Fixed-Term Contracts: The Innovations Envisaged by the “Labor Decree”

On May 4, 2023, Law Decree No. 48/2023, entitled “Urgent Measures for Social Inclusion and Access to the Labour Market,” was published in the Official Gazette.

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Among other provisions, this measure introduces significant changes regarding fixed-term contracts, with an effective date of May 5, 2023. It introduces new justifications for the use of this type of contract, effectively replacing the previous conditions outlined in letters a) and b) of Article 19 of Legislative Decree No. 81/2015.

 

The New JustificationsFixed-Term Contracts

Until May 4, 2023, according to the previous wording of Article 19 of Legislative Decree No. 81/2015, while the option to enter into “causal” contracts remained available, i.e., contracts lacking any specific motivation or reason justifying the use of this type of contract for a maximum duration of 12 months, fixed-term contracts could have a duration exceeding 12 months but not exceeding 24 months, provided that one of the following justifications existed:

  • Temporary and objective needs unrelated to ordinary activities or the substitution of other employees.
  • Needs related to temporary, significant, and non-programmable increases in ordinary activity.

According to the new wording of the provision set out in Article 24 of Law Decree No. 48/2023, titled “Regulation of Fixed-Term Employment Contracts,” while the option to enter into “causal” contracts for a maximum duration of 12 months remains available, fixed-term employment contracts may have a duration exceeding 12 months but not exceeding 24 months only if at least one of the following conditions is met:

  • In cases provided for by collective bargaining agreements.
  • In the absence of provisions by collective bargaining agreements, and in any case until April 30, 2024, for technical, organizational, or productive reasons identified by the parties.
  • For the purpose of substituting other workers.

Therefore, it can be inferred from the wording of the provision that the justifications are primarily defined by collective bargaining agreements. Only in the absence of provisions in the collective agreement applied by the employer, and in any case until April 30, 2024, will it be the responsibility of the parties to identify specific technical, organizational, or productive needs that justify resorting to fixed-term employment contracts.

However, the possibility of signing fixed-term employment contracts for the purpose of substituting other workers remains always available.

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