Italy

    1.1 In what circumstances does the employee transfer law apply?

    Italian courts have defined criteria for identifying a transfer and the application of the employee transfer law:

    • the undertaking (or part of it) is an independent organised economic entity;
    • a functional link exists between the activities carried out and transferred, and these are likely to produce an economic result;
    • the undertaking retains its identity as an organised economic entity following the transaction; and
    • tangible assets and/or employees are transferred.

    The above criteria are only indications and the assessment must be conducted on a case by case basis.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    1.2 Does the employee transfer law apply to (a) a sale of a business or (b) outsourcing?

    (a) Sale of a business

    A transfer is any operation which, by means of ‘a transfer of contract or a merger’, transfers ownership of an undertaking (or part of one) ‘regardless of the type of legal procedure or legal act by which the transfer is made, including ‘usufruct’ or lease of the undertaking’. The rules apply to sales, rentals, mergers and acquisitions and gifts. They do not apply to the sale of single assets, because these are not considered an independent organised economic entity.

    Note that joint liability exists between the transferor and transferee where there is a service agreement involving the transferred branch of the undertaking. This lasts two years from termination of the agreement as regards salary and social security contributions for employees.

    (b) Outsourcing

    The employee transfer law could apply to outsourcing if the circumstances fall within the transfer rules. Note that the employee transfer law does not apply to the acquisition of the workforce employed for an existing service agreement if the new contractor has its own organisational and operational structure and some activities are run differently from the way they were performed by the former contractor.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    1.3 In outline, what are the implications of the employee transfer law?

    If the employee transfer rules apply:

    • Employees assigned to the undertaking transfer on their existing (pre-transfer) terms of employment.
    • Collective agreements in force at the transferred undertaking continue to apply until they expire, unless substituted by collective agreements applicable at the transferee. Substitution may only take place as between contracts of the same level.
    • The transferor and transferee must inform the work council and trade unions of the intention to carry out the transfer, as well as certain other information. On the request of the work councils or of the trade unions, a joint examination will be carried out. Both the transferor and transferee are responsible for claims based on matters that relate to before the transfer, unless the employee expressly waives the responsibilities of the transferor.
    • Dismissals motivated purely by the transfer are automatically unfair.
    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    2.1 Who transfers?

    The protection covers all employees involved in the business (or part of it) transferred, including fixed-term employees, apprentices and executives. All subordinate employees are covered, whilst consultants and self-employed people are not and will follow general principles of termination or reengagement by the new employer.

    If an employee is only partially involved in the part of undertaking which is transferred, the most important consideration is the portion of working time spent in the transferring part.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    2.2 Can employees object to transferring?

    The transferor does not need the employees’ consent to the transfer, as affected employees transfer automatically.

    However, an employee whose conditions of work change substantially in the three months following a transfer may resign. In this case, the employee will have the right to receive payment in lieu of notice. The length of the notice and amount of the payment is generally prescribed by law or contained in a collective agreement, and takes into account the employee’s length of service and qualifications.

    The employee can complain first to the transferor/transferee within 60 days and can then file a claim in court with a further 180 days.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    2.3 What happens to terms of employment contracts?

    Employees who are employed at the time of the transfer automatically become the employees of the transferee beginning at the moment of the transfer and they must retain the same conditions of employment (such as salary, fringe benefits, etc.) as they had with their former employer.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    2.4 What about other employee benefits?

    Benefits provided under the employment contract (e.g. a company car) are maintained after transfer. If they cannot be replicated by the transferee, the employees must be compensated according to general principles.

    Note that past employment with the transferor counts as ‘continuous employment’ with the transferee.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    2.5 What happens to pension rights?

    As regards the mandatory social security system, the position of the transferred employees with the National Social Security Agency (INPS) remains the same.

    The transfer law does not set out any specific rules regarding complementary pension funds. Generally speaking, there could be a problem of incompatibility between the different pension funds that the transferor and transferee are enrolled with. Therefore, the transferred employees may not be able to maintain their enrolment in the fund they already belong to under their previous employer. Ultimately, it is necessary to look at the rules governing each pension fund.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    2.6 What liabilities transfer?

    All civil and economic liabilities transfer from the transferor to the transferee. However, criminal liability does not transfer. 

    With regard to outstanding debts on the part of the transferor at the time of the transfer, the employee may claim payment either from the transferor or the transferee (given that the transferor is jointly liable for such debts). 

    However, a transferred employee may release the transferor from obligations under the employment contract by applying a legislative settlement procedure, according to which the employee signs a settlement agreement before the Court, the trade unions or the Employment Office.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    2.7 Do collective agreements transfer?

    After the transfer the transferee must apply the economic and legal treatment set out under the national, territorial and company collective agreements applicable to the transferred employees in force at the time of the transfer until they expire, unless they are substituted by collective agreements applied by the transferee.

    If the transferor and the transferee apply different collective agreements, the above-mentioned provision permits a change from the collective agreement (of the same level) applied by the transferor to the one applied by the transferee. According to the case law that is normally cited, substitution takes automatic effect at the time of the transfer. However, certain older case law states that the substitution becomes effective only after a collective agreement has been reached during the information and consultation procedure (the so-called ‘accordo di ingresso’ or ‘di armonizzazione’).

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    2.8 How does the transferee obtain information on transferring employees?

    The transferee normally obtains information on transferring employees from the transferor during the negotiation of the agreement on the transfer of undertaking. However, there are no mandatory rules about this.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    3.1 Can employers make changes to employment contracts?

    The new employer may not unilaterally change the existing terms of the employment contract, irrespective of the reason for the proposed change. There is no particular moment after which changes to employment contracts can be made. Any changes to the employment contracts are possible only with the consent of the employees or in specific cases set out in law (such as change of the employee’s workplace under certain provisions of the Civil Code).

