Following the August decree provisions, with the 18 September circular no. 105, INPS has provided the first instructions about the contribution exemption for employers who do not require further wage supplements.
Aid will be available to employers who have already benefited from the Covid-19 emergency wage supplement measures in May and June 2020.
INPS has specified that this is a total exemption, with the exclusion of INAIL premiums and other minor contributions and is equal to the unpaid contribution for twice the hours of wage supplement obtained during May and June 2020.
The exemption amount shall be recalculated and applied monthly for up to four months and may not exceed the due monthly contributions for each month.
To apply the exemption, it will be necessary to wait for the European Commission authorisation and an additional INPS message.
It is well known that the August Decree earmarked a further 18 weeks of supplementary wage support (cassa integrazione) to be used between 13 July and 31 December 2020. These are split into two separate periods of 9 weeks, as the INPS clarified in its message 3131/2020. Any weeks already used since 13 July based on the previous decrees will be taken into account in calculating the first 9 weeks. Applications for the two periods should be submitted to INPS separately.
More particularly, the Decree provides that the last 9 weeks can availed of only if the entire previous 9-week period has been used. When submitting the application for the last 9 weeks, the employer will also have to self-certify any reduction in turnover occurring as a result of the COVID-19 emergency during the first six months of 2020. Without such self-certification, the company will be obliged to pay the INPS an additional contribution of 18% of the pay that would have been owed to the worker for hours not worked.
The Supreme Court of Cassation, in case No. 11005 of 9 June 2020, gave judgment on the dismissal of a worker who stole two company brushes which were recovered in his bag.
The Rome Court of Appeal ruling of 30 May 2018 had upheld the original Court of Cassino decision rejecting the worker’s application against his employer for a declaration of unlawful dismissal. The circumstances of the case reveal that the employer’s withdrawal from the contractual relationship was based on the fact that two brushes, which were considered to be company property due to their similarity to those used in the company and kept in storage, were discovered in the worker’s bag at the end of his shift.
The worker’s reasons justifying his possession of the brushes were not accepted as a demonstration of ownership, and the only rational conclusion was that the brushes had been unlawfully removed in order to profit illegitimately to the company’s detriment. Against the worker’s interpretation, witnesses confirmed that the brushes were identical with those used in the company, and thus the circumstances referred to in Article 32 of the applicable National Collective Labour Agreement (CCNL) – which provides for dismissal as a proportionate sanction in these circumstances – were held to be applicable in this case. Although the brushes were of low economic value, the incident was held to breach the relationship of trust between employer and employee, thus triggering the prompt application of the aforementioned sanction.
More specifically, according to the Supreme Court judges, the lower court based its conclusion that the company owned the brushes on an item of photographic evidence which reproduced the image of two generic brushes in use in the company, which were not exactly the same as those found in the employee’s bag. According to the Supreme Court, the photograph did not have the merit of actually identify the stolen objects, but it did establish – based on the employees’ testimony – whether or not the generic brushes shown in the photograph corresponded to the brushes found in the worker’s bag.
Finally, the Supreme Court, rejecting the worker’s appeal, attributed to the worker the absence of the brushes due to theft, which is one of the circumstances referred to by the collective bargaining agreement that justifies the maximum penalty that can be imposed. The judgement of proportionality expressed by the lower Court – based on the potential of the alleged unlawful conduct to undermine the bond of trust between employer and employee – is therefore an accurate one, as this bond of trust is precisely what the employer relies on if he is to be confident that future contractual services can be carried out properly; accordingly, the fact that the stolen goods are of low economic value is of no relevance.
The Official Gazette No. 223 published (on 8 September 2020) the Decree Law 111/2020 entitled “Urgent provisions to tackle the unavoidable need for funding and support for the start of the school year, associated with the COVID 19 epidemiological emergency”. The Decree came into force on the following 9 September.
Let’s look in greater detail at the main regulatory changes in the labour law field.
Smart working rights
The right to smart working has become an established entitlement for employees, for all or part of the period corresponding to the length of time during which a child below fourteen years of age is required to quarantine at home, as ordered by the Prevention Department of the competent Local Health Authority, following contact inside the school complex.
Covid leave
If, however, smart working is not possible then one of the parents is entitled to absent him- or herself from work for all or part of the period corresponding to the length of their child’s quarantine.
For the periods of leave, an allowance is granted of 50% in lieu of full pay, calculated according to the same ratios applicable to maternity/paternity leave, i.e. first by identifying the INPS-taxable wage of the monthly period prior to that in which the worker absents him- or herself..
This value will be divided by 26 in the case of “blue-collar workers” and by 30 for “white-collar workers”: the result of the ratio will identify the “average daily pay”, to be re-proportioned to 50% and multiplied by the number of days on which the worker is absent.
