The fixed-term contract: a flexible contractual formula

The legal regulation introduced in 2015 already confirmed some of the characteristics of this institution (formerly provided for by Legislative Decree No. 368/2001, implementing Directive 1999/70/EC) and presented that fundamental openness towards the unnecessity of a recruitment reason that had already been introduced into the legal system in 2012, by the Fornero Law. While on the one hand this approach gave a sign of greater freedom in the use of this form of contract, which was necessary to respond concretely to the demand for greater flexibility called for by the business world, on the other hand it has in fact created the premises for a progressive tightening, in recent years, related to the introduction of a necessary  employment reason for contracts interesting more than 12 months, also involving contract extension and renewal (always beyond 12 months). Furthermore, this also provided an opportunity to bring back to this matter the key role of collective bargaining (already provided for by Law No. 57/1986), as a privileged instrument for determining in each business sector, the actual, real and concrete ‘temporary' or ‘structurally temporary' needs determining the use of the fixed-term contract.

In Italy, the current regulation is the result of both the adjustments made in 2018 by the Decreto Dignità (Decree No. 87/2018 converted into Law No. 96/2018) and of the subsequent amendments and supplements, result of the derogations and further openings made during the pandemic period. In that period, we realized, among other things, the importance of flexibility schemes anchored to specific contractual instruments and the relevance of the collective bargaining players' knowledge of the different sectors in this matter.

The framework that the law returns to us today in this regard is characterised first and foremost by the criterion of the total absence of the need for an employment reason for the first 12 months of the employment relationship (art. 19, c. 1 Legislative Decree no. 81/2015) to which follows the possibility of renewal, as well as that of extension (within a limit of 4 extensions) for an overall maximum total term (between extensions and renewals) of 24 months of employment, including in this maximum limit also any interruption periods between one contract and the other, when the tasks and the legal category of classification (blue collar, white collar or managerial positions) of the worker are the same (art. 19, c. 2 Legislative Decree no. 81/2015).

The requirement of an employment reason - in all cases of fixed-term employment exceeding 12 months - is therefore laid down by law by providing that it must correspond:

1. to the indication of a scenario provided for by collective agreements (of all levels, as governed by Article 51 of Legislative Decree 81/2015, i.e. national, territorial or company collective agreements signed by trade union associations that are comparatively more representative at national level and company collective agreements entered into by their company trade union representatives, or by the unitary union representative body);
2. in the absence of collective bargaining provisions, to a scenario provided for in the collective agreements applied in the company (and only until December 31, 2024, for technical, organisational or production requirements identified by the parties);

(b-bis) to a replacement of other workers (Art. 19(1) of Legislative Decree 81/2015).

In the case of contracting a fix-term contract with an initial lenght of more than 12 months, as well as in the cases of extension and renewal of a contract with provision for exceeding this limit, precisely as a result of the extension or renewal, without compliance with the reasons requirement, the law provides for the contract to be transformed into an open-ended contract from the date on which the 12-month time limit is exceeded (Article 19, paragraph 1-bis, Legislative Decree 81/2015).

The law also establishes the mandatory condition of the written form (for employment relationships lasting more than 12 days), to which are added, on the one hand, the obligations to inform the employee of the conditions applied to the employment relationship, pursuant to Decreto Trasparenza (Legislative Decree No. 152/1997, as amended by Legislative Decree No. 104/2002, issued in transposition of EU Directive No. 2019/1152), and, on the other hand, the provision of specific numerical limits, based on the workforce, to the use of this form of employment - without prejudice to eventual different provisions stated by collective bargaining.

Therefore, a fundamental role in the regulation of fixed-term contracts arising from the law today is entrusted to collective bargaining. This does not only have to do with the determination of reasons or numerical limits, but above all with the possibility that the bargaining freedom granted to the collective parties identifies further room for flexibility. Reference is made, for example, to the identification of seasonal activities, for which, not only the maximum duration limits (equal to 24 months pursuant to Art. 19, c. 2 Legislative Decree no. 81/2015) but, also the obligations to identify the reasons for employment terms exceeding 12 months (also for extension and renewal; Art. 21, c. 2 Legislative Decree no. 81/2015) already do not apply under the law. This is a very important aspect that has not been very significantly grasped by some of the collective bargaining players in the most recent contract renewals, which could actually have helped to shed more light on the correct identification of seasonal activities (beyond what is strictly provided for by law under Presidential Decree no. 1525/1963). Moreover, considering that the latest case law is very strict in defining the concept of seasonal activities and establishes that only business activities tightly connected to forms of seasonality (which, if not identified by law, should be well defined by collective bargaining) can be so considered, same considerations are not extended to those business activities connected to greater market demands or to reasons of an economic and productive nature (see Court of Cassation no. 9243/2023). A missed opportunity that may not be regained with the next renewals.