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Employment Law Worldview

M5 or A303 – “unmanageable” public interest complainant runs out of road in UK Tribunal

Posted in Termination, Whistleblowing

It is rare that an employer wins its Tribunal case but still covers itself in so little glory as did Hampshire Police this month in its defence of a whistleblowing allegation brought by former policeman Mr Panayiotou.   

Mr Panayiotou was a chap with a strong, not to say obsessive, sense of right and wrong.  He regarded it as his duty not just to report alleged breaches of obligations by his colleagues, but then also to fight and fight until that complaint was investigated as he wished and led to the outcome he wished.  Any failure by Hampshire Police to do as he wanted led to a further complaint and then another, until he had on the go some fifty grievances of one sort or another and had become “a one-man industry …. taking up huge amounts of management time” for the Police and through his relentless pursuit of his chosen outcome, made himself effectively “unmanageable”.  In addition to this, found the Tribunal, due to his extended absence from work with mental health issues, there was “an exasperation that the Claimant had worked so little in the years he had been with [Hampshire Police] while seeking to be involved with family business while (mostly) being paid for (not) being a police officer”.    

In normal circumstances an employee who is so sick that he is approved for ill-health retirement, as here, and who at the same time renders himself unmanageable by his own deeds could well be fairly dismissed.  But that ignores the public interest disclosure context – how can it be that the good faith conduct of complaints, even if objectively beyond the point of common sense, is not connected with the making of the complaint in the first place?  The Tribunal considered the complaint to be just that, i.e. context only – “Our conclusion is that the public interest disclosure was the genesis of the matters of treatment about which the claimant complains, but only in the sense of if I had not taken the M5 and travelled on the A303 instead, I would not have had the car crash.”  Pursuing that analogy perhaps beyond breaking point, the making of the complaints was the decision to take the M5, but the way in which they were conducted was the standard of driving which led to the crash.    

Mr Panayiotou had behaved in a way “sufficient to try and to exhaust the patience of any organisation”, and it was that which was ultimately found to have been the basis for his dismissal, not the complaints themselves.  The Tribunal and EAT also took into account Mr Panayiotou’s mental health complaint, but although the Tribunal considered that his relentless campaigning for his version of justice could well have been caused or exacerbated by his mental health difficulties, that disability still did not allow him to behave in such a way with impunity.   He had clearly lost sight of the limits to the rights afforded to a whistleblower – not to be treated less favourably as a result, certainly, but also not to dictate the extent or even fact of any subsequent enquiry by the employer, nor the outcome nor the remedy.    

This decision was a far closer-run thing for Hampshire Police than it needed to be.  Perhaps exploiting the exclusion of police constables from the right to claim unfair dismissal, the Force treated Mr Panayiotou brusquely, exceptionally and, said the Tribunal, not entirely honestly.  On any view it would have been unfair if only he had been able to claim it.  However, while in other circumstances that would have been fertile ground for the drawing of an adverse inference against it, the evidence of just how painful Mr Panayiotou had been for the Police to deal with in connection with his disclosures was overwhelming, leaving no room for any other conclusion as to the motive for his dismissal.  

The Employment Appeal Tribunal therefore confirmed that where the manner in which a public interest disclosure is made or pursued effectively overtakes the fact of its making, then an employer is entitled to act against the employee as a result.   However, it should before doing so pay very careful heed to the unimproveable advice given by the EAT in Martin –v-Devonshires Solicitors in 2007, which said (key part underlined): “Of course such a line of argument is capable of abuse.  Employees who bring complaints often do so in ways that are, viewed objectively, unreasonable.  It would certainly be contrary to the policy of the anti-victimisation provisions if employers were able to take steps against employees simply because in making a complaint they had, say, used intemperate language or made inaccurate statements.  An employer who purports to object to “ordinary” unreasonable behaviour of that kind should be treated as objecting to the complaint itself.  We would expect Tribunals to be slow to recognise a distinction between the complaint and the way it is made, save in clear cases.  But the fact that the distinction may be illegitimately made in some cases does not mean that it is wrong in principle”.

