Lexology GTDT Market Intelligence provides a unique perspective on evolving legal and regulatory landscapes. This interview is taken from the Labour & Employment volume featuring discussion and analysis of legal developments, the enforcement of restrictive covenants and political debates about employment within key jurisdictions worldwide.
1 What are the most important new developments in your jurisdiction over the past year in employment law?
The employment law environment has been subject to significant changes over the past year due to the covid-19 pandemic; since February 2020, there has been a continuous enactment of emergency measures put in place to deal with health, social, economic and labour effects caused by the spread of the virus. Such measures had to be juggled, often without success, with the balance of several constitutional values such as health, freedom of movement, freedom of private economic initiative, the right to work and health and safety at the workplace. In particular, the legislator has intervened, albeit with temporary measures, on many aspects of employment and labour law. Such acts have been applied across multiple private and public sectors, imposing: strong limitations to the possibility of triggering any dismissal related to objective reasons; the introduction of very flexible furlough programmes to suspend employees from working and having them benefit from special subsidies charged to the social security administration; the extension and renewal of fixed-term contracts; very flexible and easy to access remote working schemes; and peculiar health and safety rules to be complied with.
The most impacting and highly debated emergency measure put in place by the government has been a general prohibition of collective and individual dismissals for objective reasons. This was introduced by Law Decree No. 18/2020, preventing employers from triggering any new dismissal procedures and retroactively suspending any of them until 23 February 2020, then extended until 17 August 2020 by Law Decree No. 34 of 19 May 2020, and further extended by Law Decree No. 104 of 14 August 2020, as well as by the Law Decree no. 137 of 28 October 2020, according to which all individual and collective dismissals were rendered void unless they were due to the definitive cessation of the employer’s activity and simultaneous liquidation (provided that no transfer of business or going concern is carried out), or bankruptcy, or in any case once the furlough programme is complete (or fully benefited by the social security exemptions provided by the emergency legislation).
It is also worth pointing out that procedures applicable to fixed-term contracts have also been deeply (though temporarily) amended allowing, until 31 December 2020, for the renewal or extension of fixed-term contracts even in the absence of a justification, which would normally be required by Law Decree No. 87/2018, for any extension beyond 12 months or for any new fixed-term contract after the first one.
2 What upcoming legislation or regulation do you anticipate will have a significant impact on employment law in your jurisdiction?
Disruption caused by the spread of covid-19 and the emergency measures and restrictions triggered by it (eg, lockdown) have resulted in an acceleration of new working modalities. A complete dissociation between the employer’s site and the place of work of the employees has been very rapidly and effectively implemented and is now real and ordinary practice (except for labour-intensive activities, such as those that take place in industrial plants). The Italian government has shown promptness and sensitivity to this change, though the regulations presently in place (inspired by simplification principles and aimed at inducing employers and employees to remote working) are still emergency measures and, as such, temporary.
What is expected now is a revision of the regulations on remote working, not only taking into account the transformation of the concept of place of work that happened during the covid-19 emergency, but also considering that it may happen again in future, in the case of similar emergencies or other calamities.
3 How has the #MeToo movement impacted the investigation or settlement of harassment or discrimination claims in your jurisdiction?
Now that it is a few years since the #MeToo movement spread worldwide, it can be said for sure that it has consolidated common awareness in Italy on the impact of sex and gender discrimination and gender-related harassment in the work environment. Confirming a trend shown by the common practice, employers have continued to show greater attention to this matter, putting in place measures to fight harassment in the workplace and to monitor proper behaviour by employees and executives. In this respect, a major role has been played by whistle-blowing policies, allowing people to anonymously report any violation they may be aware of (including sex- and gender-related abuses and violations). However, from a legislative point of view, the phenomenon of sexual harassment at the workplace, unlike the more general concept of harassment and gender-based violence, has always presented itself in a more fragmented way. While private, gender-based violence has been progressively defined and regulated at the international level through a body of conventions, declarations and resolutions of the United Nations and the European Union, for a long time there has not even been a universal definition of ‘sexual harassment at the workplace’. From an international legislation point of view, this stalemate was overcome only with the adoption of Convention No. 190 of 21 June 2019 by the International Labour Organization of the United Nations. The aim of this work is to fight violence and harassment in the workplace. The Italian parliament is presently discussing the ratification of this Convention.
