Italy: Legislative Decree N. 368 of 6th September 2001

. - (G.U. n. 235, 9th October 2001, Serie Generale)

Art. 1.

After a long agony lasting many years, in which law N 20 1962, (which provided the very few and definite hypothesis in which it was allowed to stipulate a fixed term employment contract), has gradually crumbled thanks to the introduction of a number of normative and contractual exceptions, the new discipline of time contracts has been at last approved, and came into force on the 24th October. It is not a complete liberalization, but a total change of perspective: the new law does not stem from predetermined legal or contractual hypothesis, but instead provides for the existence of technical, productive, organizational or replacement reasons for the sealing of fixed term employment contracts. Thus, the use of this much more adaptable and efficient kind of contract shall widen, even though the need for a reason to justify it does once again confirm its odd unpopularity. The fundamental difference between indefinite term employment contracts and fixed term employment contracts remains, although the latter is no more subordinate to legal or contractual hypotheses, even if its existence must still be adequately motivated. The interpretation of the admission requirements, and consequently the validity of each fixed term employment contract, is referred to the law which shall probably avail itself of precedents in matter of transfers, which is allowed according to art. 2103 of the civil code only if it is supported by technical, productive, organizational or replacement reasons.

This shall, no doubt, raise many interpretative problems, and it shall actually leave the final word to the magistrate as to its validity. All this represents a major risk: in the event of the judge not considering the alleged motivations as valid, he might provide for the conversion of the contract into an indefinite term employment contract, even though many years may have elapsed from the actual termination of the contract itself.

However, when we consider that this norm should be the enforcement of an EU directive, it is surprising to note that no such condition exists in European norms. In fact, the norm refers to the general agreement signed on 18th march 1999 by Trade Unions organizations (Ces, Ceep, Unice) and this agreement never mentions justifying reasons for fixed term employment contracts, but only the need to establish rules against discriminations. Thus, the EU did not ask us to introduce a reform of fixed term contracts providing for reasons for their signing, nor did it grant collective agreements the possibility to fix limits.

As for the possibility to use fixed term employment contracts for substitutive reasons, we think that this norm matches the old one in every point, i.e. that it is provided for by the former legislation, which specifically referred to the replacement of absent employees, who would, nonetheless, keep their position in the firm.

For what concerns the form of fixed term employment contracts, the norm provides for what was already stated in article 1 of the former law, i.e. that the fixing of a limit has no validity when it does not appear in a written act, unless the length of the contract does not exceed twelve days. As before, therefore, written form is request ad substantiam, even though the inadvertence of the norm does not imply the contract’s invalidity because of the absence of one element, but it does cause its conversion into an indefinite term employment contract. A copy of the written act must be given to the employee within five working days from the beginning of their service.

This article confirms the discipline contained in subparagraph f. of article 1 of the law n. 230, 1962, introduced by law n. 266 of 23d March 1977, which allows a greater flexibility in the signing of fixed term employment contracts in the field of air transportation. The existence of mere time requirements - considering the particular needs of air transportation - makes the recourse to fixed term employment contracts possible within the legally disposed bounds, without any other justification. The permission for the firms supplying airport services to increase the percentage of fixed term hired workers must be released by the Direzione provinciale del lavoro (provincial labour office) and no longer by the Ispettorato del Lavoro

Point 3 of the present decree expressly indicates cases in which it is not possible to fix a limit to the length of employment con-tracts, thus actually recovering the same situations in which employers can’t resort to temporary work. Apart from the obvious prohibition to stipulate fixed term employment contracts in order to replace workers on strike -something which would frustrate the exercise of the relative right as granted by the Constitution - and apart from collective dismissals involving workers whose tasks would be performed by other workers hired with a fixed term employment contract, this norm more generally penalizes firms which fail to fulfill their obligations concerning safety.

With reference to collective dismissals, we must observe that there is no absolute prohibition here: in fact, the law provides for the fact that Unions might decide differently. The absence of any explanation in the norm does not make it clear what agreements are alluded to.

