“Decreto Ferragosto”: urgent measures to support and relaunch the employment

Legislative Decree No 104 of 14 August 2020, so-called Decree Law August (renamed "Relaunch 2"), adopted a number of important measures in the field of labour law, in order to deal with the epidemiological emergency by COVID-19.

Our Firm will be monitoring the first applications of the Decree and will provide with assistance and updates on the measures adopted.

Below we will illustrate all the most important aspects of these innovations.                        

Renewal of the social safety nets

For the period between 13 July and 31 December 2020, companies will be able to benefit from an additional 18 weeks of social safety nets, granted only to employers who have already been fully authorized for the previous nine-week period (Article 1).

The last 9 weeks will be subject to the additional contribution in the event of a reduction in revenues of no more than 20% compared to the first half of 2019.

Renewal of the ban on redundancies

The ban on collective dismissals and on dismissals for justified objective reason is extended until the social safety nets are fully exhausted by the employer.

In the event of recourse wage subsidies, from 13 July 2020 (earliest possible date), the employer may not make redundancies until at least 16 November 2020. If the company does not benefit of social safety nets, four months of de-contribution remain for all those who applied for treatment in May and June (Article 2).

Therefore, the Government has not limited itself to a simple extension of the ban on dismissals, but has developed a mechanism whereby the continuation of the ban coincides with the further period of benefit from the redundancy fund or de-contribution (see below).

On this point, doubts of constitutional legitimacy persist: the extension of the ban on dismissal for a further period (even beyond the expiry date of the emergency proclaimed by the Italian Government, i.e. 15 October 2020) compresses excessively the employers’ freedom guaranteed by Article 41 of the Italian Constitution.

The only exceptions to this ban are in cases of taking over of a contract, definitive cessation of the company's activities or bankruptcy, when there is no provision for the provisional exercise of the company, or its cessation, as well as voluntary terminations with a trade union agreement (Article 14).

Exemption from social security contributions

For companies that decide not to request the additional 18 weeks of social safety nets, an exemption from the payment of contributions is provided for 4 months, until 31 December 2020, excluding contributions to Italian national insurance institute for accidents at work, provided they have taken full advantage of the previous 18 weeks of social safety nets (Article 3).

The Technical Reports estimate the average rate of relief to be borne by the employer at 31%.

Exemption from the payment of contributions in case of hiring

For all companies hiring an employee with an open-ended contract, a six months exemption from social security contributions is provided until 31 December 2020, up to a limit of 8,060 euros and excluding contributions to Italian national insurance institute for accidents at work.

For businesses in the tourism sector there is also an exemption in the case of temporary employment (Articles 6 and 7).

Extension or renewal of fixed-term contracts

By extending a provision contained in d. l. no. 34 of 2020, until 31 December 2020 companies are allowed to renew and / or extend fixed-term contracts without the obligation to indicate the cause, for a period not exceeding 12 months and without prejudice to the maximum limit of 24 months (Article 8).

Renewal of unemployment benefit

Employees who have received a wage subsidy to make up for the loss of employment (so-called NASpI), and whose subsidy expired between 1 May 2020 and 30 June 2020, are entitled to an extension of the subsidy for two months from the date of expiry (Article 5).

One-off allowance

Seasonal and temporary workers in the tourism sector, who have unwittingly ceased, reduced or suspended their activity or employment relationship, are entitled to an all-inclusive allowance of EUR 1,000.

Under certain conditions, such as at least thirty working days between 1 January 2019 and 17 March 2020, employees and self-employed workers from sectors other than tourism may be entitled to receive the one-off allowance (Article 9).