Youth Employment Bonus under 36: What It Is and How It Works

The past few weeks have been of fundamental importance for employers, as the necessary authorizations to benefit from the “youth employment bonuses” provided by the 2023 Budget Law have finally been granted. After a long wait, the European Commission has given its approval (EU approval was required as the regulations fall under the category of State aid).

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Youth Employment Bonus under 36Specifically, these are tax relief measures reserved for employers who hire workers under the age of 36. These measures aim to promote youth employment and provide job opportunities in disadvantaged areas.

In the 2023 Budget, the provisions of the 2021 Budget Law have been extended, and the maximum limit of the contribution relief has been increased from 6,000 to 8,000 euros per year. This means that employers can benefit from a 100% tax exemption for up to 8,000 euros per year for a period of 3 years. This incentive covers the social security contributions paid by the employer, excluding premiums and INAIL contributions.

Furthermore, if an employer hires young people in production units located in the regions of Southern Italy, an extended contribution relief of 48 months is guaranteed, exceeding the standard limit of 36 months. To benefit from this extended period, it is important to note that the locations must be situated in the following regions:

  • Abruzzo
  • Basilicata
  • Calabria
  • Campania
  • Molise
  • Puglia
  • Sardegna
  • Sicilia

Who is eligible for the contribution relief?

The reduction in employer social security contributions applies to the hiring or conversion to permanent contracts of young individuals who meet the following requirements:

  • Individuals up to the age of thirty-five (not yet turned thirty-six).
  • Individuals who have not had a previous permanent employment relationship with the same employer or any other employer.
  • Even those who have completed apprenticeships, both with the same employer and with another, are included in the benefit.

However, the right to contribution relief does not apply if the young individual has had a previous permanent employment abroad.

Which employment relationships are covered?

The facilitated contribution relief for workers under 36 applies exclusively to the following types of employment contracts:

  • Permanent contracts, regardless of whether the working hours are full-time or part-time.
  • Conversion of fixed-term contracts to permanent contracts, provided that the worker meets the age requirement at the date of conversion.
  • Contracts entered into by employment agencies for the provision of permanent personnel, noting that despite the fixed-term nature of these contracts in the agency’s context, they are eligible for the contribution relief.

 

Which employment relationships are excluded from the contribution relief?

The contribution relief does not apply to the following types of employment relationships:

  • Contracts for occasional work performed under Article 54-bis of Decree Law No. 50/2017, also known as former “vouchers.”
  • Intermittent or on-call employment contracts, even if they are permanent contracts.
  • Domestic employment relationships.

 

How much is the relief and how long does it last?

The amount exempted from employer contributions cannot exceed 8,000 euros per year for each worker, for hires and conversions made from January 1, 2023, to December 31, 2023.

Consequently, the maximum monthly contribution exemption threshold amounts to 666.66 euros (8,000 euros divided by 12 months).

In the case of employment relationships that commence or terminate during the month, the aforementioned threshold must be proportionally adjusted.

 

Which employers can benefit from the relief?

The contribution relief applies to all private employers, including entrepreneurs, with the exception of financial sector companies and domestic employers. Public administration is excluded from the contribution exemption.

Employers must meet the following conditions:

  • They must not have dismissed or intend to dismiss employees with the same qualification in the same production unit within the six months prior to the new hiring and within the nine months following it.

Additionally, the enjoyment of the contribution relief is subject to compliance with the following conditions:

  • Regularity of social security contribution obligations, as attested by the Single Certificate of Contribution Regularity (DURC).
  • Absence of violations of fundamental labor protection regulations and compliance with other legal obligations.
  • Compliance with national collective agreements and agreements, as well as regional, territorial, or company agreements signed by the most representative employer and worker trade unions at the national level.

It is important to note that the contribution relief cannot be combined with other similar incentives provided by current legislation, limited to the period of application of those incentives.

Conclusion

From what has just been presented, it is clear that the legislator’s intention is to encourage the hiring of young individuals through significant contribution relief. However, the question remains open as to whether this initiative will be sufficient to

stimulate the recovery of the youth labor market. The initial results will likely be visible in the coming months, but it is undoubtedly an important starting point.

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