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Italy

Transposition of the EU Directive1: The rules of the Directive are mainly implemented in Article 2112 of the Italian Civil Code and Article 47 of Law No. 428 of December 29, 1990.

Scope

Covered Employees.
Covered employees include both indefinite-term and fixed-term employees, as well as part-time employees and executives treated as employees or quasi-employees from employment law purposes. Consultants and directors do not fall within the scope of these rules.

Covered Transactions.
Article 2112 of the Italian Civil Code broadly covers any transactions resulting in a change of ownership of an organized going concern, which existed prior to the transfer and maintains its “identity” afterwards. The type of agreement or provision on the basis of which the transfer takes place is irrelevant for these purposes. Transfers of parts of a business or business units are also included, provided that such parts could be treated as an autonomously functioning and organized going concern, as identified by the transferor and transferee at the time of the transfer.

Excluded Transactions.
Article 2112 of the Italian Civil Code does not generally apply to:

  • Stock sales.
  • Transfers of assets not constituting a going concern or where the going concern does not maintain its “identity” following the transfer. However, the analysis of whether a transfer of assets can be characterized as  going concern is fact-specific and highly depends on specific circumstances.  Legal advice should always be sought to evaluate whether Article 2112 of the Italian Civil Code does apply.
  • Transfers occurring in the context of bankruptcy procedures or similar insolvency procedures, in case during the consultation procedure (see “Obligation to Consult” below) an agreement on preserving jobs is reached (and unless the provisions of Article 2112 are agreed to be applied in the context of the consultation procedure).

Transfer of Employment and Certain Rights and Obligations by Operation of Law

  • In General.  In case of a transfer of a going concern, the employment relationships of the transferred employees automatically continue with the transferee and the transferred employees retain all the rights arising from such relationships (including salary and benefits).  
  • The Pension Exception.  Does not apply in Italy.  The pension plan funding obligations relating to the transferred employees under the Italian mandatory social security system are not affected by the business transfer.  With respect to any complementary pension schemes possibly implemented by transferor and to which the transferred employees participate, following a transfer of going concern, the transferred employees are generally entitled to convert the position accrued by them under the transferor’s complementary pension scheme into quotas of the transferee’s one but different rules and funding obligations may apply depending on the actual terms and conditions of such complementary pension schemes.
  • Joint and Several Liability.  Both the transferor and the transferee are jointly and severally liable, without limitations, for all liabilities relating to the transferred employees that have accrued as of the transfer date, irrespective of any agreement that the parties to the deal might reach on how to allocate such liability between them.  By following certain statutory procedures (i.e., settlement at court or labor office), the employee may release the transferor from obligations deriving from the employment relationship.
  • Collective Agreements.  The transferee must apply substantially the same terms and conditions provided for by any national, regional and plant-level collective bargaining agreements applied by the transferor at the date of the transfer until the date of their expiry, unless the transferee applies different collective bargaining agreements, in which case they will replace the agreements in place before the transfer.
  • Employee Representative Recognition.  There is no provision regarding employee representatives and it is a matter for negotiation. However, standard practice is that employee representatives within the transferred business continue their appointment until it expires.

Specific Employee Protections

  • Protection Against Dismissal.  The transfer of going concern cannot, in itself, constitute grounds for dismissal by either the transferor or the transferee.  The termination of the employment relationship of an employee by the transferor or by the transferee due to the transfer of a business or a part of a business is invalid.  However, dismissals (whether individual or collective) are not prohibited by Article 2112 of the Italian Civil Code. If redundancies are necessary (e.g., because the transferee is going to carry out a restructuring of the business) the transferee must state this information in the notification to the applicable trade unions and works councils (see “Obligation to Provide Information” below).
  • Substantial Changes in Working Conditions.  As a general principle, employees continue to be employed by the transferee on the same terms and conditions on which they were employed by the transferor. The transferee cannot unilaterally change the terms of any existing employment agreement.  Any reduction in employees’ rights must either be negotiated with works council in the context of the consultation procedure (see “Obligation to Consult” below) or be subject of individual waivers signed before the labor authorities.
  • Right to Object to the Transfer.  If their working conditions change materially during the three-month period following the transfer of the business concern, the transferred employees would be entitled to resign for cause.
  • Contracting Out.  Any provision with the purpose to exclude or limit the application of the law is void. 

Employee Engagement

  • Obligation to Provide Information.   If the transferor employs more than 15 employees, both the transferor and the transferee must notify the applicable trade unions and works councils 25 days before entering into a binding agreement for the sale of the business.  The information required to be provided includes (i) the date or proposed date of the transfer, (ii) the reasons for the transfer, (iii) the “legal, economic and social implications” of the transfer for the employees, and (iv) any measures envisaged in relation to the employees.  Generally, a “measure” may include changes or adjustments to the terms and conditions of employment, changes to work locations or practices, redundancies or administrative changes. 
  • Obligation to Consult.  From the date of receipt of the notice of transfer referred to in “Obligation to Provide Information” above, the trade unions or work councils have seven calendar days to file a request for consultation with the transferor and transferee.  Once the transferor and transferee have received the request for consultation, they in turn have seven calendar days to start the consultation process.  It is common practice for the transferor and transferee to conduct one consultation process together.  The consultation ends after 10 calendar days , even if an agreement has not been reached with the trade unions or work councils.  Overall, the consultation procedure may take up to 24 days to complete. Only consultation is required; unions cannot veto the transaction.
  • Parent Decisions.  The obligations to inform and consult apply irrespective of whether the decision resulting in the transfer is taken by the employer or by its parent company.

[1] Directive 2001/23/EC.