Employment Law in Italy

Introduction

A contract of employment may be terminated in any of the following ways:

• resignation
• dismissal by the employer (including a dismissal for “just cause”)
• the expiry of a fixed term
• mutual agreement
• retirement.

There are also other ways in which a contract can be terminated which are not considered by this overview including:

• death
• force majeure (act of God)
• the judicial termination of the contract.

Resignation

An employee does not have to have any grounds for terminating an employment contract. The employee must use the online procedure for resignation and comply with the statutory requirement to serve the contractual notice period stated in the relevant National Collective Labour Agreement (CCNL) and must follow any notice formalities provided for in the contract of employment.

Trial periods

No specific provisions apply to the termination of an employment contract during a trial period, and either party may terminate the relationship without notice or any specific reason.

Indefinite term contracts

The laws which regulate the dismissal of employees who are not part of the top level management are more strict than those which apply to the dismissal of top level managers (dirigenti). A lawful and effective dismissal can only take place for a “just cause” or a “justified reason” and there is no qualifying length of service to bring an unfair dismissal claim. An employer does not have to serve notice in cases of resignation, dismissal for just cause or if the termination is by mutual agreement and the parties have agreed to the exclusion of the notice period. If the dismissal is for a subjective justified reason, the employer must give notice. An employer who intends to take disciplinary action against an employee which could lead to dismissal for just cause or for a subjective justified reason must follow a specific disciplinary procedure.

Fixed term contracts

In general, there does not need to be a reason for using a fixed term arrangement (but employers can specify if they use fixed term contracts to replace absent employees to receive benefits in paying social security contributions). The maximum length is 36 months. A fixed term contract can be renewed up to five times within this 36 month period for the same tasks and duties.

Other specific forms of contract

Apprenticeship (Apprendistato): this is an open-ended employment contract aimed at providing a period of training and an employment opportunity. During training, the apprenticeship contract can be terminated by either party for just cause or justified reason. If at the end of the training period, neither party withdraws, the apprenticeship contract continues as an open-ended contract.

Automatically unfair dismissals

Certain reasons for dismissal render a dismissal automatically unfair without any consideration of reasonableness. These include reasons connected with discrimination, illness, health and safety, pregnancy or maternity, parental leave, assertion of a statutory right, union membership, and assertion of rights under the Working Time Directive.

Excluded categories

A pregnant employee cannot be dismissed during the period running from the date on which her pregnancy is certified by a doctor until the date of the child’s first birthday. It is also forbidden to dismiss a female employee during the period running from the date of publication of her wedding until the first anniversary of the wedding. In either of these two cases, an employer can only dismiss an employee for “just cause”.

Senior executives

The rules which apply to the dismissal of managers (dirigente) differ from those which apply to ordinary employees. If there is a breach of the fiduciary relationship between the parties (rottura del vincolo fiduciario) the employer is entitled to dismiss a dirigente (known as a “dismissal ad nutum_”). Due to the special nature of the employment relationship between _dirigente and employers, dirigente can be dismissed at any time with due notice as provided for by the applicable CCNL. If the dirigente does not work out their notice, the employer must pay the relevant payment in lieu of notice. In practice, however, the relevant CCNL is likely to contain provisions which will significantly complicate and increase the financial risk of dismissing dirigenti.

Retirement

The retirement age for private sector employees who have accrued at least 20 years’ social contributions are:

• for 2016-2017: 66 years and seven months for men and 65 years and seven months for women, and
• for 2018: 66 and seven months for both men and women. 

Mutual agreement

An employer and employee can agree to terminate an employment agreement by mutual consent. In such cases, a settlement agreement will often be entered into (see below).

Settlement

If both parties agree to the ending of the employment relationship this can be achieved by way of a settlement agreement. In such cases, the employer offers the employee a lump sum as an incentive to resign (called incentivo all’esodo, similar to a termination package).

Further information on termination in Italy is available from our International Employment Issues microsite here.