French disconnection: have employees in France been banned from checking work email after 6pm?

Posted in Wage and Hour

It has been reported in the UK press that union lobbying in France has resulted in certain employees in the digital and consultancy sector being required to switch off their work phones and to avoid looking at work emails outside normal office hours, which are taken to be before 9am and after 6pm.

As this sounded a little irréaliste, shall we say, I checked the view of Jean-Marc Sainsard, our Employment Partner in our Paris office, and he confirmed that the UK press article had exaggerated matters somewhat.   There has been an addendum to one collective bargaining agreement to that effect which has not been signed into by a number of the employers’ federations which are party to that agreement.  It covers only a limited population of employees, a very far cry from Press suggestions.

More detail on the real changes in France will come soon, but the very question of banning access out-of-hours email is an interesting one.

Certainly in the UK, we have become very accustomed to being expected to be available at all times. Whilst 24/7 accessibility used to be a ‘value added’ for key client pitches, it has now become the norm for most City professionals.  There is little more irritating when you are trying to close a deal or deliver some documents, etc. than to get to something past 6 and find that the other side has just home and cannot be reached.  All the same, part of you still envies that degree of self-discipline and the almost certain knowledge that their work: life balance is vastly healthier than your own.

But would the requirement to switch off at 6pm actually help create a better work/life balance for UK employees?

For a start, this may generate greater pressure on employees to achieve the same amount of work in a strict 9 to 6 day. Is it actually better for employees to be told that they cannot work after 6pm, if this means they end up working through lunch every day to get their work finished?

Such a change could also have a disproportionate impact on working parents with childcare responsibilities. Employees who have to leave at 5pm on the dot to collect children from nursery may often finish off emails and other work matters later on that evening, perhaps when their children are in bed. In that case, to be prevented from working in the evening is to deny a great deal of flexibility that current technology has provided, and could put working parents at a disadvantage.

So even if it is right that some employees in France are required to switch off at 6pm, we can’t see that happening any time soon in the UK.  Any such move here would be bound to go the same way as the hours and rest-break provisions of the Working Time Regulations – unimpeachable in their intentions, interesting in abstract and substantially ignored in practice.

If you would like more information on the French developments in this area, please contact Jean-Marc Sainsard.

US H-1B Visas: Another Year; Another Lottery

Posted in Immigration

The United States Citizenship and Immigration Services (USCIS) announced today that it received about 172,500 H-1B petitions during the FY-2015 filing period which began April 1, including H-1B petitions filed for the advanced degree exemption.  This represents a 72% increase from the 124,000 H-1B petitions received last year.

The agency also announced it has completed a computer-generated random selection process, or lottery, to select enough petitions to meet the 65,000 general-category quota (or “cap”) and 20,000 cap under the advanced degree exemption.

In actuality, the agency ran two lotteries.  First, to select cases to fill the cap exemption for 20,000 holders of U.S. advanced degrees.   Once the advanced-degree lottery was completed, USCIS rolled the remaining cases – approximately 152,500 – into a second lottery to select enough cases to fill the standard H-1B quota of 65,000.

Based on these USCIS figures, cases had roughly a 42% chance of being chosen in the standard cap lottery – a significant drop from last year’s 62%.

Keep in mind, the USCIS will continue to accept and process petitions filed to extend the amount of time current H-1B workers may remain in the United States, change the terms of H-1B employment, allow current H-1B workers to change employers, and allow current H-1B workers to work concurrently in a second H-1B position.

As of April 10th, the USCIS began issuing filing receipt notices for premium processing for H-1B cap cases.   We expect this notice period to take at least one week.  At this time, it is unknown when USCIS will commence issuance of filing receipts for cases not filed with premium processing.

Squire Sanders will notify clients who filed a cap-based H-1B petition if their case was selected for processing or not as soon as we receive notification from the USCIS if their individual case was accepted or rejected.    Until then, we are keeping our H-1B files and fingers crossed.

