In the final days of the particularly tense campaign leading up to the parliamentary election in Italy, politicians from all sides of the political spectrum made bold proclamations on a variety of topics; for the most part, this was predictable and inevitable. Nevertheless, it was surprising to read the statements made by two former labour ministers essentially blaming the precariousness of labour relations in Italy on a legislative measure, the Jobs Act, which was endorsed by a government led by their own party.
The Jobs Act came into effect in 2015, but the detail of its contents are not always clear and understood. For this reason, it is worthwhile to take a few minutes to revisit and review some of the provisions of this key piece of employment legislation.
First, it is important to remember that the Jobs Act is not only about the regulation of dismissals. The Jobs Act also focuses on:
- Introducing simplified rules for using tools that allow employers to monitor employees in the workplace, including simple technologies such as telephones, computers and access badges. The Jobs Act clarified that the use of these instruments in the workplace is not subject to special authorization procedures. However, special authorization procedures may be required for other types of equipment, such as surveillance cameras, which serve lawful purposes while also giving employers greater visibility and control over the performance of work;
- Making it possible for an employer to change a worker’s duties at the same contractual level, or, in the event of a company reorganization, to a lower level, thereby giving the employer greater flexibility to modify the employment relationship, even to the extent of relocating the worker, in certain circumstances.
As regards dismissals, and in particular the remedies for unfair dismissal, the new provision introduced by the Jobs Act was not about the obligation to reinstate the worker. A legislative reform of 2012 had already restricted this obligation to the most serious cases of unfair dismissal, in line with other European legal systems. Rather, the Jobs Act provided a way in which employers could calculate with greater certainty the compensation that would be due to a worker as a result of a successful claim of unfair dismissal. The ‘increasing protections’ provision of the Jobs Act, which has become rather famous, introduced a compensation mechanism for unfair dismissal based on increasing amounts according to the length of service of the worker.
The question that has been asked is whether it is fair to consider this a rule that promotes ‘precariousness’ in labuor relations? Arguably it is not. Numerous governments, representing opposite ends of the political spectrum, have, since its introduction, only carried out limited intervention as regards this provision of the Jobs Act. For example, modifying the level of minimum and maximum compensation, without changing the overall compensation scheme.
In 2018, the Italian Constitutional Court decided that the minimum and maximum limits of compensation provided for by the Jobs Act were lawful, but that the automatic nature of the increases in compensation depending on length of service did not allow for adequate consideration of all the relevant factors that ought to be considered in determining damages for unfair dismissal. With this decision, the Court effectively restored sweeping discretionary power to the labour judiciary, to determine compensation for unfair dismissal. In reality though, in the vast majority of cases the labour judiciary continues to determine that damages due for unfair dismissal are to be primarily based on the duration of the employment relationship.
Perhaps the time is right to review certain provisions of the Jobs Act, such as reintroducing some of the automatic features into the calculation of compensation for unfair dismissal that would make penalties more predicable for employers, while also safeguarding a margin of judicial discretion in order to adapt compensation amounts to unique individual cases. However, one should not define the Jobs Act today as an instrument that lessens employees’ rights, since the legislation has been reconfirmed since 2015 by governments of very different political persuasions, and weakened four years ago by a ruling of the Judge of Laws.
As a final point, it is best to remember the fundamental rule that legal reforms should be judged in their entirety. The critics of the Jobs Act may overlook the fact that the Jobs Act legislation limits to a bare minimum the para-subordinate employment collaboration known as “co.co.co”. Thanks to the Jobs Act, it is now more difficult to hide a truly subordinate employment relationship behind the veil of a “co.co.co” contract. In Italy, we see a similar trend regarding the treatment of gig economy workers. Finally, although the 2015 reform message was clear – certainty in exit costs in exchange for stabilization of workers whose status is not clear– it still is one of the most misunderstood aspects of the Jobs Act.
Anyone wanting to abandon the Jobs Act approach, which attempts to balance the interests of the employer and the employee, as well as meeting the evolving needs of the economy as regards workforce, must be ready to propose a functional alternative.
The content of this blog is based on an article originally published in Italy’s leading financial daily newspaper, Il Sole 24 Ore, on September 22, 2022.
The article captured the attention of a former Italian Employment Minister, Mr. Cesare Damiano, who provided written clarification of his position regarding the Jobs Act, which was published online by the newspaper on September 27, 2022.
For more information regarding the Jobs Act or Italian employment law generally, contact Attilio Pavone, Head of Italy.