With circular letter no. 63 of April 14, 2021, INPS has provided the first clarifications regarding the right for working parents in the private sector to benefit of the leave introduced by decree law 30/2021.

The leave, covered by a notional contribution, is aimed at workers with children under of 14 years of age or severely disabled children who are affected by Covid, in contact quarantine or, possibly, with suspended teaching activities.

For the periods of abstention, INPS grants the employee an indemnity equal to 50% of the salary.

The leave can only be taken in cases where the work duties cannot be carried out in a “smart working” mode and as an alternative to the other cohabiting parent, or even non-cohabiting parents in the case of a severely disabled child.

Furthermore, for parents with children aged between 14 and 16, the right to abstain from work has been stated, without, however, payment of the salary or allowances nor recognition of a notional contribution, with a prohibition on dismissal and the the right to retain a job.

The Court of Cassation, in ruling no. 701 of 18 January 2021, ruled on the employer’s power of dismissal, underlining that it is limited if the employee has previously signed a trade union agreement asking to be moved to a less senior job in order to keep his job.

In the case at hand, a worker was dismissed following the outcome of a mobility procedure under Law no. 223/1991. In particular, the worker – classified as a clerk – had been laid off under an extraordinary redundancy scheme due to the abolition of the function to which he was assigned, and had subsequently manifested his willingness to carry out tasks at a lower level, even with a reduction in the salary received.

This willingness was rejected by the employer, who started the mobility procedure for 15 employees and then concluded the trade union agreement to define its criteria. Finally, the employee was dismissed, with effects deferred to the end of the redundancy period.

The employee’s appeal against his dismissal was rejected by the first two instance courts, which held that the employee’s willingness to perform lower duties did not give rise to an obligation on the part of the employer to accept the employee’s request, rather only to the possibility of reaching an agreement.

The Court of Cassation, after receiving the employee’s appeal, noted that a clause in the trade union agreement signed with the employer established – in application of paragraph 11 of Article 4 of Italian Law no. 223/1991 – that “agreements concluded in the course of the procedures referred to in this Article, which provide for the total or partial re-employment of workers deemed to be redundant, may establish […] the assignment thereto of duties other than those performed”.

Therefore, the clause in the agreement set out the possibility for redundant employees to ask to be transferred to lower jobs and qualifications in order to avoid their dismissal. According to the Court of Cassation, the rationale of the rule referred to in the trade union agreement imposes a mandatory constraint on the employer, being this on the one hand a remedy to avoid dismissal and, on the other hand, a non-binding derogation for employees, who might refuse their demotion.

In fact, what prevails is “the interest of the employee in maintaining his job”: in this sense, the Court of Cassation also observes that trade union agreements that establish the criteria for choosing the employees to be laid off under a mobility scheme “do not belong to the category of normative collective agreements, so that they directly affect not the position of the employee, rather that of the employer, who must apply the agreed criteria in choosing the employees to be laid off under a mobility scheme“.

Therefore, the agreement is binding, for it is designed to protect the general interest and to safeguard employment levels.

Hence, the Court of Cassation upholds the worker’s appeal, concluding that the primary interest protected by Article 4, paragraph 11 of Italian Law no. 223/1991 is job preservation, rather than the stability of contractual economic conditions.

Source: Sintesi

With provision no. 60353 of 3 March 2021, The Inland Revenue provided operating procedures by which workers, employees and self-employed, beneficiaries of the special regime for repatriates, may opt for the extension of the tax benefit, under Article 1, paragraph 50, of Law 178 of December 30, 2020 (the “ 2021 Budget Law“), for an additional five years.

Regulatory framework

Article 1, paragraph 50, of the 2021 Budget Law – supplementing article 5, of Decree-Law no. 34/2019 – provided for the possibility for repatriate workers to opt for the extension of the tax benefit for an additional five tax periods. For the extension duration, employment (or similar) and self-employment income will be subject to reduced taxation, as we will see more fully below.

