New provisions in Italian Labour Law have introduced important changes regarding the use of fixed-term contracts and work project contracts from 1 January 2013.

Prior to 1 January 2013, employers had to provide suitable reasons for hiring a worker with a fixed-term contract. With the new law this is no longer required, providing that: (i) the working relationship is the first between the parties; (ii) the duration of the fixed- term contract is no more than twelve months; or (ii) the temporary contract may not be extended.

These temporary contracts (so called “temporary contracts without reason” or “contratti a tempo determinato acausali”), can now be concluded in the absence of the usual justifying circumstances and may be used to fill any employee role, even for labour supply contracts, but they cannot be extended.

In addition, the Law states that national collective agreements may, if agreed, provide different regulations in the use of temporary contracts by employers involved in company reorganization, brought about by (i) starting new activities; (ii) launching an innovative product or service; (iii) implementing an important technological change; (iv) augmenting the supplementary phase of a significant project of research or development; (v) renewing or extending a ‘considerable’ order. In such cases, employers may hire temporary employees (by fixed term contracts or labour supply contracts) within the threshold of 6% of all employees in force in the same office.

Another important change concerns an extension of the period (known as “periodi cuscinetto”) which must elapse between two fixed-term contracts in order for the second not to be deemed a permanent contract. Where an employee was previously employed on a fixed-term contract of up to six months, at least 60 days must elapse before he or she is rehired on a fixed-term contract – the previous minimum gap was 10 days. Where the previous fixed-term contract was for more than six months, 90 days must elapse – the previous minimum gap was 20 days.

Moreover, the Law introduces the maximum duration of 36 months – included renewals and extensions – of a temporary contract. Such maximum duration takes into account both fixed term contracts and labour supply contracts signed between the parties of an employment relationship.

For fixed term contracts, the new Law modifies the necessary conditions for challenge the contract. In particular, a fixed term employee may challenge his/her contract within 120 days – no more than 60 days from the termination date, and must file his/her summons before the Labour Court within 180 days.

The Law also make significant changes to project work contracts, which are cooperation agreements in connection with the realisation of a specific project that justifies their use.

In particular, the Law states that the project (i) must be functionally related to an effective final result of business carried out by the employer; (ii) may not merely replicate the employer’s core business; (iii) may not consist merely in carrying out ordinary or repetitive duties; and (iv) must be described in detail in the contract with specific reference to the final result.

With reference to project workers’ compensation, the Law provides that it must be related to the quality and the quantity of activities carried out by the project workers and that it, in any case, may not be lower than the minimum compensation provided by specific national collective agreements taking into account typical project workers’ professional profiles. In the absence of specific national collective agreements, the compensation may not be lower than the minimum compensation provided by the national collective agreements, applied to the sectors in which project workers are engaged, for similar activities performed by employees with the same professional profile of the project workers.

The Law provides that in the absence of a project (“the essential element in the validity of a work project contract”), the contract is considered to be a permanent employment contract from the beginning. Similarly, if a project worker carries out work in the same manner as the company’s regular employees, the project worker’s working relationship with the employer is considered to be an employment relationship from the beginning, although it remains open to the employer to demonstrate that this is not the case.

The Law also amends the rights of the parties to withdraw from a project work contract. The employer may withdraw from the contract before its termination date if the worker is professionally incapable of completing the project; the project worker may withdraw from the contract before its termination date on terms set out in the contract.