    In general, subject to the settlement procedures as provided in law, waivers of rights and settlements with respect to employment contracts will not be valid and may be challenged.

    The rules contained in collective agreements remain in force until their expiry unless they are substituted by agreements (of the same level) in force in the transferee’s company before they expire.

    Note that it is possible to transfer the employees from one branch of the organisation to another for economical, technical or organisational reasons.

    Therefore, in terms of harmonisation, the terms contained in collective agreements can be changed immediately, since the collective agreements applied in the transferee’s company take the place of those applied in the transferor’s company, but the terms contained in individual contracts can only be harmonised with the consent of the employee. 

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    3.2 When can employers safely dismiss employees before or after a transfer?

    The transfer of an undertaking does not constitute a reason to terminate an employment contract. If the transfer is the only reason for the dismissal, the dismissal will be considered unfair. However, a dismissal which is carried out for economic reasons before or after the transfer will not be considered unfair. 

    Note that there is no time after which dismissals can be safely be made. A dismissal will only be deemed fair if it is in compliance with the general rules for the dismissal.

    If dismissals based on economic reasons are declared unfair, the employer must pay an indemnity of between 12 and 24 months’ salary. If the reasons given for the dismissal are manifestly and clearly untrue, the court could order the reinstatement of the employee and award him or her an indemnity equal to the salary owed between the unfair dismissal and the reinstatement, to a maximum of 12 months’ salary.

    A dismissal for economic, technical or organisational reasons will be fair as long as the employer can show the reasons for it and demonstrate that the employee could not be used efficiently in other roles. For example, if after the transfer of either part of an undertaking or a merger, the transferee amalgamated certain functions (such as payroll offices) the redundant employees could be fairly dismissed.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    4.1 Who must employers consult?

    Companies with more than 15 employees (including executives) must give written notice to employee representatives and to the trade unions who signed the collective agreements applied within the companies at least 25 days before the earlier of the signing of the transfer agreement or the reaching of a binding verbal agreement between the transferor and transferee.

    For companies with less than 15 employees, there is no obligation to inform trade unions or work councils.

    If there is no work council, the most representative trade unions in the sectors involved (at a national level) will take their place.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    4.2	What information must they provide?

    The notification that both the transferor and transferee must provide in writing to the unions must include the following information:

    • the date (or proposed date) for the transfer;
    • the reasons for the transfer;
    • the legal, economic and social consequences with regard to the affected employees; and 
    • any measures that will be taken in relation to affected employees.
    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    4.3	What does consultation involve?

    During consultation the transferor; transferee; and work councils and trade unions will discuss the legal, economic and social consequences of the transfer with regard to the affected employees.

    No specific provisions rule how the parties must consult with each other and they are not obliged to enter into an agreement. Parties must act in good faith, however. Note that if no agreement is reached, this does not lead to any consequences, as the transfer can go ahead in any event.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    4.4	How long does consultation last?

    Within seven days from of being given notice of the proposed transfer, the work councils and trade unions may ask for a joint examination, which must start within seven days. Once begun, it must be concluded within ten days.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    4.5	What happens if an employer fails properly to inform or consult?

    In the event that an employer does not comply with the transfer law, they could be subject to legal action under the Worker’s Statute for anti-trade union behaviour. However, such failure will not affect the validity of the transfer itself.

    Should an employer take action which prevents or limits trade union activities, a judge could order an injunction to immediately cease. Employers who fail to comply with such an order will be criminally liable and could face up to three months’ imprisonment or a fine of up to EUR 206. Furthermore, judicial authorities will order publication of this penal decision.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    5.1	Identify up to three issues in this country of which employers should be aware?

    The transferor and transferee should be aware of the need to give written notice to the works council and trade unions of the information and consultation procedure 25 days before they reach a binding agreement about the transfer. This may mean that they need to be informed about the procedure long before the deal closes and the transfer takes place.

    Looking at case law, two main areas are subject to interpretation. Firstly, how a branch of an undertaking is defined, and in consequence how to apply the rules on transfers of undertakings as set out in Italian law. Secondly, the consequences of failure to comply with the transfer procedure. 

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    5.2	Would the employee transfer law apply on a cross-border transfer into or out of this country?

    There is no express provision excluding the application of the rules concerning transfers of undertakings on cross-border transfers, therefore, Italian law on transfers of undertaking may apply, together with that of other states. However, there could be a conflict between the different applicable national laws and problems in coordinating the trade unions of different countries, which could make it difficult to apply Italian law.

    In the case of a transfer to a non-EU Member State, in which the same level of protection for the employees upon transfer does not exist, Italian law will apply. However, there is no case law on this point.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

    6.1	What are the main national laws protecting employees upon transfers of businesses?

    The transfer of undertakings is regulated by Article 2112 of the Italian Civil Code and by Law No 428 of 29 December 1990 which amended it, ensuring conformity with European Directives.

    Legislative Decree No 18 of 2 February 2001, which implemented EU Directive 98/50, modified both regulations. 

    Article 2112 of the Civil Code was then further modified by Article 9 of Decree No 251 of 6 October 2004.

    Article 29, paragraph 3 of Law No 276 of 10 September 2003, as amended by Law No 122 of 7 July 2016.

    Hide note

    Author: Toffoletto De Luca Tamajo e Soci

    Date: September 2016

     

    We use cookies on our website. To learn more about cookies, how we use them on our site and how to change your cookie settings please view our privacy statement. By continuing to use this site without changing your settings you consent to our use of cookies in accordance with our cookie policy.