National legislation remains fragmented and can be traced back to civil law, strictly linked to health and safety at work principles, criminal law and, recently, Law No. 69 of 19 July 2019 (the Red Code) on the protection of victims of ‘home’ and gender violence. This law has set itself the main goal of facilitating complaints against harassment or sexual violence and accelerating the investigation of these crimes.
4 What are the key factors for companies to consider regarding the enforcement of restrictive covenants against departing employees?
Restrictive covenants within the frame of employment relationships are subject to stringent restrictions for their validity. Consequently, whenever an employee breaches the restrictions undertaken, enforcement may become problematic if the restriction covenant has not been drafted ‘by the book’. Among other things (eg, confidentiality, non-solicitation), the post-termination non-competition agreement, according to which the employee is bound not to compete with the employer for a certain period of time after termination, is one of the most delicate – not only for the amount of interest it generates, but also for the detailed procedures contained in the Italian Civil Code.
For example, article 2125 of the Italian Civil Code defines the requirements for the validity of non-competition agreements such as form, duration, territory, object and consideration. The agreement must be in written form to be valid, while the duration cannot exceed five years in the case of executives and three years for lower-level employees. Moreover, the combination between territory, duration and subject matter should not be so wide as to prevent the employee from performing any working activity, which would conflict with constitutional law right to work. Residual work capacity needs to be assessed not as a general possibility to take any job (from the lowest level one onward), but should take into consideration the employee’s skills and background.
The importance of non-solicitation clauses is often underestimated. These clauses can be seen as an act of unfair competition and may be banned or sanctioned during negotiations. They play a key role for employees who have a direct relationship with clients. Finally, a separate discussion is needed for the protection of confidential information and industrial and commercial secrets: there are many rules that can be implemented to protect them, but the essential element remains the preparation, by the employer, of adequate measures to protect their secrecy. Additionally in this case, the employer must take measures in advance, protecting himself or herself from both a technological and contractual point of view.
5 In which industry sectors has employment law been a hot topic recently? Why?
This year, there has been much discussion regarding a subject matter that for some time now has been a hot topic in the employment law environment: the gig economy. Employment law (and the workplace) has evolved into increasing dematerialisation. This has led to a reversal of perspective and a profound change in work organisation and resources through the creation of labour platforms and multimedia/telematic places, where people give their availability to be recruited for one or more single gig jobs. The most common kind of gig worker is undoubtedly food delivery, usually referred to as ‘riders’, since they perform their duty typically riding a bicycle or a scooter. In this respect, the legislator has increased his attention to this matter, providing a full discipline applicable to this kind of relationship with Law Decree No. 101/2019, which became effective on 5 September 2019, having introduced, among others, a legal definition of ‘digital workers’ and a series of law requirements (ie, insurance coverage for occupational accidents and diseases, and salary structure not to be mainly based on the number of deliveries or tasks done).
The Italian courts have also ruled on the classification of the employment relationship with gig workers more than once. One of the most resounding cases has been the one regarding six food delivery riders who claimed, before the Labour Court of Turin, to be reclassified as subordinate employees, despite their relationship being formalised under the self-employment scheme. The Labour Court of Turin dismissed the case, denying that the relationships in question could be considered as ordinary employment under Italian law. This ruling was based on one main argument: they were not held to perform the job proposed by the company, but could choose to accept or refuse it without incurring in any consequences other than not being remunerated. The judgment has been brought before the Court of Appeal, which, partially overruling the first instance judgment, stated that the workers in question could not be considered as ordinary subordinate employees but still need to benefit from equivalent economic aids applicable to ordinary employment.