New UK tax rules on dual/split contracts

Posted in Contracts, Tax

From 5 April 2014 HMRC intends to target contrived arrangements which create “artificial divisions between the duties of a UK employment and an employment overseas in order to obtain a tax advantage”. The new legislation is expected to bring in £245m over the next 4 years. It remains unclear why such new legislation is even needed (particularly in an era of purported tax simplification) as there are already provisions in ITEPA to prevent any artificiality. There is a real danger that these rules will hit genuine division of contracts.  

Non-doms will no longer be able to utilise the remittance basis for “dual contracts” to keep any non UK earnings outside the net of UK tax (once they have been here for more than 3 years- see comments below on Overseas Workday Relief).    

The new rules apply where:   

a)         the taxpayer has both a UK and a foreign employment;  

b)         the UK employer and foreign employer are ‘associated’;  

c)         the UK employment and foreign employment are ‘related’; (broadly an individual would not hold one role without the other/the two roles will cease together/ are dependent on each other/ they reference each other in the terms of employment/ involve the same type of duties/ the same clients, etc.); and  

d)         the foreign rate of tax on the foreign income is less than 65%  (previously 75%) of the UK’s 45% tax rate, i.e. taxed at less than 29.25%.  

The circumstances making employers associated and employments related are widely defined.  

Where all four conditions are met the foreign income (including employment-related securities) will be subject to tax in the UK as it arises, with relief for any foreign tax deducted at source.  

The new rules will not apply where:  

(a)        there is a nominal directorship and the individual (including associates) owns less than 5% of the co ordinary share capital;  

(b)        dual roles are held for regulatory/legal purposes;  

(c)        employment income was “earned” before 2014/15;  

(d)        overseas Workday Relief is available; and  

(e)        there is no tax avoidance motive.  

Going forward, perhaps employers will simply tax-equalise more commonly or only second employees to the UK while they qualify for Overseas Workday Relief.   

It seems that the rules will not impose a PAYE burden for the overseas element on the employer.  Instead the employee will have to complete a self-assessment return.   

I wonder how this all fits in with EU free movement of workers.  Mr Chancellor Osborne is obviously happy that it respects such principles, though I suspect his eye is mostly on the £245m.

Feeling Down Under – when the doctor’s “sick note” won’t cut it

Posted in Health & Safety

The management of long term sickness absence cases can be difficult.  This is particularly so if an employee is reluctant to provide information about his condition and prognosis. 

This is often amplified by the fact that in keeping with the Australian Medical Association guidelines, many medical certificates only state that the employee is unfit to work for a given period. When subsequent medical certificates are provided in the same form it becomes very difficult for an employer to deduce anything useful regarding the expected overall duration of the absence and whether indeed the employee will ever be able to return to work at all. So can an employer demand further medical information?

In Australian and International Pilots Association (AIPA) v Qantas Airways Limited (2014) the Federal Court recently ruled that employers may have an implied right to require employees to provide more detailed medical reports.

The AIPA brought a claim against Qantas on behalf of a pilot who had been absent for work for over six months. During his absence, the pilot submitted periodic medical certificates to Qantas, each indicating that he was suffering from clinical depression and initially stating that he would be unfit for work for three months. This was subsequently extended. In response, Qantas requested that the pilot provide a written medical report regarding:

  • his medical prognosis;
  • the expected duration of his absence; and
  • the likelihood of his being able to perform the requirements of his role as and when he returned. 

The AIPA objected to the request, claiming that the pilot had complied with the requirements under the Enterprise Agreement by producing medical certificates as evidence of his then current unfitness for duty. The AIPA asserted that there was no lawful basis for Qantas to request further evidence.

In response, Qantas advised the pilot that if he failed to provide the information requested he could face disciplinary action. 

The AIPA claimed that, in making that threat, Qantas had taken adverse action against the pilot for his exercising a workplace right to take sick leave on the submission of certificates evidencing his unfitness for duty at that time, which the certificates he had submitted clearly did.