This option is permitted, from 1 January 2021 to workers who are already enrolled in the Registry of Italians resident abroad (AIRE), or have been citizens of European Union Member States. They must (i) have transferred their tax residence to Italy before 30 April 2019 and (ii) as of 31 December 2019 be beneficiaries of the special tax regime provided for by Article 16 of Legislative Decree no. 147/2015 for repatriated workers.

Under the above provision, the possibility of benefiting from the favourable tax regime is open to workers who

• have at least one minor or dependent child, including those in pre-adoptive foster care, or
• become owners of at least one residential property unit in Italy, after their transfer to Italy or during the 12 months preceding the transfer of their tax residence in Italy. The regulation specifies that the purchase is relevant when it is completed directly by the worker or spouse, cohabiting partner or children. This includes joint-owned property.

Employment (or similar) or self-employment income produced in Italy will be taxable only for 50 per cent of its amount. The taxability is further reduced to 10 per cent if the worker has at least three minor or dependent children.

The option, without prejudice to compliance with the above subjective requirements, may be exercised on condition that the worker pays:

• 10 per cent of the employment (or similar) or self-employment income produced in Italy and subject to the favourable tax regime received in the tax period before the period during which the option is exercised. This is without prejudice to the fact that, at the time of (formal) exercise of the option, the worker concerned must (a) have at least one minor child, including those in pre-adoptive foster care, or (b) have become the owner of at least one residential property unit in Italy after the residence transfer or during the preceding 12 months, or become owner within 18 months from the option exercise date;
• 5 per cent of employment (or similar) or self-employment income produced in Italy and subject to the special tax regime relating to the tax period before that in which the option is exercised. This is the case if, when exercising the option, the worker has at least three minor children, including those in pre-adoptive foster care, and becomes (or has already become) the owner of at least one Italian residential property, after the residence transfer for tax purposes or in the preceding 12 months, or they become owner within 18 months from the option is exercised date (the property ownership may be acquired under the procedures outlined in letter b) above).

The 2021 Budget Law required procedures for exercising the option be subject to a provision of the Inland Revenue, issued on 3 March.

Worker obligations and the withholding agent

Under the 2021 Budget Law, the provision describes the fulfilments that must be carried out by the worker (the employee) and the withholding agent.

A worker who meets the requirements for exercising the option must pay the amount referred to in the previous paragraph:

• using the F24 tax form, without the possibility of compensation provided for by article 17 of Legislative Decree no. 9 July 1997, no. 241. The Inland Revenue specifies that, with a subsequent resolution, the tax code to be inserted during payment will be established, and the instructions for completing the F24 tax form will be provided;
• by June 30 of the year following the end of the first period of the benefit’s use. Those for whom the period ended on 31 December 2020 must make the payment within 180 days of the measure’s publication (i.e. by 30 August 2021).

Employees who intend to benefit from the extension of the favourable regime must inform their employer that they have exercised the option by submitting a signed application containing:

• name, surname and date of birth;
• tax code
• statement that the residence was transferred to Italy before 30 April 2019, under article 2, paragraph 2, of the Consolidated Law on Income Tax;
• statement of the permanent Italian residence on the application date;
• a commitment to promptly communicate any change in residence or domicile, relevant to the benefit application by the employer;
• identification data of the residential property unit including joint-owned property, purchased directly by the employee or spouse, cohabiting partner or children, and the purchase date, or a commitment to communicate such data within 18 months from the option exercise date, if the employee becomes the owner within this last term;
• the number and date of birth of the minor children, including those in pre-adoptive foster care, on the date the payment is made;
• the year of first use of the special regime for repatriate workers;
• the employment and self-employment income produced in Italy under the benefit referred to in Article 16 of Legislative Decree no. 147/2015, related to the tax period prior to that of the option exercise;
• the details of the payment made under the procedures set out in the Inland Revenue provision.

Following the extension of the favourable regime made by the employee, the employer will operate the withholding taxes on the lower amounts and taxable values paid from the wage period following the receipt of the application signed by the employee.

