By its Circular No 46 of 17 May 2023, the Italian National Social Security Entity (Istituto nazionale della previdenza sociale, ‘INPS’) provided some important clarification on the liquidator’s information and contribution obligations on the termination of permanent employment relationships in the cases governed by Italian Legislative Decree No 14/2019, amended by Italian Legislative Decree No 83/2022 (implementation of EU Directive 2019/1023), containing the ‘Business Crisis and Insolvency Code’ (Codice della crisi di impresa e dell’insolvenza, ‘CCII’), which entered into force on 15 July 2022.
In particular, in its circular the INPS highlights the regulatory changes introduced by the new Italian Business Crisis and Insolvency Code and provides operational guidelines for the management of the New Social Insurance for Employment (Nuova Assicurazione Sociale per l’Impiego, ‘NASpI‘) contribution due for interruptions of permanent employment relationships in the light of the provisions of the CCII.
Reference legislation
As a preliminary remark, it should be noted that the Business Crisis and Insolvency Code, as regulated by Italian Legislative Decree No 14/2019, includes specific provisions on the management of employment relationships, in particular in Articles 189 and 376.
In particular, Article 376 of the aforementioned Italian Legislative Decree No 14/2019, by amending Article 2119 of the Italian Civil Code, states that ‘The compulsory administrative liquidation of the undertaking does not constitute just cause for termination of the contract. The effects of a compulsory winding-up by the court on employment relations are governed by the crisis and insolvency code’.
In this respect, according to Article 189, the initiation of compulsory winding-up proceedings against the employer does not constitute grounds for dismissal.
However, the liquidator must give notice of dismissal when the conditions and reasons indicated in the same Article 189 are met, i.e. ‘if the continuation or transfer of the company or a branch thereof is not possible, or in any event there are clear economic reasons inherent in the organisation of the work’.
Therefore, employment relationships in place at the date of the declaratory judgment remain suspended until the employees are given notice of the liquidator’s takeover or withdrawal, which takes effect from the date of the start of the compulsory winding-up proceedings.
The suspension of employment relationships is intended to allow the liquidator to assess the possibility of continuation of the business activity (directly or indirectly) and continues until the liquidator takes over the employment relationship or orders the dismissal of the employee or in cases where the latter does not resign.
That said, the ‘suspended’ relationships are in any event considered to be terminated by law four months after the date of the start of the compulsory winding-up proceedings.
The suspension may be extended for a maximum of eight months if the conditions set out in Article 189, paragraph 4 of the CCII are met, i.e. by order of the bankruptcy Judge, following a petition that may be submitted by the liquidator, by the director of the Local Labour Inspectorate of the area where the compulsory winding-up proceedings have been started or, finally, following a petition submitted by individual workers. In the latter case, the extension takes effect only in respect of the applicant workers.
Finally, an employee’s resignation during the suspension period, which is understood to be resignation for just cause within the meaning of Article 2119 of the Italian Civil Code, takes effect from the date of the start of the compulsory winding-up proceedings, provided that the worker is not the beneficiary of wage guarantee payments (under Titles I and II of Italian Legislative Decree no. 148/2015), since, in that case, the resignation is not considered to be for just cause and will not have retroactive effect.
Carrying on the debtor’s business
With reference to employment relationships, Article 189, paragraph 9 of the Italian Business Crisis and Insolvency Code provides that while the liquidator carries on the debtor’s business in the compulsory winding-up, existing employment relationships continue, unless the liquidator suspends them or dismisses the employees under the applicable ordinary employment regulations.
Therefore, in the event of suspension, the above-mentioned provisions of Article 189 on withdrawal by the liquidator, termination of employment and resignation by the employee for just cause apply in so far as they are compatible.
Collective redundancies
In the case of collective redundancies, the employment relationships are terminated from the date on which the liquidator gives notice of the termination.
In this respect, the reference regulatory provisions do not change and remain those set out in Articles 4 and 24 of Italian Law No 223/1991. However, it is worth noting that the Italian Business Crisis and Insolvency Code sets out a specific simplified procedure for collective redundancies occurring during liquidation proceedings.
Moreover, in cases of collective redundancies, once the trade union agreement has been reached, or the procedure has been exhausted, the liquidator takes any consequent action under Article 4, paragraph 9 of Italian Law no 223/1991. Consequently, termination by operation of law (with effect from the date of the start of the compulsory winding-up proceedings) does not apply when the liquidator has commenced the collective redundancy procedure.
Finally, termination by operation of law at the end of the suspension period of four or eight months does not apply when collective redundancy procedures already started by the liquidator are pending.
The contribution obligation under the ‘redundancy ticket’ (ticket di licenziamento)
In the event of termination of employment described above, whether due to withdrawal by the liquidator, resignation of the employee during the period of suspension – if they fall within the cases considered for just cause – as well as termination by law at the expiry of the period of suspension of employment, the question arises as to whether or not it is necessary to pay the ‘redundancy ticket’ payment under Article 2, paragraphs 31 to 35 of Italian Law No 92/2012 as amended.
Article 2, paragraph 31 of Italian Law No 92/2012, which introduced the redundancy ticket, states that this contribution is always due on termination of a permanent employment relationship for reasons which, regardless of the contribution requirement, could, even potentially, give rise to the right to receive NASpI.
That said, given that Article 190 of Italian Legislative Decree No 14/2019, which governs the Italian Business Crisis and Insolvency Code, states that termination of employment under Article 189 of the same decree constitutes involuntary loss of employment and therefore gives rise to the right to NASpI, with its Circular No 46/2023 the INPS confirms that the obligation to pay the ticket exists for each type of termination referred to in the aforementioned Article 189 of Italian Legislative Decree No 14/2019.
However, in the cases of termination of employment provided for in Article 189 of Italian Legislative Decree No 14/2019, the amount of the NASpI ticket is admitted to the statement of liabilities as a claim prior to the start of the compulsory winding-up proceedings, and the liquidator cannot in fact proceed with the payment.
Therefore, the relevant UNIEMENS forms flows must in any case be sent within the month following the month in which the notice of termination of employment was given, while it will be the responsibility of the local competent INPS offices to manage recovery of the claim.
On the contrary, for employment terminations occurring during the carrying on of the debtor’s business in compulsory liquidation, the relevant claims are satisfied before distribution under Article 221, paragraph 1, letter a), and Article 6, letter d) of the Italian Business Crisis and Insolvency Code.