The employment landscape in Italy is set for a significant shift with the introduction of Decree-Law No. 60 of May 7, 2024, commonly known as the “Cohesion Decree”. This new legislation provides substantial contribution relief for private employers aiming to invest in hiring young talent, facilitating their entry into the workforce. Starting from September 1, 2024, employers will have the opportunity to access specific incentives that will allow better hiring planning, thus reducing the overall personnel management costs.
>> READ LDP ARTICLES TO KEEP UP TO DATE WITH THE LATEST NEWS
Youth Bonus
At the heart of these incentives is the “Youth Bonus” outlined in Article 22 of the Cohesion Decree, which aims to facilitate the employment of young people under 35. This measure is not new but rather a continuation of annually extended incentives in recent years, which the 2024 Budget Law could not confirm due to a lack of financial resources.
Objective and Concept of Stable Youth Employment
Objective
The aforementioned article aims to increase stable youth employment. The benefit covers the hiring of non-managerial staff on permanent contracts or the conversion of fixed-term contracts to permanent ones. The benefit applies to the hiring of workers, employees, and middle managers, excluding executives.
Concept of Employment Stability
The concept of Employment Stability within the context of these incentives is based on two main aspects:
- Types of Eligible Employment Contracts: Eligible contracts include permanent contracts and the conversion of fixed-term contracts to permanent ones. The exemption does not apply to domestic work and apprenticeship contracts, nor to on-call permanent contracts due to their lack of stability.
- Worker’s Subjective Condition: The worker must never have been employed on a permanent contract. The exemption also applies to those previously employed on an apprenticeship contract not continued as a permanent contract.
Paragraph 2 of Article 22 specifies that the contribution exemption is for those who, on the date of the incentivized hiring, have not yet turned 35 (under 35), unlike previous versions of the exemption aimed at those under 36.
Employers Eligible for the Benefit
Private employers eligible for the contribution exemption include:
- Entrepreneurial entities
- Non-entrepreneurial entities (per Article 2082 of the Civil Code)
- Private companies, even with full or partial public participation
Public administrations are excluded from the benefit.
Temporal Scope and Measure of the Benefit
Eligible are the hirings and/or conversions carried out between September 1, 2024, and December 31, 2025.
The incentive consists of a 100% exemption from social security contributions for private employers, excluding premiums and contributions due to INAIL, up to a maximum of €500 per month per worker, for 24 months. For hirings in the Special Economic Zone of Southern Italy (ZES unica), which includes Abruzzo, Molise, Campania, Basilicata, Sicily, Puglia, Calabria, and Sardinia, the exemption increases to €650 per month per worker, still for 24 months and within the authorized spending limits.
Conditions of Applicability
General External Conditions: To obtain the benefit, the following must be respected:
- The conditions and principles of Article 31 of Legislative Decree No. 150/2015.
- The rules of contribution regularity indicated in Article 1, paragraphs 1175 and 1176, of Law No. 296/2006.
Internal Conditions: Specific anti-dismissal regulations must be adhered to:
- The contribution exemption is granted to employers who have not carried out individual dismissals for justified objective reasons or collective dismissals in the same production unit in the 6 months preceding the hiring.
- The justified objective dismissal of the worker hired with the exemption, or of a worker with the same qualification in the same production unit, within 6 months of the incentivized hiring, results in the revocation of the exemption and the recovery of the benefit already enjoyed.
The benefit is also granted within the spending limits set by paragraph 7:
- €34.4 million for 2024
- €458.3 million for 2025
- €682.5 million for 2026
- €254.1 million for 2027
INPS will monitor compliance with these limits and may block the incentive upon their exceeding. A procedure for requesting the benefit from INPS before obtaining it is anticipated.
Next Steps
To make the provision operational, the following steps are necessary:
- Conversion of the decree into law;
- Issuance of a decree by the Ministry of Labor to define relations with INPS, which will manage the incentive, and the communication methods for employers to comply with the spending limit.
- Authorization from the European Commission pursuant to Article 108, paragraph 3 of the TFEU.
- Issuance of an operational circular by INPS.
Conclusion
In a constantly evolving economic context, young people represent a fundamental resource for the future of the Italian labor market. The Cohesion Decree offers a significant opportunity for private employers to invest in the new generations, reducing the overall labor cost through targeted contribution relief. However, for these incentives to have a meaningful impact on the labor market, it is essential that the decree be approved and implemented promptly, ensuring accurate hiring planning and strict verification of contribution regularity.