The Legislator is probably referring to the agreements that can be entered into during a collective dismissal, a practice regulated by the norms mentioned in the same article. In any case, and even without an agreement with the Unions, employers can stipulate fixed term employment contracts in order to replace workers registered in labour mobility lists and also to sign contracts whose length does not exceed three months.

The present article confirms the existence of limits to further extensions of fixed term employment contracts, even though there are differences with respect to the past. Law n. 230,1962, in fact, admitted only one exceptional extension, whose length could not exceed the length of the original contract. Moreover, the extension was possible only in the presence of contingent and unpredictable needs and it had to relate to the same tasks for which the original fixed term employment contract had been signed.

Article 4 of the present decree, instead, no longer refers to exceptional or temporary needs, but admits a single extension only if the original length of the contract did not exceed three years, provided the said extension is required by objective reasons and provided it concerns the tasks for which the first contract had been originally stipulated.

The employer must specifically provide the proofs which demonstrate the actual reasons for a possible extension of the contract; obviously, he should also be able to provide proofs of the need for the signing of a fixed term employment contract, as opposed to an indefinite time one.

This article reproposes the system of sanctions inflicted when the contract is still in force after its supposed termination, thus constituting a violation of the discipline on fixed term employment contracts. This system was introduced in article 12 of the law n. 196 of 24th June 1997, which, in its turn, changed article 2 of the law n. 230 of 1962. This law was much stricter, in that it considered any contract dating from the original term fixed or extended as a unique indefinite term employment contract, uniting the length of all contracts. Law n. 196 of 1997, as well as the present Decree, states that the employer is merely expected to pay the employee an increase of salary for any eventual extension of the employment contract following its original termination or extension. In any case, the contract is held to be an indefinite term employment one when it is prolonged for twenty days after its termination date - in case the original contract lasted less than six months, or when it is prolonged for thirty days when it lasted more than six months, but exclusively on termination of these terms.

The reform also confirms the system of contracts’ renewal, in that it considers as indefinite-term any contract signed within ten days from the termination date of a former six-month term employment contract, or within twenty days from the termination date of a longer lasting fixed term employment contract.

It also reasserts the system of consecutive fixed term hiring made without solution of continuity. In this case, precisely in order to avoid any misuse of fixed term employment contracts, the contract is held to be an indefinite term one dating from the first original signing.

This article follows the spirit of 1999/70/CE norm declared in subparagraph 4 (Non-discrimination Principles) of the agreement signed by Unions CES_UNICE_CEEP, which says: "As for working conditions, fixed term hired workers can’t be treated less favourably than comparable indefinite term workers, just because of the nature of their contract, unless there are objective reasons for it". Unlike previous norms, this principle’s new expression clearly explains what is meant by comparable indefinite time workers, i.e. workers that work at the same level as defined by collective agreements. Rather than a non-discrimination principle, this norm seems to be introducing equal treatment, something which had never been mentioned before in our political order, even though we think that past - and consolidated - jurisprudence dealing with this hypothesis is to be held valid. In particular, any reference to economic treatment in the firm, is to be interpreted only in the light of collective treatment, surely not in that of individual one . However the reference to collective agreements might create problems to employers who do not apply them to their employees and who, therefore, are not bound by their criteria.

The present reform should have reinforced the rights of fixed-term-hired workers, by granting them adequate training which, in its turn, would enhance their professional career - as provided for in EU norms. However, the present norm has but blandly transferred this principle. As for the first subparagraph, in fact, it contains obligations stated also in Law n. 626 of 1994 which refers to all categories of workers, while as for training obligations, they are not in charge of employers, but of Collective Agreements.

Art 35 of the Workers’ Statute defines the application field of the disposition contained in Paragraph III, concerning trade unions activities (i.e. assemblies, leaves of absence, referendum). Fixed-time workers, therefore, are counted in for this calculation, but only if their work contract lasts longer than nine months. This principle could well have been applied also to calculations made for dismissals, as provided for in article 18 of the Workers’ Statute, which hasn’t been considered.

