On 19 May 2020, the Italian government published a legislative decree setting out “Urgent Measures in the field of health, support for work and the economy, and social policies related to the epidemiological emergency from COVID-19”. The measures, which came into immediate legal effect, provide support for Italian businesses affected by the covid-19 epidemic by modifying or extending special measures in place across Italy.
Employers in Italy should make sure they are familiar with the new measures (also known as social safety nets), and how they can apply the financial support that they offer.
Amendments to wage support
Wage treatment: The new rules offer support to employers that have to “suspend or reduce their work” as a result of the coronavirus crisis. Under article 70 of the decree, employers can submit an application to the Italian government to grant ordinary treatment of wage integration (essentially wage supplementation), for a maximum of 9 weeks, from 23 February 2020 to 31 August 2020. Employers that have previously used up their 9-week wage supplement allowance may claim a further 5 weeks during the permitted period.
Employers in the tourism, cinema, amusement park, live entertainment, and trade fair sectors are eligible for a 4-week extension to the wage treatment scheme, from 1 September to 31 October.
FIS and ANF allowance: Beneficiaries of Italy’s ordinary FIS allowance (claimed as a result of the coronavirus crisis) are entitled to also claim family allowance (ANF).
Applications: Under the new decree, applications for wage supplementation must now be made at the end of the month following the month in which wage suspension or reduction began. The decree also reintroduces a requirement for applicants to provide information to support their claim, along with a consultation and joint examination process.
Employers already receiving wage supplementation
Under article 20 of the decree, employers that were already receiving wage supplementation from 23 February 2020 (essentially prior to the pandemic) also have the right to request covid-19 emergency wage treatment for up to 9 weeks from between 23 February to 31 August. The possibility for extensions to wage treatment periods also applies under the same circumstances outlined above.
It will be possible to request the direct payment of salary supplements (under articles 19 to 21) commencing 30 days after provisions come into effect.
Layoffs in derogation
Under article 22 of the decree, provisions have been made for layoffs in derogation across Italy via the intervention of wage support, known as Cassa Integrazione Guadagni in Deroga (CIGD). Like the wage supplementation treatments above, support for layoffs in derogation will be available for 9 weeks from 23 February 2020 to 31 August 2020, with 5-week extensions for employers that have already exhausted their allowance.
Extensions: Employers may access a further period of CIGD support for 4 weeks from 1 September to 31 October 2020. Employers in the tourism, cinema, amusement park, live entertainment, and trade fair sectors are permitted to apply for this extension prior to September 1 if they have already used up their allowance of 14 weeks.
Trade union agreements: Under previous rules, employers that closed their business as a response to the pandemic could still access the layoff in derogation support without a trade union agreement. The new decree removes that possibility: employers without a trade union agreement may no longer access the support.
New employees: Workers employed by employers from 25 March 2020 will be able to access CIGD support. Similarly, CIGD eligibility will not be affected if employees do not have effective seniority of at least 90 days. To facilitate direct payment of CIGD support, employers must send the Italian social security authority, Istituto Nazionale Previdenza Sociale (INPS) all necessary data within 15 days of the month following the month in which the support was received.
Implementation time and locations: The Minister of Labor and Social Policies, working in conjunction with the Minister of Economy and Finance will set out the spending limit for the changes introduced by the decree within 15 days of it coming into effect. The decree will also outline the autonomous regions and provinces in which CIGD support will be implemented. The INPS will grant CIGD support for periods after the first 9 weeks of its implementation at the request of employers without necessarily checking their compliance with the relevant spending limits.
Application process: Employers should submit their CIGD applications electronically to INPS, detailing the hours of work that have been suspended for each employee during the claim period. Applications for the first 9 weeks of CIGD will be subject to verification against spending limits. CIGD applications can be submitted to the relevant INPS office 30 days after the point at which the decree comes into effect. After that first 30 days, subsequent applications should be sent at the end of the month following the month in which the work suspension began.
Advance payment: In order to receive an advance payment from INPS, employers should use the direct payment facility to submit their application (including relevant data) within 15 days from the beginning of the period in which work was suspended. The advance payment is calculated at 40% of the hours authorized for the work period claimed. After all claim data has been received, INPS will pay the residual amount of the wage treatment or alternatively, claim back any amounts unduly paid.
Employers must submit all relevant data to the INPS within 30 days of the disbursement of the advance.
Further financing of wage subsidies
The decree includes mechanisms that allow the Minister of Labour and Social Policies, in agreement with the Minister of Economy, to extend the maximum duration of the wage subsidy schemes after 31 August 2020. Those extensions specifically relate to:
- The 4-week extension period between 1 September to 31 October 2020 for employers that have used their maximum 14 weeks of wage treatment support.
- The 5-week extension available from 23 February to 31 August 2020.
- The 4-week extension available from 1 September to 31 October 2020.
For more information and advice on Italy’s covid-19 employment support schemes, contact activpayroll today.
For more information on Italy's labour laws, tax, and payroll landscape, browse activpayroll’s Italian Global Insight Guide: find background on Italy's global economic profile, major industrial sectors and common business practices.