The Federal Court disagreed and found that Qantas’ request for further information had not interfered with the pilot’s rights under the applicable Enterprise Agreement – Qantas had never challenged his entitlement to take sick leave. The Court considered that it would be ‘quite unrealistic’ to expect Qantas to have no right or ability to require a sick employee to provide it with the sort of information it had requested.

After all, the information provided to Qantas in the medical certificate told Qantas nothing about how it should plan for the pilot’s absence or his return to work beyond the period stated in the medical certificates, which could well be (and had been) extended or renewed. The information requested was reasonably necessary to allow Qantas to comply with its obligations regarding rostering and also its duties to ensure the health and safety of the pilot and his colleagues (both on his return to work and during his absence). It was therefore necessary to imply a right within the employment contract for Qantas to require the employee to provide further medical information.

UK High Court rewrites ineffective covenant and grants 12 month non-competition restraint

Posted in Uncategorized

In a somewhat surprising application of the rules of construction, the High Court has in Prophet plc v Huggett [2014] EWHC 615 (Ch) upheld a restraint preventing a salesman from selling software in the fresh produce sector for a period of 12 months. 

Mr Huggett was engaged by his former employer, Prophet, in 2012 following its decision to send its existing UK Sales Director to the US.   He was therefore its most senior sales person in the UK and had full knowledge of and access to all of its confidential information about its customers and leads, its charging structure, its weekly sales reports and the dates on which its customers’ annual contracts were up for renewal. 

In December 2013, Mr Huggett resigned. After some initial “coyness” as to the identity and nature of his new employer or, as the Judge put it “resorting not only to concealment but blatant lies until the truth was dragged out of him,” Mr Huggett eventually revealed he was going to work for another software developer, K3, which also sold a software product for the fresh produce market.

Having established Mr Huggett’s intention, Prophet agreed in writing to release him early from his 12 weeks’ notice.  The next working day, Prophet’s solicitors wrote requesting Mr Huggett’s undertaking that he would not work for K3 for 12 months on the basis of the non-competition clause in his contract.  The clause contained the following proviso:  “the restriction shall only operate to prevent the Employee from being so engaged, employed, concerned or interested in any area and in connection with any products in or on, which he was involved whilst employed hereunder.” 

Construction   

The first hurdle for Prophet was to persuade the Court that the above clause when properly construed prevented Mr Huggett from working for K3.  The difficulty for Prophet here was that what the clause actually says is that that Mr Huggett cannot work with Prophet’s own products.  At K3 Mr Hugget would not be working with Prophet’s products, he would be working with K3’s equivalent products – thus the clause read at face value was, as the Judge put it, totally pointless.   This cannot have been what the parties intended. “That something had gone wrong in the drafting was therefore clear.”

The Judge in this case felt able to overcome this difficulty for Prophet.  He did this by asking each counsel to provide language to reflect what a reasonable person would have understood the parties to have intended when entering into the contract (the “true meaning”) and ultimately using his own formula for achieving this by reading in the words “or similar thereto” into the clause so that K3 products were then covered. 

The concept of omitting words from a clause using the “blue pencil test,” is a familiar one.  In cases such as Francotyp Ltd v Whitehead, the Court has been able to sever words from a clause where doing so does not affect the rest of the wording of the clause or otherwise distort the parties bargain.   It is far more unusual to find a Judge who is willing to read words in to a clause to find its true meaning.   The Judge felt able to do so on the basis that the words added represented the minimum change necessary to produce a commercially sensible result and were the probable formula the parties would have adopted for this purpose. 

This is of course only a first instance decision, but it does seem that the Judge was surprisingly willing to assist Prophet.  He was doubtless influenced by the fact that he found Mr Huggett to be a thoroughly unreliable witness. Another Judge, another day and a more credible Defendant and Prophet could equally well have found itself to fallen foul of another well-known rule of construction – any ambiguity in drafting will be construed against the party seeking to rely on it.  