It should also be noted that these allowances are subject to a 50 million euro expenditure ceiling for the year 2020 and, therefore, the INPS itself will monitor the available resources and suspend them if that spending threshold is reached.
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The aforementioned periods are covered by notional contributions.
These allowances will be available until 31 December 2020.
The two measures cannot be availed of if, during the period when the child is in quarantine, the other parent is already smart working or is not working.
The Supreme Court of Cassation, in its ordinance No. 18245 of 2 September 2020, upheld the principle that carrying out a working or non-working activity while absent from work due to illness may constitute a serious breach of the worker’s contractual obligations, if it compromises or delays the recovery.
The facts
The case originates from a legal action taken by an employee against his dismissal for just cause by his employer, in which he claimed the right to be reinstated in his job and also to receive compensation for loss.
The lower court and subsequently the Court of Appeal with territorial competence ascertained that the worker – unable to work for three days due to “acute dermatitis of the hands” – worked at his wife’s pastry shop during his days of absence from work. Among other duties, he washed dishes and prepared coffee, thereby exposing his hands to heat sources.
In the lower court’s view, the worker had violated obligations of honesty and good faith which apply during the illness period, whose purpose is to ensure the worker’s prompt recovery and restoration of his/her energies which can then be made available to the employer.
The worker appealed to the Supreme Court of Cassation.
The Supreme Court of Cassation’s ruling
The Supreme Court of Cassation, rejecting the worker’s appeal, confirmed the appropriateness of the allegation against him for disciplinary purposes. This is because its purpose was “not so much to challenge the lack of justification for his absence from work, but rather to sanction the worker’s deliberate abnegation of his work obligations and of his contractual obligations in general”.
This conclusion, continues the Supreme Court of Cassation, is “in line with the consistent case law of this Court in the field, according to which the employee’s performance of other work activities while ill infringes the specific contractual obligations of diligence and loyalty, and also the general duties of honesty and good faith, and also if such external activity tends towards the presumption that the illness is feigned, and also where the same activity – examined from an “ex ante” point of view in relation to the nature of the pathology and of the worker’s job duties – could compromise or delay the worker’s recovery or return to service” (see, among others, Supreme Court of Cassation 19.10.2018, no. 26496, Supreme Court of Cassation 27.4.2017, no. 1041).
According to the Supreme Court of Cassation, “if a worker performs working or non-working activities while ill, this can entitle the employer to withdraw from the employment contract (only) if it transpires that the activity in question is indicative of a careless attitude on the part of the worker to his or her health and to the obligation to look after it, and to get better without delay.”
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This judgment, accordingly, concludes that if an employee on sick leave carries out a working or non-working activity, this can entitle the employer to withdraw from the employment contract based on the infringement of the general duties of honesty and good faith and the specific contractual duties of diligence and loyalty, if the activity in question aggravates the illness as well as the healing time and delays the return to work.
One of the most discussed regulations in recent years is that related to fixed-term contracts, and the numerous innovations have without doubt influenced employers’ choices and also affected the current regime of employment rules.
The provisions of the Dignity Decree
Lastly, the most significant structural changes were made by Decree Law No. 87 of 12 July 2018, converted by Law No. 96 of 9 August 2018 (the “Dignity Decree”), which amended a number of provisions introduced by the Jobs Act (Legislative Decree 81/2015).
More particularly, the Dignity Decree permits the first contract to be signed without the employer being required to specify the reasons justifying a fixed term contract, provided that the contract does not exceed 12 months in duration.
However, it may be extended (if the total duration exceeds twelve months) and/or a contract renewal may be signed extending it to twenty-four months provided that at least one of the following justifying reasons are present:
Therefore the fixed-term contract may not last longer than twenty-four months, including any extensions and/or renewals. This is without prejudice to the different or alternative provisions of collective labour agreements (territorial or corporate) signed by trade unions that are comparatively more representative at national level.
The legislation also set the maximum number of extensions allowable, by allowing for the fixed term contract to be extended at most four times. It also confirmed that the contract extension must relate to the same work activity for which the fixed-term contract was initially signed, and that the reason for a fixed term contract must be specified only if the contract is for longer than 12 months.
If the contract is renewed, however, one of the aforementioned reasons must be specified regardless of the duration of the contract originally signed.
The provisions of the August Decree
The Decree Law No. 104 of 14 August 2020 (the “August Decree”) introduced important regulatory changes in order to deal with the current resumption of activities following the COVID-19 health emergency underway, and to ensure greater flexibility for employers in the use of fixed-term contracts.
More specifically, Article 8 of the August Decree, in derogation from the provisions of the Dignity Decree, enables private employers to renew or extend fixed-term contracts until 31 December 2020, subject to the maximum duration of 24 months, without the need to indicate a justifying reason.
