Labour cost reducing measures: under 36 incentive made operational for the years 2021 and 2022

Prepared by Marzio Scaglioni and Giulia Baltimora

After several months from the enactment of the so called “2021 Budget Law”, through Official Message no. 3389 of the 7th of October, following previous Circular letter no. 52/2021, INPS (National Institute of Social Security) provided operating instructions for the employers in order to benefit of the bonus structural incentive provided for the event of open-ended hirings of young employees under 36 years old for the years 2021 and 2022.

As it’s well known, in order to promote stable youth employment, Article 1, paragraphs 10 to 15, of Law n° 178 (Budget Law 2021), established that, for permanent hires and for the transformation of fixed-term contracts into permanent contracts carried out in the two-year period 2021-2022, the exemption from the payment of the overall social security contributions of employers, as per the 2018 Budget Law, is recognized in the amount of 100% for a maximum period of thirty-six months, up to the maximum amount of 6,000 euros per year, with reference to the subjects who, at the date of the first hiring incentive have not completed the thirty-sixth year of age, without prejudice to the rate of calculation of pension benefits.

The duration of the aforementioned exemption from contributions is extended to a maximum period of forty-eight months for private employers who recruit in the southern regions.

The exemption in question is recognized to all private employers, including employers in the agricultural sector, but excluding companies in the financial sector. Similarly, it cannot be applied to apprenticeship relationships and domestic work contracts, for which the application of social security rates to a lesser extent than the ordinary one is already envisaged.

It is worthwhile mentioning that the right to the legitimate use of the contribution exemption is subject to compliance, on the one hand, with the general principles on hiring incentives, governed by article 31 of Legislative Decree n° 150/2015, on the other hand, of the rules for the protection of working conditions and compulsory insurance for workers and, finally, certain conditions specifically provided for by the 2021 Budget Law.

With regard to the former, the exemption from contributions in question does not apply if one of the following conditions is met:

  • The recruitment violates the right of precedence, established by law or by the collective agreement, to the re-employment of another worker dismissed from a permanent relationship or terminated from a term relationship that has manifested in writing, within six months of the termination of the relationship, their own will to be summed up.
  • At the employer or user with a leasing contract where work suspensions are in place related to a crisis or corporate reorganization.

It reiterates what is already provided by the same article 31, paragraph 1, letter e), that, with reference to the leasing contract, the economic benefits linked to the hiring or transformation of an employment contract are transferred to the user and, in the following paragraph 3, that the late forwarding of mandatory electronic communications relating to the establishment and modification of an employment or administration relationship produces the loss of that part of the incentive relating to the period between the starting date of the subsidized relationship and the date of the late communication.

With the aim of contrasting behaviors aimed exclusively at reiterating the use of concessions by the same group of companies, with reference to the exemption regulated therein, in the cases in which the worker, for whose permanent employment was partially benefited from the exemption under discussion, is again hired for an indefinite period by other private employers, the benefit is recognized to the same employers for any residual period, regardless of the worker’s age at the date of the new hires.

With reference to compliance with the fundamental rules on employment conditions and compulsory social insurance, the use of the contribution exemption is subject to compliance by the employer who assumes the following conditions:

  • Regularity of social security contribution obligations, pursuant to the legislation on the Single Document of Contribution Regularity (DURC).
  • Absence of violations of the fundamental rules for the protection of working conditions and compliance with other legal obligations.
  • Compliance with national collective agreements and contracts, as well as regional, territorial or company ones, signed by the trade union organizations of the comparatively most representative employers and workers on the national level.

In relation to the constraints of the exemption under the Budget Law2021, the right to the legitimate use of the contribution exemption is subject to the existence, at the date of hiring, of the following conditions:

  • The worker, on the date of the new hiring, must not be thirty-six years old. This provision also concerns the hypothesis of transformation of fixed-term relationships into permanent ones.
  • The worker, during his working life, must not have been employed, with the same or any other employer, by virtue of a subordinate employment contract for an indefinite period.
  • Employers must not have carried out, in the six months prior to hiring, individual dismissals for justified objective reasons or collective redundancies, pursuant to law no. 223, towards workers with the same qualification in the same production unit.
  • Employers must not proceed, in the nine months following hiring, to individual dismissals for justified objective reasons or to collective redundancies, pursuant to law no. 223/1991, towards workers with the same qualification in the same production unit.

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