Covid-19 – Italy Legislative Update – January 2021

Covid-19 – Italy Legislative Update – January 2021 

Law no. 178 of 30 December 2020. State budget for the financial year 2021 and multi-annual budget for the three-year period 2021-2023. 

The 2021 Budget Law (Law no. 178/2020), which came into force on 1 January 2021, has extended the current ban on dismissals until 31 March 2021². 

The ban on dismissals for objective reasons, affecting all employers and regardless of  
their number of employees, and is not connected to the company having made full  
use of the COVID-19 shock absorbers, as initially provided for by the “August Law  
Decree”.  The new rule establishes that until 31 March 2021 employers may not: 

• Initiate collective redundancy procedures;

• Conclude any collective redundancy procedures initiated after 23 February 2020;

• Proceed with individual or multiple dismissals for objective reasons;

Law No. 604/1966. 

The following cases do not fall under dismissals for justified objective reasons and as such are to be excluded from the ban on dismissals: 

• Dismissal for disciplinary reasons, namely for justified subjective reason and for just  
  cause; 

• Termination as a result of exceeding the period of sick leave during which the employer is required to hold the employee’s position open; 

• Termination during or at the end of the probationary period; 

• Termination due to reaching the maximum age limit to be eligible for an old age  
  pension; 

• Termination of a domestic worker; 

• Termination at the end of the apprenticeship period; 

• Termination of executive (Dirigente). 

² The ban was previously provided for in Article 12, paragraphs 9 and 10 of Law Decree no. 137/2020, known as the Ristori Decree, converted, with amendments, by Law no. 176 of 18 December 2020, which would have ended its effectiveness next 31 January 2021. 

Mutual terminations of employment relationships are allowed, and the legislator has  
not placed limits on employee resignations, including those for constructive dismissal.  The additional circumstances in which the legislator has provided for the possibility of terminating the employment relationship are: 

• In the event of bankruptcy, if there is no provision for the provisional continuation of the business, or if it is ordered to be wound up; 

• Definitive cessation of the company’s activity, resulting from the liquidation of the company without continuation, even partial, of the business; 

• A company collective agreement, signed with the most representative trade unions at national level, provided that (i) the employees are represented by trade unions (ii) an incentive is provided for the termination of employment which the company must pay  to  the  relevant  employees (iii)  the  agreement  provides  for  the  voluntary participation of individual employees (as unilateral dismissal is not allowed) (iv) the company  pays  the  mandatory  redundancy  fee.  Adherence  to  the  agreement  is certified by means of an individual agreement (between each employee and the employer) in a “protected environment”. Employees who, at the time of submitting the  application,  enclose  the  collective  company  agreement  and  the  individual agreement will be eligible for unemployment benefit (Naspi). 

Any violation of the ban on dismissal entails the nullity of the dismissal itself, with the consequences of the law. 

Do you have questions regarding termination scenarios in Italy?  Direct your query to our specialist IRIS HR Consulting team here.