Italy, a guide to contracts

Despite Italy is still up against the political and economic crisis, which makes the country less reliable to the eyes of foreign investors, there are still many foreign companies that consider Italy a place for business opportunities and where it  can be worth opening new branches.

Italy, is also notorious for its bureaucracy, rating among the most complex in the world, which may make a foreign company get lost in the meanders of all types of employment contracts .

Like in all other countries, a work contract implies guarantees, but risks as well, in particular for employers.

According to the new rules introduced by outgoing government Labor Minister Elsa Fornero, a foreign company interested in employing in Italy, must open an Italian branch office. The foreign company, this way, will be able to comply with the mandatory pension contribution, insurance, communication to institutions about the number  people hired.

The majority of companies establish SRLs (limited liability companies),  more simple company type compared to the SPAs ( joint-stock companies.)

The most evident result of the Fornero labor reform is, the boosting of youth employment through the apprenticeship contract . This type of contract implies some benefits for employers: this way access to employment should be improved.

Here is a short list of contract types:

APPRENTICESHIP CONTRACT: Through this kind of contract, companies provide young people with professional training  in order to achieve further levels of qualification, and make the apprentices more competitive on the labor market. On the other end, employers   pay lower salaries and social security, and benefit of several other incentives.

At the end of the training period , the employer can withdraw from the agreement, but , he is also supposed to convert 50% of apprenticeship contracts into permanent work contracts, or else he /she won't be allowed  to avail of apprenticeship contracts again.

PERMANENT CONTRACT: It is a written contract , with no pre-determined termination date. It specifies the tasks of the employee, labor schedule, wages etc. Not applicable to those under 15 of age. High social security wages,  around 33%, paid almost entirely by the employer.

TEMPORARY CONTRACT: It is a written contract with specified the termination date and tasks. It cannot be longer than 36 months, this working period can be extended one more time, with the same tasks,  and the employer can withdraw from the agreement on the termination date.

Wages for part-time employees are the same as those of permanent contract employees in the company .

High social security wages, paid almost entirely by the employer.

SUPPLY CONTRACT (dependent job) :It can be of two types , one signed by the work agency and the employee, and the other  by the work agency and the user. It can be a permanent or temporary contract.  It is a labor contract with a specific length pre-decided  by both, the employer and the employee.

Staff Supply enables clients of employment agencies to avail of the labor activity performed by workers holding employment agreements with employment agencies. Both clients and employment agencies are jointly liable for payment of employee wage and social security contributions and for compliance with workplace safety regulations in force.

Staff Supply contracts set down the rights and obligations of employment agencies as well as their clients, and can either be open-term or fixed-term contracts.

The first fixed term contract agreed upon an employment agency and the worker, if it does not exceed one year, may not specify the reasons which the labor has been requested for.

Technical, productive, organizational or replacement reasons may also be not specified in the contract.

According to the law, a worker with a fixed term contract may not work for the same employer more than 36 months, if the tasks established have never changed.

Therefore between the first fixed term contract and the following extensions, the contract may last at maximum for 3 years. Nevertheless, the national collective contracts may infringe this rule since it is only the limit which affects fixed term contracts and not supply contracts. As a result, over 36 months the employer may employ the same worker drawing up a supply contract.

JOB SHARING (dependent job): Written contract,  it provides a structured form  of part time contract, where two people share one job.  The contract specifies  the different tasks and wages of each employee.

The two employees  are not supposed to be substituted by a third one. If one of the two resigns or is fired, then the contract is considered terminated, each of the two employees are responsible for the whole work results o. High flexibility of working schedule that can be decided and modified in any moment by the two employees.

Self-employment- VAT Registration number.  It is not required a written contract.

Self-Employed people must register for VAT.   Social security contributions are paid entirely by the self-employee. High flexibility.

INTERMITTENT WORK CONTRACT:  It relates to a professional  activity performed on a discontinued or on intermittent basis It can be a temporary or permanent contract. It is an on-call work that permits a company to call in the worker  at  anytime.  Regardless of  the  professional  activity nature,  job on call can be performed by employees under 24 or those over  55 of age only.  The wages , for the effective working time, must be the same as those of another employee at the same level.

ANCILLARY LABOUR:  Ancillary occasional labor relates to a professional activity performed on a discontinued or intermittent basis by the same worker.

Contract payments do not have to exceed the following sum:

- 5.000 Euro yearly referring to the total number of purchasers

- 2.000 Euro yearly referring to a single purchaser, entrepreneur or professional.

Payment will be on vouchers, which will guarantee, in addition to the salary, the social tax for

Inps ( National Social Security Institute) and the social security cover for Inail ( National Institute for Insurance against Industrial Accidents.)

OCCASIONAL EMPLOYMENT: It is a short-term temporary contract which can be used only up to a maximum each year of 5,000 euro in total. It cannot be longer than 30 days with the same employer. High flexibility. It is not generally drawn up as a contract. The employer is not charged with contributions wages.

PROFESSIONAL APPRENTICESHIP CONTRACT: Dependent employment with open-contract, targeted to provide the apprentices with a professional qualification. This type of contract is for individuals between 18 and 29 of age. Social security wages are paid almost entirely by the employer.

PROJECT WORK: This kind of contract is related to specific projects and cannot imply repetitive tasks already mentioned in a similar contract between the same employee and the same employer. The contract must describe the sort of project, specifying the main activities and the final result supposed to be achieved.

The salary must not be less than the national wage salary. The 2/3 social security wages are paid by the employer  and1/3 by the employee.

Prof. Raffaele Fabozzi of Luiss University contributed to this article