Five out of the six food delivery riders have brought the judgment before the Supreme Court, which, confirming the Court of Appeal ruling, with Judgment No. 1663 of 24 January 2020, extended the rules of subordinate employment to riders. According to the Supreme Court, the regime of autonomy of the employees is intact in the genetic phase of the agreement (the employee being free to provide, or not, the service) but not in the functional phase of the performance of the relationship. The modes of performance are, in fact, substantially determined by a platform and an app for smartphones. The Supreme Court thus denies that a third type of work relationship can exist, which is intermediate between self-employment and employment.
Moreover, on 15 September 2020, employers’ association ASSODELIVERY and one national trade union named UGL-RIDER signed the first National Collective Bargaining Agreement for the regulation of the employment relationships of riders who, thus, are brought back into the category of self-employment. Though this collective agreement has raised a debate on the legitimation of UGL-RIDER to enter into a national contract binding for the industry, the NCBA in question has introduced a series of economic and legal benefits for the workers (eg, minimum pay and pay criteria, mandatory insurance and notice entitlement). The main aspect regulated in the contract, which has, however, entailed firm reactions by other – more representative – national trade unions not involved in the negotiation, is that the legal category assigned to riders is not subordinate employment, but independent contractor, mainly based on the fact that riders are generally free to determine ‘what’ job to accept, further to ‘when’ and – first of all – ‘if’ they will take a single job and perform it.
6 What are the key political debates about employment currently playing out in your jurisdiction? What effects are they having?
The covid-19 pandemic is not only a health emergency, but also the most critical economic and labour market crisis of the century. According to a preliminary outlook issued by the International Labour Organization (ILO), the economic and labour crisis caused by covid-19 may create approximately 25 million new unemployed people in the world. Needless to say, this would primarily involve disadvantaged categories, such as older people or people suffering disability and, last but not least, people migrating from war zones.
The unemployment unleashed by the emergency has not shown its full effects yet, considering the emergency measures put in place by the government, including block of dismissals. This is pushing the political discussion towards implementing any measure that may favour employment growth and reduction of all related company costs. Among those directly impacting employment law, more flexible rules for extension and renewal of fixed-term contracts (considerably restricted since 2018) have been introduced and are being discussed for the future. Also, the possibility for the employer to benefit from special social security contributions has been partially implemented already and may be extended for 2021.
The Inside Track
What are the particular skills that clients are looking for in an effective labour and employment lawyer?
Specialisation and technological innovation. The first because employment law is one of the most complex legal disciplines, is diverse and covers a multitude of subjects. For this reason, employment counsel should operate with a deep knowledge of the client specific business needs and goals, almost like a business partner. And technological innovation because, currently, the application of innovation to all aspects of a complex organisation like a law firm has become fundamental to guarantee optimising processes and sharing knowledge to provide an exceptional service for clients. Combining the experience of all team members to create a common language structure and heritage, to create real benefits and value for all clients, is a key factor and a unique element when striving for efficiency and success.
What are the key considerations for clients and their lawyers when handling employment disputes?
In employment disputes, transparency has a fundamental role. Clients and their counsel must be well aware of the maximum potential liability – what is the maximum achievable goal, but also what is reasonably achievable. As a result, counsel must have an open dialogue with the client about the strengths and weaknesses of their position. Moreover, counsel needs to look ahead and analyse potential risks for the client at all times, while ensuring that the client is apprised of the same.
What are the most interesting and challenging cases you have dealt with in the past year?
On trade union matters, we have assisted one of the major all-cargo airlines operating in Italy (founded as a joint venture between Italian interests and Luxembourg cargo airline) in the revision of the Corporate Employment Collective Agreement applied to pilots. We supported the client by developing a management and negotiation strategy capable of balancing the interests of the Italian company and the Luxembourg parent company with requests from the pilots’ trade union association. Our firm has achieved a complete and coordinated regulation of the pilots’ employment relationship, unique and able to rise to the rank of national collective agreement for the air cargo sector.