12 months not too long

Having overcome this hurdle of construction, the Judge went on to decide with relative ease that Prophet had a legitimate interest in protecting its confidential information and that the clause was no more than was reasonable to protect that interest.

The renewal timescale of Prophet’s contracts with clients was a particularly important factor in persuading the Judge that the confidential information which Mr Huggett had access to remained fresh for a period of up to 12 months after his employment ended and 12 months was not therefore an excessive period for Prophet to seek to restrain him.

Exercise of discretion – modest risk of damage to Prophet no barrier to exercise of discretion

Finally, the Judge went on to consider whether it was appropriate to exercise his discretion to grant an injunction.   Commonly in this type of case, the employer is looking for an interim injunction to preserve the position for a short period of time pending a speedy trial in which case the Court will apply the principles in the well-known American Cyanimide case, i.e. whether there is a serious issue to be tried.   Here, however, Mr Huggett had given undertakings to Prophet pending a speedy trial, so the Judge was considering whether a final order should be made enforcing the clause for its full 12 month duration.  This involved his considering factors such as the potential damage and risk to Prophet, the adequacy of damages as a remedy, the circumstances of the employment terminating and the hardship to Mr Huggett if the injunction were to be granted.

Whilst the Judge was satisfied that the risk of damage to Prophet if the injunction was not granted was “real and not fanciful”, he didnot think that the risk “greatly exceeded that low threshold”.   He considered that Prophet’s account of the risk of damage if the injunction were not granted was “over-alarmist to a considerable degree.”  Despite this and the “odour of bad faith” emanating from Prophet’s first releasing Huggett early to go to K3 and then seeking to restrain him from doing so, the Judge was still minded to grant the order preventing Mr Huggett from working on fresh produce products for K3 for the balance of the 12 month period. 

Lessons learned

Were it not for the fact that Mr Huggett’s standards of integrity would make the average second hand car salesman blush, I suspect that Prophet would not have been so lucky.  In exercising the discretion, the Judge expressly took into account factors such as Mr Huggett’s “thoroughly unreliable” performance as a witness and the possibility (supported by evidence of his having downloaded at least one sales report to an external hard drive before handing back his laptop) of his having ongoing access to Prophet’s confidential information.  

There are two morals behind this tale.  The first is that where a party comes across as an unreliable and untruthful witness, the Court is likely to decide against it on those issues which could go either way.

The second is that where an employer is aware that one of its employees is to leave to join a competitor and asks to be released early, it is advisable not to agree unconditionally to that request.   If the employer is prepared to release early, it should make it clear that it still expects the employee to abide by his non-compete restraint. Prophet’s failure to do this gave Mr Huggett the ammunition to argue that Prophet had not come to the court “with clean hands”, which the Court takes into account when exercising its discretion whether to grant an injunction. Fortunately for Prophet, the judge decided that their hands were cleaner than Mr Huggett’s.

NLRB Gives the OK for US College Athletes to Unionize

Posted in Employment Relations

In January, Northwestern University football players petitioned the NLRB to be recognized as a union.  (Previously published here).  Yesterday, to the surprise of many, the National Labor Relations Board (NLRB) granted the unprecedented request, finding that grant-in-aid scholarship football players are “employees” within the meaning of the federal law and are therefore eligible to unionize.

The decision, issued by NLRB regional director Peter Sung Ohr, placed great significance on Northwestern’s financial benefit from the football program.  Ohr noted that the Northwestern football team generated total revenues of $235 million between 2003 and 2012 and $30.1 million in revenue in 2013.  Another factor given considerable weight was the number of hours invested by the student-athletes, as well as the amount of control that the coaches have over the daily lives of the scholarship players.  However, the 24 page decision can be boiled down to the ultimate conclusion:  “Players receiving scholarships to perform football-related services for the Employer under a contract for hire in return for compensation are subject to the Employer’s control and are therefore employees within the meaning of the Act.”

