Italy compromises on extending its covid redundancy ban
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Italy On Coronavirus Lockdown
Emanuela Nespoli
Emanuela Nespoli is a partner at Toffoletto De Luca Tamajo e Soci

For more than a year, a dismissal ban, due to covid-19 emergency, has been in force in Italy. The controversial ban has raised doubts and legal criticism, under a constitutional viewpoint, but despite this, there were recent rumours of a possible further extension after 30 June 2021.

The situation has recently changed, however. The government, under increasing political and trade union pressure, with the Legislative Decree n. 99/2021 issued on 30 June, confirmed that companies qualified for access to the so-called ordinary furlough (CIGO) (i.e. manufacturing and construction companies) may proceed with individual/collective dismissals starting 1 July. Conversely, the redundancy ban continues for companies in different sectors at least until 31 October 2021.

Moreover, Decree n. 99/2021 integrated the provisions on social shock absorbers introduced by previous decrees (n. 41/2021, the so-called DL Sostegni, and n. 73/2021, the so-called DL Sostegni bis), adding two further situations in which the dismissal ban – linked to the social shock absorbers – is still in force.

The first situation concerns the textile, clothing, and leather goods industries – as sectors most affected by the economic crisis – which have the opportunity to request a further 17 weeks of CIGO covid (without any additional contribution being due by the employer), to be used between 1 July and 31 October 2021. These companies won’t be allowed – regardless of the use of the social shock absorber concerned – to dismiss workers for either collective or individual redundancy reasons until 31 October.

The second hypothesis concerns companies that used all the available periods of the furloughs provided for by Decree 148/2015 and request, due to situations of critical financial difficulty, an additional 13 weeks of the so-called extraordinary furlough (CIGS). This further period of CIGS does not require the payment of the additional contribution and can be used until 31 December 2021. In this case, the ban applies for the period of effective use of the aforementioned social shock absorber.

The above system provided for by Decree n.99/2021 is the result of a “gentleman’s agreement” reached between the government and the social parties. With this agreement, the social parties suggest that companies access all the available social shock absorbers before proceeding with any termination of the employment relationships.

The manufacturing and construction companies are not the only ones exempt from the dismissal ban: all the exceptions already provided for – which have granted some flexibility during this period – remain in force. More specifically, the prohibition does not apply:

  • to employees involved in a change of service contract, to which a “social clause” applies (i.e. a clause aimed at guaranteeing the employment stability of employees in the event of a change of the service provider in the context of a service contract);
  • to dismissals as a result of the closure of a company;
  • to dismissals due to liquidation of the company without the continuation, even partial, of its business activities (as long as there is no transfer of an undertaking, or of a part of it);
  • to terminations of employment contracts which are incentivised as part of company-level collective agreements (with the payment of unemployment insurance benefits to employees); and
  • in the event of a bankruptcy, where no arrangements have been made for a temporary period for carrying on business.

With these measures, the Italian government tried to find a compromise concerning the end of the dismissal ban – which was strongly contested by unions – introducing some more exceptions, aimed at protecting the sectors most in crisis, which further complicate an already complex regulatory framework.