The European Court of Justice this week looked at employment relationships of public sector workers in Italy, analysing the transfer from fixed-term employment to permanent employment and its impact on pay.

It ruled that fixed-term contracts do not constitute an ‘objective ground’ that would justify the refusal to take account previous service when determining the salaries of workers moving from temporary contracts to permanent employment.

Several employees, recruited by the Italian National Competition Authority (AGCM), worked for the public sector body under successive fixed-term employment contracts. They then obtained permanent contracts, a process known as a ‘stabilisation’ procedure.

But this caused issues regarding the salaries of the workers. Under Italian law, this initial salary is fixed and disregards the length of service accrued in previous employment under fixed-term contracts.

The AGCM refused to take into account the fact that those employees had worked for the same public authority on fixed-term contracts. The workers then took the case to court, involving the Court of Justice on the question whether the European ‘framework agreement’ on fixed-term work precludes Italian legislation.

In its judgment on 18 October 2012, the Court pointed out that fixed-term workers must not be treated in less favourable terms than permanent workers – unless different treatment is justified on objective grounds.

It said that the Italian legislation is “disproportionate” in that it “completely prohibits all periods of service completed under fixed-term contracts being taken into account in order to determine the length of service upon recruitment on a permanent basis and, thus, the remuneration.”