The New Labour Market In Italy: A Quick Overview Of The New Rules And The Challenges Posed By Technological Revolution, Industry 4.0 And GIG Economy

On 10 May 2017, the new Decree concerning freelancers and smart working was finally enacted in Italy. The adoption of this Decree completes the so called "Jobs Act" project which was made up of a series of reforms of labour law and practice. The reform project aimed at fundamentally changing the labour market in Italy. It must be seen as a natural continuation of the first reforms introduced under the so called "Fornero Law" (after the then Ministry of Labour). The end result is that Italy's rigid labour market has evolved considerably over the past five years to achieve a better balance between the rights of labour and the rights of employers.

The labour law reforms were triggered by the famous "secret" letter sent by the European Central Bank to the Italian Government on August 5, 2011 in which ECB pushed for a series of economic measures "to be implemented as soon as possible". The support of ECB to the Italian economy and in particular the massive purchase of Italian bonds on the secondary market was conditional on Italy implementing these reforms.1

To understand the significance of the reform it must be recorded that until the Fornero Law was enacted, any kind of invalidity in the termination of a labour contract, irrespective of the seriousness or the nature of the invalidity, lead to the reinstatement of the employee; this remedy was available unless the employee was an executive (dirigente) or employed by a "small employer" (i.e. with less than 15 employees). This right of reinstatement was the based on the famous (or notorious according to the opinions) Section 18 of the Statute of Workers, a Law enacted in 1970.

As a result of the Fornero Act, except for a number of limited and marginal exceptions (e.g. discrimination, verbal termination or termination during maternity leave), the only consequence of a finding of unfairness in the termination of a contract is now the payment of a penalty which varies from 12 to 24 months' salary.

Subsequent to the Fornero Act, the Jobs Act further lowered the level of the protection by providing that anyone engaged after March 7, 2015 is subject to the "increasing protections system". This means that the penalty payable in case of unfair termination increases with the length of service: 2 monthly salary per year of employment, with a minimum of 4 months and a maximum of 24 months. The major consequence of this new rule is that there has been a massive drop in number of the Court cases concerning...

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