On this point, the National Labour Inspectorate clarified, in its Memorandum No. 713 of 16 September 2020, that the 31 December 2020 deadline refers exclusively to the formalisation of the extension or renewal. The employment relationship may be extended also during 2021, subject to the maximum duration of 24 months.
Lastly, the August Decree provided that renewals and extensions that do not specify justifying reasons are permitted only once.
This provision initially generated opposing views as to whether or not employers who exhausted the maximum number of extensions would be able to further extend the fixed term contract. The National Labour Inspectorate clarified this doubt in the same Memorandum No. 713 of 16 September 2020.
More specifically, the National Labour Inspectorate stressed that employment contracts could be extended once only, without the need to indicate a justifying cause, also if they had already reached the maximum limit of 4 extensions under previous contracts.
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Note finally, for the sake of completeness, that according to the prevalent interpretation, these new provisions also apply to fixed-term staff leasing contracts, given the equivalence of both types of contract as confirmed by the Dignity Decree’s provisions.
By Resolution No. 46 of 14 August 2020, the Revenue Agency gave its opinion on the use of fringe benefits for tax and contributions purposes in relation to vehicles granted to employees for company and personal (i.e. “heterogenous”) use.
Regulatory references
The Revenue Agency’s intervention follows the amendment of Article 51.4 a) of Presidential Decree 917/1986 (Income Tax Consolidation Act (TUIR)) by Law 160/2019 (the “Budget Law” 2020) in force since 1 January of this year. This amendment revised, with effect from 1 July 2020, the quantification of the fringe benefit taxable based on CO2 emissions per kilometre, to the benefit of less pollutant vehicles in contrast to vehicles that produce more carbon dioxide.
More specifically, the new wording of the regulatory provision provides that for newly-registered vehicles, motorbikes and mopeds with carbon dioxide emission values not exceeding 60 g/km of CO2, which are allocated to employees for heterogenous use in contracts signed since 1 July 2020, 25% of the amount corresponding to a conventional distance of 15,000 kilometres – calculated based on the kilometre cost for the year deducible from ACI tables and net of any amounts withheld by the employer for this employee benefit – should constitute the assessable base (for taxation and contributions purposes).
The aforementioned percentage is increased to 30% for vehicles with carbon dioxide emission values higher than 60 g/km but below 160 g/km; if the values are higher than 160 g/km but below 190 g/km, the percentage is increased to 40% for 2020 and to 50% with effect from 2021; for vehicles with carbon dioxide emission values in excess of 190 g/km, the percentage is 50% for 2020 and 60% with effect from 2021.
Contracts already in force at that date are excluded and are subject to the old rules, which set the fringe benefit at a fixed rate of 30%.
The Revenue Agency’s clarifications
In relation to the new provisions, the Revenue Agency – in response to a petition for a clarificatory tax ruling filed by an employer – provided important clarifications regarding the correct identification of the number of vehicles, motorbikes and mopeds subject to the new rules.
More specifically, the petitioner asked:
The Revenue Agency replied, on this point, that the term “new registration” is attributable to vehicles, motorbikes and mopeds registered since 1 July 2020, and the date of entry into force of the 2020 Budget Law (1 January 2020) is of no relevance to this. The tax authorities did not consider it feasible, for logical-systematic reasons and also for reasons of temporal consistency of the new regime, to hypothesise two different moments in time for the purposes of the regulation’s operation, i.e. 1 January 2020 for purposes of compliance with the registration deadline and 1 July 2020 for purposes of compliance with the deadline for the signing of the contract by which the benefit is allocated for heterogeneous use.
Moreover, in order for the new wording of Article 51.4 a) of the Income Tax Consolidation Act (TUIR) to be applied – motor vehicles, motorbikes and mopeds must be “allocated for heterogeneous use by contracts entered into with effect from 1 July 2020“. This is because – according to the Agency – the allocation of a car to the employee for heterogeneous use is not a unilateral act but rather an actual contract between employer and employee.
Finally, the tax administration gave its opinion on the tax rules applicable in the event that the contract allocating the vehicle for heterogeneous use is signed after 1 July 2020, but the vehicle is registered before that date. In this case, the taxable base is quantified by reference to the general principles governing the determination of income from employment.
Here, the Revenue Agency made reference to Resolution 74/2017 where it indicated that, if the legislation gave no default criterion for the valuation of a benefit, costs incurred by the employee exclusively for the employer’s benefit should be identified based on objective elements ascertainable by documentary evidence. This is in order to ensure that the full “ordinary value” of the asset allocated does not go towards determining income from employment. Consequently, the benefit should be assessed for tax purposes solely for the part attributable to the vehicle’s private use, separating the vehicle’s use for the employer’s benefit from its normal value.