Italy introduces significant changes to employment law and pensions

Significant changes in Italian employment and pensions law have been introduced after the Italian government implemented an agreement with the main employers’ associations and trade unions.

They include changes to legislation about hiring disabled workers and managing fixed-term contracts.

Law 247/2007 was imposed in January 2008 following the government’s pledge to incorporate the agreement into Italian employment law.

It affects a number of areas – in particular:

  • Fixed-term employment contracts can no longer be renewed on an ad hoc basis after a total of 36 months has been reached (breaks between contracts count towards the total), unless both parties agree a new contract for a maximum of one additional year at the Local Labour Office. Employees must be accompanied and advised by a trade union representative.
  • The law also added the possibility of entering into agreements (convenzione) to improve the chances of disabled employees to be hired on a permanent basis. The rules have been extended to encourage more employers to recruit disabled workers.

The Italian government will also implement new rules for social benefits, employment services, and incentives for creating new jobs and apprenticeship contracts.

  • Open-ended arrangements whereby agencies ‘lease’ staff to companies are now unlawful. Collective agreements at company level (as opposed to national level) are to be encouraged through the introduction of monetary incentives, such as reduced social security contributions paid on any variable pay provided for in such agreements.
  • The mandatory retirement age for the Italian National Employees Pension Fund, which applies to most employees in the private sector, has been increased to 58 this year, gradually increasing to 61 by 2013. The processes for the calculation of retirement benefits (coefficienti di trasformazione) are to be modified during 2008. Social security contribution rates for temporary workers hired to work on specific projects will rise from approximately 23% to 24% in 2008, 25% in 2009 and 26% in 2010.
  • The payment period for unemployment benefit has been extended to eight months for workers below 50 and to 12 months for those over that age.

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