Recognition of exemptions for youth employment following the reclassification of a previous employment relationship under a permanent employment contract 

19 December 2023

In message no. 4178 of 24 November 2023, the Italian National Social Security Entity (Istituto nazionale della previdenza sociale, ‘INPS’) provided some clarification on when the contribution benefit for the recruitment of young people “Under 30”, introduced by Italian Law no. 205/2017 (2018 Budget Law), and “Under 36”, introduced on an experimental basis for 2021-2022 by Italian Law no. 178/2020 (2021 Budget Law), extended also for 2023 by Italian Law no. 197/2022 (2023 Budget Law) does not apply.  

INPS recalled that the exemption applies to the recruitment and conversion of fixed-term contracts to permanent contracts for individuals who, on the date of the first subsidised employment, are under 30 or under 36, and have not been employed on a permanent contract with the same or with another employer. 

In this message INPS has reiterated the clarification it has provided in its previous circulars on this contribution incentive (most recently circular no. 57/ 2023, relating to the exemption for youth employment referred to in the 2023 Budget Law). INPS has also recalled the provisions for the three-year exemption, set out by Italian Law no. 190/2014, included in the Italian Ministry of Labour and Social Policies’ Ruling no. 2/2016, which clarified that the above-mentioned contribution exemptions provided for the hiring of young people “Under 30” and “Under 36”, do not apply “if, following an inspection, a self-employment relationship, with or without a VAT number, or a para-subordinate relationship is reclassified as a permanent subordinate employment relationship”. 

In fact, as set out in the above-mentioned Ministry of Labour and Social Policies Ruling no. 2/2016, it is not possible to benefit from contribution relief if the permanent employment relationship has been established not voluntarily by the employer but following an inspection

The ministerial ruling is specifically intended to incentivise the voluntary recruitment of personnel by rewarding those employers that contribute to increased and stable employment with the exemption, consequently excluding employers that, conversely, break the law. 

Therefore, with the message in question, the INPS has again clarified that the contribution in question must be returned if the employer who has benefited from it has been subject to an inspection following which the “subsidised” employment relationship has resulted from a previous reclassified employment relationship.  

The position is not the same for an employer that benefits from contributions relief provided for the recruitment of young persons and that is different from the employer under the reclassified employment relationship. In this case, the employer is lawfully entitled to the contributions exemption since it can be presumed that the subsidised recruitment was in good faith, taking into account that at the time of the establishment of the employment relationship the employer was not aware of the previous reclassification of the relationship. 

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