open search
Internationales Arbeitsrecht Italy

Italy: New mechanism for employers to encourage retirement introduced

Print Friendly, PDF & Email

A new legal measure designed to encourage employees to retire has been introduced in Italy. This article sets out a description of how this new instrument works for employers and employees.

Italy has implemented a pension reform in recent years, which has increased the state pension age in order to improve the system’s sustainability. Under the current rules, from 1 January 2019, the retirement age is 67. In addition, in order to access their pensions, employees must have paid social security contributions for a period of 20 years (to qualify for the old-age pension). Regardless of age, all workers who have paid social security contributions for a certain number of years can access their pensions. In general, men must pay social security contributions for a minimum of 42 years and ten months, while for women the minimum period is 41 years and ten months (early retirement).

As a consequence, a number of ‘pension tools’ have been introduced in order to increase the flexibility of the Italian pension system. The most recent one aims to foster employees’ exit when they are nearing retirement age through social security contributions made by the employer. It was introduced by law n. 58 of 28 June 2019, converting the so-called ‘Growth Decree’.

The new measure provides companies employing more than 1000 employees with the possibility (within the context of a reorganisation or reindustrialisation process) of signing an agreement aimed at hiring new employees (contratto di espansione) with the unions and the Ministry of Labour to encourage employees who are close to retirement to terminate their employment relationship, with their consent. In particular, employers can pay a monthly allowance to employees who will meet the old-age pension or early retirement requirements in five years’ time, until those requirements are reached. To benefit from this measure, employees need to have made at least 20 years of social security contributions. Besides this measure, the agreement could also provide for a reduction in working hours for employees who do not meet the above requirements.

The allowance is equal to the gross pension amount to which the employees would be entitled on termination of their employment and includes the unemployment allowance to be paid (if due) to the employee after the termination of his or her employment.

This measure will be applied on an experimental basis in 2019 and 2020 and, in addition, will be accessible only within the budget limit provided for by the same law, which is EUR 4.4 million for 2019, EUR 11.9 million for 2020 and EUR 6.8 million for 2021.

Verwandte Beiträge
Internationales Arbeitsrecht Italy

Italy: New rules on bank remuneration policies

Italy’s updated regulations on pay and bonuses in the banking sector aim to increase the regulation of economic incentives, in order to discourage bank employees from exposing banks and the wider economy to excessive risk. This article sets out the main elements of the new rules and possible difficulties with their implementation. It also provides views on the issue of pay in the financial services sector…
Internationales Arbeitsrecht Italy

Italy: Protecting women from ‘dismissal for marriage’ is not discriminatory

The Italian Supreme Court has confirmed that the protection from dismissal offered solely for women employees in the period around marriage does not constitute discrimination. The Italian Supreme Court of Cassation recently confirmed its opinion that the prohibition on dismissing an employee during the period from the date of publication of marriage banns to the first anniversary of the wedding (known as ‘dismissal for marriage’)…
Internationales Arbeitsrecht Italy

Italy: new government revives extraordinary wage subsidy for companies in crisis

A measure recently reintroduced by the new Italian Government gives companies in crisis who have wholly or partially ceased trading the opportunity to apply for financial support to guarantee employee wages. This article sets out the details and conditions of the revived provision. In a Decree Law effective from 29 September 2018, the new Italian Government has reintroduced the possibility for companies that cease their business…
Abonnieren Sie den kostenfreien KLIEMT-Newsletter.
Jetzt anmelden und informiert bleiben.


Die Abmeldung ist jederzeit möglich.

Schreibe einen Kommentar

Deine E-Mail-Adresse wird nicht veröffentlicht. Erforderliche Felder sind mit * markiert