Is there room for furlough in Italian labour law?

26 May 2023

In relation to working relationships holding international features, it is not rare that some procedures, normally executed in one country, are implemented in the other national legislations involved, even under other similar options they provide. As the furlough is not an exception to the above, here below is a brief recap of its characteristics and on how it relates to the Italian employment system.   

As a typical law instrument of the UK and the United States of America, furloughis thereby defined as that period of time within which a company pauses the employment relationships with one (or more) of its workers for a fixed length of time during which the latter does not receive the working performance from the involved employee, and consequently does not have to provide the relevant remuneration.

Such a timeframe is contractually defined by the parties through a specific arrangement, where the involved employees agree to stop carrying out their working activities for a determined period of time, although still formally remaining an employee of the reference company.

According to UK and USA laws on the matter, such a procedure applies to both part-time and full-time workers under any regime (e.g., agency workers and apprentices as well).  

As the employee chooses the employees to put through a furlough regime, it has to avoid any possible discrimination while doing so. However, on the other hand, employees are compelled to accept the relevant proposal when offered, unless a specific lay-off clause is provided for such scenarios in their employment contracts.

On the other hand, the American regulations prescribes that the furlough agreement shall be in writing and it shall indicate the start date of the relevant period, the ways the latter stay available to the employer in case it decides to put an end to the furlough period, as well as the timeframe within which the conditions set for the execution of the furlough will be revised.   

Even though the furlough period is intended to be unpaid, if the parties have agreed on a better financial treatment for the employee, this must also be included in the relevant agreement. Moreover, with particular reference to the amount of such a payment the UK law provides that the employer will be reimbursed by the competent financial authority with a total sum equal to 80% (or alternatively up to £2,500, whichever is less) for the amounts paid during the period of the employee's use of the furlough. On a purely discretionary basis of the employer, it may freely determine to pay the remaining 20% of the remuneration normally received by the employee concerned. In any case, even if the latter decides otherwise, such an intention and its reasons shall be formally expressed to the concerned employee.

During the execution of their furlough period – which is legally provided to last at least seven days to a maximum of twelve months – the employees remain formally employed by their employer. In cases where the latter wishes to extend or terminate the employees’ period of absence, this must be provided for in a further written agreement between the parties involved. In the latter scenario, there is no minimum notice period required, but it is advisable that the modalities for returning to the workplace be discussed as early as possible to avoid potential criticalities caused by the employees’ period of absence.

Finally, workers who are furloughed by one employer, may still work for a different one as well, provided they remain available in case such a period is interrupted by the reference employer, who may request the resumption of the activities.

As a result of the above brief examination, the implementation of the described Anglo-Saxon furlough in the Italian context would be challenging, especially in consideration of the significant flexibility with which the parties can decide to use it to use it (and in fact, as is well known, it does not exist in our legal system).

The Italian “leaves” could, in a broad sense, represent a valid alternative, as they allow workers to be absent from their workplace for a period of temporary unpaid absence. However, it is only granted to specific categories of employees, merely where certain requirements are met according to the provisions of the applicable NCLAs (e.g., for personal reasons strictly provided for by law), during which the employees concerned retain, for its entire duration, the right to job preservation.

Notwithstanding the above, the parties may always decide to agree upon a period of paid leave of absence, pending which the employee will stay bounded to the loyalty obligation towards the employer pursuant to section 2105 of the Italian Civil Code, which prevents the employee to execute competing working activities for a different employer.   

2024 - Morri Rossetti