Another novelty introduced by the present norm concerns the right of fixed term workers to information, as already provided for by Law 1999/70. It refers to both collective and individual information, whose means are once again referred to collective agreements.

The present norm lists all the existing norms in the field of fixed term employment contracts and exempts them from the application field of the new law. Thus, for example, the new discipline of fixed term employment contracts can’t be applied to cases specifically disciplined by the law on temporary work, nor can it be applied to training contracts, nor to apprenticeship, nor stage which do not constitute an employment contract. It also confirms what has already been settled by past legislation concerning fixed term employment contracts for Executives. As already provided for by article 4 of the law n. 230 of 1962, in fact, it is possible to seal a fixed term employment contract lasting less than 5 years with executives, who can nonetheless recede from it after the first three years, by giving the due notice, in conformity with article 2118 of the Civil Code. Executives are then expressively excluded from the application field of the new law, excepting for what concerns articles 6 and 8: which means that for these kind of employees there is no need for validity requirements in order to make the fixing of a term possible; the latter will thus always be valid, provided it is fixed within the approved time limits. In particular, there will be no need for justifications. The non-discrimination principle shall instead be applied to Executives as well.

Collective agreements are in charge for determining the percentage of allowed fixed term employment contracts - but no longer deputed to establish new or further applications of fixed term hiring. Collective agreements stipulated by the most representative national Trade Unions Organizations shall therefore fix the highest percentage of fixed term employment contracts to be signed. The lack of a normative limitation and the common-law-system which now regulates collective agreements do not make it possible to extend this limits to employers who are not members of any Trade unions organizations and who do not apply collective agreements. In this case, according to the spirit of the norm, there shall be no quantity limitations for the signing of fixed term employment contracts. Likewise, the same impossibility to extend the norm to employers who do not apply collective agreements might be advanced with reference to the right of precedence in hiring which from now on shall be introduce in collective agreements. It must be noted that this right was generally provided for in article 23 of the law n. 56 of 28th February 1987, article 8-bis of law n. 79 of 25th March 1983: both these norms have been repealed with the following article 11.

Limitation of quantity, anyhow, is not applied to fixed term employment contracts signed during the starting phases of new business activities or to all the cases already mentioned in law n. 230 of 1962 as the only ones in which it was possible to stipulate fixed term employment contracts (i.e. substitutions, seasonal work, specific entertainments or the intensification of work). Finally, there are no limits to fixed term employment contracts signed at the end of trainings or stage, or stipulated with workers over 55 years of age, or to brief contracts (less than 7 months).

With the issuing of the present decree, all articles of law n. 230 of 18th April 1962, as well as article 8-bis of law n. 79 concerning seasonal work of 25th March 1983, and article 23 of law n. 56 of 1987 which made it possible for collective agreements to fix further cases in which to recur to fixed term employment contracts, shall be repealed.

This norm, however, provides for a transition period in which employers will have to comply, except in case of newly stipulated agreements, with the dispositions provided for in currently valid collective agreements, until the said agreements come to their termination, i.e., in case of an ultra-validity clause, to their renegotiating. Thus we can call the whole process a staggered deregulation, although it is not easy to define its limits. We think that this provision wants to maintain the limitations concerning fixed term employment contracts provided for by collective agreements - obviously only up to the agreements’ own termination. These limitations are not those provided for in article 1, in that the reasons for their introduction are neither technical, nor organizational, nor productive nor substitutions. Thus, among the various cases of fixed term employment contracts not provided for by this decree, only fixed term employment contracts provided for by national collective agreements will still be valid, albeit transitorily, and they shall be subjected to the limitations fixed by the same collective agreements. We do not exclude, however, that jurisprudence might furnish other possible interpretations of this norm, especially when we consider CGIL’s disagreement on this matter.

Finally, sanctions inflicted in case of non-compliance with the dispositions contained in article 6, i.e. concerning the non-discrimination principle between fixed term workers and indefinite term workers, have not changed, but are still the same contained in law 230 of 1962.