1. What are the administrative steps necessary to hire an employee?

No later than the day prior to the start its job, even if such day falls on a public holiday, the employer is required to send electronic communication to the Employment Services, providing (i) worker’s personal data and tax payer’s code; (ii) starting and, in case of fixed-term employment, final date of the employment relationship; (iii) type of contract; and (iv) professional qualifications, as well as compensation and applicable statutory provisions. In case of operational difficulties linked to production requirements, the employer may submit only the employee’s personal information, taking care of providing any missing information within the subsequent 5 days. The employer may provide such information personally, or through Labor consultants or any other authorized intermediaries (see note from the Ministry of Labor of 12/21/2007). Any change in the employment relationship (e.g., conversion of a fixed-term work into indefinite-term relationship, resignation/termination, etc.) must be notified within 5 days from the occurrence of such event.

2. What are the obligations towards the employee at the time of hiring?

Within 30 days from the hiring date, the employer must provide the employee with the following information: a) identity of the parties; b) place of work; c) date of commencement of the employment relationship; d) duration of the employment relationship; e) duration of the probationary period, if applicable; f) placement, level and qualifications attributed to the employee, or features and brief description of assigned tasks; g) original amount of compensation and relevant constituting elements, with details of the payment schedule; h) length of leave or manner of determination and use of leave; i) work hours; and, l) notice periods in case of resignation/termination. The information referred to in points e), g), h), i) and l) above can also be provided through reference to the provisions of the national collective bargaining agreement applicable to the employee. The requirements at hand, furthermore, can be fulfilled in the employment agreement or hiring letter , or by giving to the employee a copy of the hiring letter sent to the Employment Services.

3. Are there special tax deductions for hiring employees?

Special tax exemptions are provided for the hiring by private employers, such as startups, of workers employed for an indefinite period. Each year, the law defines exemptions applicable to hires made in the calendar year of reference, also outlining their maximum amount, duration, and any applicable exclusion.

4. How many temporary employees can an innovative startup hire?

Innovative startups may enter into fixed-term agreements under particularly favorable conditions.  Indeed, they are not obliged to comply with numerical parameters on the application of fixed-term agreements, which are effective for all other employers, accounting for 20% of the number of permanent employees in force as of January 1 of each year.

5. Are there other benefits for fixed-term employment agreements?

Innovative startups and their employees may extend the final date of employment agreements for more than 5 times (the maximum extension provided by general rules) and enter into a new fixed-term agreement without having to wait the time lapse, which commences upon the expiration of the previous agreement, as required by the regulations applicable to all the other employers.  Such time lapse is equal to 10 days for contracts entailing employment terms of no more than 6 months, and to 20 days for those agreements providing for a longer term.

6. Which national collective bargaining agreement is applicable to employment relationships?

Generally, employment contracts contain a wide-ranging reference to the national collective bargaining agreement, signed by the most representative unions (National Collective Bargaining Agreement, “CCNL”), for the timely application of every aspect of employment terms.  It is advisable to choose the national collective bargaining agreement applicable to the sector in which the company operates. The parties are free to agree on the legal and financial content of the employment terms, within the framework defined by the law and the CCNL. 

7. Is it possible to include a probation period for new hires?

It is recommendable to add a probation period to employment agreements, during which the parties can evaluate the mutual convenience of their collaboration. During the probation period, either party can terminate the agreement without notice obligations and compensations.  The maximum duration of the probationary period is generally determined by the applicable CCNL. The probationary agreement must be in writing, specifying the tasks to be carried out under penalty of nullity of the clause and immediate stabilization of the employment relationship. At the end of the probationary period, hiring becomes definitive.

8. How to define the compensation of the employee of an innovative startup?

The compensation of workers of innovative startups may include (i) a fixed part that cannot be less than the minimum wage required by the applicable CCNL, and (ii) a variable amount, linked to efficiency and/or Company’s profitability, productivity of worker and/or work group, as well as to targets specifically agreed by the parties. The variable part of compensation may also consist of allocations of options to purchase shares or stocks of the company and their free transfer. 

9. Is it convenient to assign financial instruments or similar rights to directors, employees or associates?

The income of permanent directors, employees and associates of innovative startups which is derived from the allocation of stocks, shares, equity instruments or rights, or from the exercise of option rights granted for their purchase, does not contribute to the accrual of taxable income for the purposes of tax payments, as long as the following conditions are complied with:

  • tools and rights are issued by innovative startups or companies directly controlled by the former;
  • there is no subsequent purchase of these instruments and rights by the issuer, the innovative startups or any entity that controls or is controlled directly by the innovative startup or by the same entity that controls the innovative startup.

10. Is it possible to add provisions limiting an employee’s ability to carry out activities in competition with the startup?

During the employment relationship, the employee shall not carry out any business, on his/her own behalf or on behalf of third parties, in competition with the employer, or disclose information relating to the organization and methods of production, or use such information so as to cause damages to the company. The parties may agree upon additional constraints to become effective at the time of the end of the employment relationship.  The restrictive covenant on competition must be in writing and provide an adequate compensation for the obligations assumed by the employee.  Furthermore, the limits must be defined as they pertains to scope, place and duration of the non-competition covenant to be complied with by the employee.  The duration of the above covenant, under any circumstance, cannot exceed 5 years for executives, and 3 years for other employees.

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