At the end of the year or the employment relationship termination, the employer will make a settlement between the withholdings made and the tax due on the remuneration, reduced under the tax benefit for which the “repatriate” employee is a beneficiary, paid from 1 January of the reference year.

The Constitutional Court, with its ruling no. 59 filed on 1 April 2021, declared unconstitutional art. 18, paragraph 7, second sentence of Italian Law 300/1970 (Workers’ Statute), as amended by art. 1, paragraph 42, letter b) of Law 92/2012 (Fornero Law), since it is detrimental to the principle of equality under art. 3 of the Constitution.

Facts of the case

By its 7 February 2020 order, the Court of Ravenna, acting as employment tribunal, raised a question of constitutional legitimacy of art. 18, paragraph 7, second sentence of Italian Law 300/1970 in the “part in which it states that, if the judge ascertains the manifest lack of the fact underlying a dismissal for justified objective reasons, “may” and not “must” apply the remedy referred to in paragraph 4 of art. 18 (reinstatement)”.

According to the Court of Ravenna, the optional nature of the reinstatement of a worker unlawfully dismissed for justified objective reason violates the principle of equality (art. 3 of the constitution.) as “(…) it would result in an arbitrary inequality in treatment between completely identical situations, i.e. the dismissal for just cause and dismissal for justified objective reason of which groundlessness is established in Court.”

In the Court’s opinion, the Constitutional Court should restore equal treatment between the two types of dismissal regarding mandatory reinstatement. According to the Court of Ravenna, even in the case of dismissal based on financial grounds, the reinstatement should be mandatory once the manifest lack of the fact is established, and it should not leave the decision to judicial discretion.

The Constitutional Court’s ruling

The Constitutional Court, adhering to the Court of Ravenna thesis, states that the “merely optional nature of reinstatement reveals a conflict within the system outlined by Law 92/2012 and violates the principle of equality.”

By legislature conscious choice, the system assigns importance to the common assumption of the lack of the fact and connects the applicability of the reinstatement remedy to this assumption. This reveals that “the optional nature of the reinstatement remedy for dismissals based on financial grounds is conflicting and harmful to the principle of equality, in the face of the inconsistency of the alleged justification and the occurrence of a more serious fault than the lack of the fact.”

The Constitutional Court quoted majority case law on the subject that recognises the discretionary power of the judge to deny reinstatement in the case of manifest lack of the fact at the base of the dismissal for objective justified reason if “the reinstatement remedy is, at the time of adoption of the judicial measure, substantially incompatible with the organisational structure” of the company.

The Constitutional Court’s view was that “it is manifestly unreasonable to link the major consequences that impact the alternative between a more incisive reinstatement remedy or a mere indemnity, to contingent factors or factors determined by the choices of the person responsible for the offence (the entrepreneur).”

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Based on the above, the Court declared art. 18, paragraph 7, second sentence of Italian Law 300/70, as amended by the Fornero Reform, unconstitutional in the part where the judge is required to ascertain the manifest lack of the fact underlying the dismissal based on financial grounds, “may also apply” – instead of “also applied” – reinstatement remedy.

With circular letter no. 56 of April 12, 2021, INPS has provided the first clarifications regarding the exemption from contributions for employers who hire employees under the age of 36 with an open-ended term employment contract or change from a fixed term to an open-ended employment, according to the 2021 Budget Law provisions.

The amount of the exemption is equal to 100% of the social security contributions due by the employer, up to the maximum amount of € 6,000 per year and for a maximum of 36 months.

For companies with a production unit located in the regions of Abruzzo, Molise, Campania, Basilicata, Puglia, Sicily and Sardinia, the exemption is benefitable for a maximum of 48 months.

Furthermore, as a general requirement, employers must not only be compliant with the social contribution duties but they also must not have carried out, in the six months prior to the hiring and over the following nine months, individual dismissals for justified objective reasons and/or collective redundancies.

The Court of Cassation, in its order no. 1759 of 27 January 2021, clarified the double contribution to be paid by those who are, simultaneously, partners and directors of limited liability companies having a corporate purpose classifiable under the tertiary sector.

