Italian labor laws have always considered the open-ended employment relationship as the standard and most dominant category of employment contract. On the other hand, a fixed-term employment relationship has always been discouraged and placed under strict limitations, even though this position has been softened in recent years. From 2012, there have indeed been many reforms, each of them aiming to have more “flexibility” concerning employees and companies and trying to put an end to the growing unemployment in the country.
Indeed, before the so-called “Fornero” reform (2012), fixed-term contracts could have only been finalized under precise circumstances (justified reasons) and for a maximum time period foreseen by the relevant laws. However, such reform has in fact allowed employers to hire fixed-term employees, without any justified reasons to be indicated, for any kind of job, provided the employee is a first-time hire and for a period of no longer than 12 months.
The so-called Jobs Act, introduced by the Renzi Government, has later removed the necessity for employers to indicate a justified cause for hiring personnel through fixed-term contracts, also, with respect to employees who are not first-time hirees, thus making the “not-justified” fixed term contract as standard procedure (provided that it does not last longer than 36 months).
The new “Dignity” Decree Law, converted into ordinary Law last August, has nevertheless revived the previous restrictions, thus again discouraging fixed-term contracts. The amended provision of art. 19, n. 1, of the Legislative Decree 81/2015, now foresees that fixed-term contracts without indication of a justified reason may only be concluded for a period of time not exceeding 12 months.
The maximum duration of a fixed term contract has been reduced from 36 months (Jobs Act) to the current 24 months. Moreover, the new law states that fixed-term contracts may be concluded for a period exceeding 12 months in exclusive cases such as:
- Temporary and objective requirements, unrelated to the ordinary activities;
- Replacement of absent workers;
- Requirements related to temporary, significant and non-programmable increases of the ordinary activities.
Where the contract is stipulated for a period of more than 12 months, lacking any of the above-mentioned justified reasons, it will be converted to an open-term contract starting from the day the limit is exceeded. Furthermore, the term prorogation is freely allowed only within a maximum period of 12 months: otherwise, the prorogation must be justified by one of the said reasons.
The fixed term contact may be extended for no more than 4 times (as opposed to 5) within the 24 months maximum term period. The contract will be deemed as an open term contract at the time the fifth extension is signed.
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