Northwestern is, of course, “disappointed” with the ruling.  In a written statement released by the university, the school’s vice president for university relations stated that, “While we respect the NLRB process and the regional director’s opinion, we disagree with it.”  The statement went on to say that the school will appeal the decision to the full NLRB in Washington D.C.  From there, the matter will likely go before the judicial system, and possibly even the Supreme Court.

Although Wednesday’s decision is just the beginning of what is certain to be a drawn out fight, the ruling very clearly has the potential to completely change the face of college sports.

Squire Sanders will closely follow developments pertaining to this issue and will provide updates as the matter progresses.

Interagency Snafu Delaying Issuance of Tax ID Numbers in Russia

Posted in Immigration, Tax

This is an article from the Moscow Times on 14 March 2014, quoting Squire Sanders’ Anastasia Melnikov, Moscow.  It is a heads-up to any employer proposing to apply for a work permit for Russia.

 

A lack of coordination between two government agencies concerning taxpayer identification numbers is creating difficulties for some foreigners trying to get a Russian work permit.

Since the start of this year, all foreigners applying for a work permit in Russia are obliged to obtain a taxpayer identification number from the Federal Tax Service.  Earlier it was only required for those in the category of highly qualified professionals, who handled the paperwork to get the ID number.

Under the new rules, the Federal Migration Service submits information about those applying for a work permit to the tax authority, which issues the taxpayer ID number within 30 days and notifies the employer.

This was meant to be an interaction between agencies; foreign citizens were not supposed to be involved in the process,” said Alexei Filipenkov, the head of Visa Delight human resources consultancy. “But practice shows that sometimes immigration authorities put the paperwork burden on individuals, telling them to personally apply for the taxpayer ID,” he said, adding that this has resulted in long lines at the tax offices.

But those standing in line are finding themselves directed back to the immigration authorities, which, in turn, may refuse a work permit on the grounds that the taxpayer ID has not been provided, Filipenkov said.

Anastasiya Melnikova, an associate at Squire Sanders international law firm, said, “Our practice is to file the forms required to get the taxpayer ID beforehand and submit them along with other documents [for the work permit] to the migration service.”

The Association of European Businesses told The Moscow Times that some of its member companies did have to fill out additional forms when applying for a work permit.

We understood from an answer the migration service gave to our inquiry [regarding the situation with work permits], that giving them individual applications for tax ID numbers should speed up the process, although these forms are meant for use between the authorities,” a spokesman for the Association said. “However, we believe this is a temporary measure and soon the system will be better coordinated and will not involve individual applicants”.

Still, consultants recommend filing all necessary forms to the immigration authorities well in advance of applying for a new work permit.

Otherwise, you will not be able to prove anything,” Filipenkov said. “The authorities may excuse themselves on the grounds that their database was not working or give other reasons. But for a foreigner the result may be the loss of a desired position because for a company the risks of employing someone without a permit outweigh any possible benefits.”

According to the Federal Migration Service, about 3 million foreigners were employed in Russia last year, up from more than 2.6 million a year earlier. More than 1.2 million of them had a standard work permit and 1.5 million obtained a ”patent” — which is a work visa often issued to migrant workers and involves a one-time fee. The number of people getting work permits in the “qualified” and ”highly qualified” foreign personnel category in 2013 grew threefold to 155,000, from 55,000 in 2012.

Contact the Moscow Times author at a.panin@imedia.ru

New time periods for Works Council consultation in France

Posted in Union

A decree providing for new time periods for consultation with Work Councils in France has recently been published.

Consultation periods

Unless otherwise agreed between the employer and its Council, the latter has one month to render its opinion on any proposed measure or similar falling under its remit.  This time period starts upon communication to it by the employer of the relevant information and consultation material (or upon the employer disclosing this information in the database – see later). After this period any failure by the Work Council to deliver an opinion on those proposals is deemed to be a rejection of them, allowing the Company to start its project.  This is reinforcement of the obligation of the employer to allow a reasonable time for proper consultation with the relevant Works Council, but not ultimately to reach agreement with it.  Clearly it does not allow all active negotiations to be ended after a month regardless of their position at that time, but it does narrow the Works Council’s scope for delaying matters by not responding to proposals in a timely manner.