According to INPS practice and the prevailing case law since 2011, the managing partner must pay contributions twice: (i) to the INPS Retailer Management scheme, as partner, for the business income produced by the company and (ii) INPS Separate Management Scheme for the income deriving from any remuneration received for the director’s office.

Under its order, the Supreme Court did not deny the general principle of the managing partner double registration in the above INPS management schemes but assumed the partner’s registration in the Retail Management scheme can be excluded.

Judicial Appeal to the payment notice served by INPS

The Court of Appeal of Bologna upheld the judgement of the Court of first instance upholding the opposition brought by the chairman of the board of directors and partner of a limited liability company against an INPS payment notice. This tax payment concerned contributions due to the Retailer Management Scheme for the activity carried out by the chairman of the board of directors as a partner who, as a remunerated director, was registered under the INPS Separate Management scheme.

The Court of Appeal held that the double registration was admissible and stated that for INPS Retailer Management Scheme registration purposes, the activity carried out as a partner had to be different and distinct from that of director.

In this case, supervision, and the position of contact person for customers and suppliers or hiring an employee by the chairman of the board of directors, fell within the director’s duties.

INPS appealed to the Court of Cassation against the second instance ruling, relying on a single detailed ground of appeal.

Unlawfulness of INPS’s actions according to the Court of Cassation

The Supreme Court noted that Article 1 paragraph 208 of Law 662/1996 did not introduce any principle of alternation between registration in the Retailer Management Scheme and the Separate Management Scheme under Article 2, paragraph 26 of Italian Law 335/95.

The Court reiterated that, following the authentic interpretation of this rule made by Article 12, paragraph 11, of Decree Law 78/2010, converted into Law 122/2010, the legislator excluded the single scheme registration rule. A single scheme registration “is possible (and for the prevailing activity) only for self-employed work exercised by retailers, craftsmen and farmers.”

The Court pointed out that “for the case of business carried out by retailers, artisans or farmers simultaneously with the self-employed work for which enrolment in the separate social security management scheme is mandatory, as provided for by art. 2, paragraph 26 of Law 335/1995, the unification of contributions based on the prevalent activity parameter, as provided for by art. 1, paragraph 208 of Italian Law 662 of 1996.”

According to the Court of Cassation, the above principle of double contribution, referred to in the case law, has led to the INPS practice of automatically registering the managing partner of a limited liability company: (i) in the INPS Retailer Management Scheme, for the business income produced as partner and (ii) at the INPS Separate Management Scheme for the income deriving from the remuneration received for the director’s office.

In their order, the judges did not question the principle of double contribution, but rather the social security institution practice. The judges ruled that “the performance […] of the sole activity of director, without participating in the company’s material and executive activity” cannot be sufficient to justify the registration to the Retailer Management Scheme, and that “nor the status of partner of a joint stock company (with liability limited to the subscribed capital and with participation in the achievement of the corporate purpose exclusively through the contribution of such capital) per se, can mean the exercise of direct commercial activity in the company.”

Director’s duties include carrying out supervisory activities, being the contact person for customers and suppliers or hiring an employee. These are not a partner’s duties.

Based on these considerations, the Court of Cassation rejected INPS’s appeal, confirming the unlawfulness of the automatic registration of the managing partner in the Retailer Management Scheme since the social security institution had not proved the “direct participation in the company’s material and executive activity” to register the partner in the above Scheme.

Conclusions

With its order, the Supreme Court questioned the automatic registration of the managing partner of a limited liability company in the Retailer Management Scheme.  According to the Court of Cassation, it is INPS’s responsibility to demonstrate direct participation in the company’s material and executive activity that will generate the obligation to register the managing partner of a limited liability company in the Retailer Management Scheme.

This direct participation of the partner in the company’s activity can be demonstrated by the institute in cases where the company carries out business with a corporate purpose classifiable in the tertiary sector without the use of employees or contracted personnel.

Source: Agendadigitale.eu