On September 17, 2024, Decree-Law No. 131/2024 (known as the “Infringement Protection Decree”) came into force, introducing several key updates regarding fixed-term employment contracts.
Specifically, the Infringement Protection Decree amends Article 28 of Legislative Decree No. 81/2015, aligning Italian legislation with EU Directive 1999/70/EC at the request of the European Union.
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Compensation Above 12 Months in Cases of Invalidity of Fixed-Term Contracts
Article 28, paragraph 2, of Legislative Decree No. 81/2015, in its original wording, provided that when a fixed-term contract is declared invalid:
- (i) the contract would be converted into an open-ended contract;
- (ii) the employee would be entitled to compensation ranging from a minimum of 2.5 to a maximum of 12 months’ wages.
The purpose of this compensation was specifically to compensate the employee for lost wages and contributions during the period between the expiration of the invalid term on the fixed-term contract and the court order converting the employment relationship to indefinite duration.
Article 11, paragraph 1, letter a) of the Infringement Protection Decree introduces the following addition to Article 28, paragraph 2 of Legislative Decree No. 81/2015: “The judge may determine an indemnity in a higher amount if the employee demonstrates having suffered greater damages”.
Accordingly, under the current language of Article 28, paragraph 2, of Legislative Decree No. 81/2015, when a fixed-term contract is deemed invalid:
- (i) the contract will still be converted into an open-ended contract;
- (ii) the judge now has the discretion to award compensation in excess of 12 months if the employee can demonstrate a “greater damage” suffered.
Repeal of Paragraph 3 of Article 28 of Legislative Decree No. 81/2015
Additionally, Article 11, paragraph 1, letter b) of the Infringement Protection Decree repealed paragraph 3 of Article 28 of Legislative Decree No. 81/2015.
In its original form, this provision stipulated that the maximum compensation in the event of a fixed-term contract being declared invalid — previously capped at 12 months’ wages — would be halved “in the presence of collective bargaining agreements providing for the employment, including on an indefinite basis, of workers previously employed on fixed-term contracts under specific ranking systems”.
The LDP team is available to provide support and consulting services to clients regarding the management of fixed-term employment contracts. This includes, among other services, detailed analysis of applicable statutory and collective bargaining agreement regulations, feasibility assessments for specific cases, and the drafting of tailored contracts.