So as to build in time where the proposal is more complex or technical and external input may be required, this one month time period is extended to:

-       two months when an expert is appointed ;

-       three months when any Health and Safety Committee is consulted;

-       four months when a coordination body of the Health and Safety Committee is set up.

Despite the decree, certain questions raised by the law remain unsolved, for example, the application of these time periods to companies with both a Central Works Council and Local Works Councils remain unclear.

Economic and social database

The decree also covers the database which companies with more than 50 employees should set up for their employees’ representatives. These provisions will come into force on June 14th, 2014 for companies with more than 300 employees and the same day next year for those with less than 300 employees.  The idea is that this database will contain the information which forms the basis of consultation with the Works Council about the strategic plans of the employer and the detail underneath them, e.g. in relation to professional skills and development, work organisation and the use of sub-contractors, temporary workers and interns.  

The database will need to include also some relatively detailed financial information of possible relevance in collective negotiations – turnover, profit, equity and debt, payments by way of dividends, state aid, cash flows between group companies and tax credits, etc.  So far as practicable the data should cover the current financial year, the two preceding years and the three following, so the burden on the employer is substantial.  In addition, the contents of the database must be updated periodically and where particular information is not available, the employer must explain why not.

Access to the database should be available to the senior employee representatives, but although the law imposes a duty of confidentiality upon them in relation to the proprietary data of the employer, this may be little comfort to it if sensitive information is “inadvertently” leaked in the course of negotiations or a trade dispute.

Italian Employment Law Made Simpler for Employers

Posted in Employment Policies

To assist its readers with employees in Italy employmentlawworldview.com has obtained the kind permission of Squire Sanders “best friend” firm http://www.vtcs.it to reprint its newsletter on recent reforms to Italian employment law.

New Reform of Italian Employment Law: Enchancement of Employment and Simplification for Companies

Decree No. 34/2014 – enacted this morning- enters into force today 21st March 2014 with immediate effect. However, its provisions will lose effect if they are not enacted in a new Law by the Parliament within 60 days.

Fixed-Term Contracts (“Contratti a tempo determinato“)

Decree no. 34/2014 significantly reforms fixed term contracts.
a) Originally, fixed-term contracts could be entered into only (i) if the employer has specific temporary technical, organization, production or substitutions needs or (ii) without any need for such reasons for the first employment contract ever with an employee, for a maximum duration of 12 months. As of today, any candidate may be hired on a fixed-term basis, without any need for any temporary reason, for an overall maximum duration of 36 months, inclusive of any extensions of the original contract.

b) Originally, it was highly questionable whether the duration of a fixed-term contract could be extended more than once. According to Decree 34/2014, extensions are allowed up to a maximum of 8 times, within the overall duration of 36 months. This, provided that the employee is assigned to the same duties for the overall duration.

Temporary Agency Work (“Somministrazione a tempo determinato”)

The provisions mentioned above concerning fixed-term contracts apply also to fixed-term employment contracts entered into in the framework of temporary agency work.

Apprenticeships (“Apprendistato“)

Apprenticeship is a contract that combines employment and training.  It entails tax and social security advantages for the employer in terms of reduced costs. The major innovations introduces by Decree 34/2014 are as follows:

(i)  employer shall pay 100% of worked hours, but is allowed to remunerate no less than 35% of the time dedicated to training;

(ii)  attending public course is no longer mandatory;

(iii)  it is no longer required that the “Individual Training Plan” is in writing, while only the contract and the probationary period undertaking (if any) shall be in writing.

Certification of Compliance with Social Security and Insurance Payments  (“Regolarità contributiva” )

Decree No. 34/2014 provides for the introduction of IT methods for the access to data concerning employers’ compliance with their obligations to pay social security and insurance contributions. These will in most cases avoid the need for paper documents requested to and issued by the relevant Social Security Agency.