Labour Leasing - the only legal operating model for an EOR in Italy

Employee leasing (or staff leasing or labour leasing) is heavily regulated in Italy. How does it work?

The leasing of labour is governed by Legislative Decree 15 June 2015, n. 81 (Chapter IV) and involves three subjects:

  • an authorized agency (c.d. leaser), registered in a special register kept at the National Agency for Active Labor Policies (ANPAL);
  • a client (c.d. user), who uses the services of the provider to find personnel;
  • one or more workers (c.d. leased employee/s), taken by the leaser and sent on a mission to the client.

It is, therefore, a complex institution, within which two distinct contractual relationships are found:

  • the commercial contract of labour leasing concluded between the leaser and the client, and which has a commercial nature and can be fixed term or open-ended;
  • the employment contract stipulated between the leaser and the leased employee, which can be fixed-term or indeterminate (open-ended).

The contractual structure of the supply involves a particular division of the employers' powers and obligations:

  • organizational and managerial power vis-à-vis workers is exercised by the client, given that the workers carry out their activity in the interest and under the direction and control of the client;
  • disciplinary power is reserved for the leaser, to whom the client communicates the elements that are the subject of the disciplinary dispute;
  • on the subject of risks to health and safety, the information obligations and training of the worker, in accordance with Legislative Decree no. 81/2008, are the responsibility of the leaser, unless otherwise provided for by the contract that places the obligation on the client. The client observes towards the workers leased the same obligations of prevention and protection to which they are bound, by law and by collective agreement, towards their employees;
  • the remuneration is paid directly by the leaser and reimbursed by the client, in addition to social security charges;
  • the social security charges, social security contributions, insurance and welfare are also borne by the leaser;
  • the client is jointly and severally obliged with the leaser to pay the remuneration and to pay the related social security contributions, except for the right of recourse against the leaser;
  • the client is responsible for damage caused to third parties by workers in the performance of work.

The client can also be a public institution but, in this case, the labour leasing is allowed only for a fixed period, with labour leasing on an open-ended basis being prohibited.

Is staff leasing always allowed in Italy?

No, the use of labour leasing is NOT allowed:

  • for the replacement of workers who exercise the right to strike;
  • in production units in which there has been collective dismissal of workers assigned to the same tasks to which the labour leasing refers in the previous 6 months;
  • in production units where a suspension of work or a reduction in hours is operating an integration salary which affects workers assigned to the same tasks to which the labour leasing refers;
  • in the case of employers who have not assessed risks to the health and safety of workers in accordance with d.lgs. No 81/2008.

The employee leasing contract requires the written form, in the absence of which the contract is null and void and the workers are considered to all intents and purposes employed by the person who uses the work.
By virtue of the principle of protection of the worker from discriminatory conduct, leased employees, for the same tasks performed, are entitled to economic and regulatory conditions overall not inferior (more detrimental) to those of employees of the same level as the client. Similarly, the trade union rights provided for by Law No 300/1970 (Article 36) apply to workers in employment agencies.
Employees of the leaser shall be informed by the client of vacant posts with the latter so that they can aspire, like employees of the same client, to fill permanent posts. This information may be provided by means of a general notice posted inside the premises of the client for whom and under whose control these workers work.

Can an employee be leased on an open-ended bases in Italy?

Yes, permanent employment contracts concluded between the leaser and the worker, are subject to the rules provided for the permanent employment relationship:

  • permanent employment is allowed for any area of activity and type of worker, but within a limit of 20% of the number of permanent employees employed directly by the client on 1 January of the year in which the contract is concluded (with rounding of the decimal to the next unit if it is equal to or greater than 0.5). This percentage may be subject to change by the collective bargaining applicable by the client;
  • only workers hired by the provider for an indefinite period may be leased for an indefinite period.

With the 2023 Budget Law, as amended by the conversion into law of the so-called Milleproroghe Decree (Law no. 14 of 24 February 2023, art. 9, paragraph 4 bis) it was also provided that, until 30 June 2025, in the event that the supply contract between the labour leasing agency and the client is for a fixed term, the client can use for periods exceeding twenty-four months,  even if not continuous, the same worker leased, for whom the labour leasing agency has notified the client of the permanent employment, without this determining for the client the establishment of an employment relationship of indefinite duration with the leased employee.
A worker employed on a permanent basis by the employment agency is entitled to an availability allowance (indennità di disponibilità) for periods when he is not assigned to any client. The amount of the allowance is determined by collective bargaining and cannot in any case be lower than the amount fixed by the decree of the Ministry of Labour and Social Policies.

Fixed-term employment contracts

For fixed-term employment contracts, on the other hand, the provisions of Legislative Decree no. 81/2015 for fixed-term contracts (Chapter III) apply, except for the provisions on rights of precedence, on the provisions relating to the terms between several contract renewals and on the maximum percentage of fixed-term workers. The starting date and foreseeable duration of the "mission"– which may be extended with the worker's consent in writing, in the cases and for the duration provided for in the collective agreement applied by the leaser – must be communicated in writing to the worker by the leaser, at the time of conclusion of the employment contract or at the time of dispatch to the client.
The number of workers employed under fixed-term contracts or temporary contracts may not exceed a total of 30% of the number of permanent workers employed by the client on 1 January of the year in which the contracts were concluded, rounded to the decimal place to the next unit, if it is equal to or greater than 0.5. This limit can be modified by the client's collective bargaining (no more than 20%) and does not apply in the following cases: unemployed people who have enjoyed non-agricultural unemployment treatment or social safety nets for at least six months and disadvantaged or very disadvantaged workers (as identified by the decree of the Minister of Labor and Social Policies of 17 October 2017).

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