Italy – Actions are taken by Government to grant continuity in wage subsidy plans

The well-known Decreto Rilancio, which was enacted in May, extended the original (9-week long) Covid-19 wage subsidy schemes of additional 9 weeks, broken down as follows:

  • 5 weeks to be used until 31st August 2020;
  • 4 additional weeks, to be necessarily used after 1st September 2020 and until 31st October 2020[1].

Clearly, for those employers who have been using such schemes since their introduction, i.e. since February 23, 2020, the original 9 weeks + the new 5 weeks would expire before the end of the firing ban, which is currently due to end on 17th August 2020.

In order to partially cure this gap, the Italian Government has recently issued Decree no. 52/2020 (effective as of 17th June 2020), which authorizes companies that have used up all the 9 + 5 weeks to immediately use also the 4 additional weeks.

Despite this improvement, however, the total span of social plans (9 + 5 + 4 weeks) is still not enough to cover the entire firing ban period. For example, if a company started using social plans on 2nd March, 2020, the 18-week period (9 + 5 + 4) will expire on 3rd July 2020.

At this stage, therefore, companies that run out of social plans and cannot resume the business activity as usual will need to implement alternative measures (such as, for instance, making use of ordinary and not Covid-19 related social plans, if accessible, or asking employees to use their accrued holidays, if existing). Indeed, at this stage they can neither (i) ask employees to resume work nor (ii) dismiss them at least until 17th August. In the absence of alternative measures employers could find themselves in an unpleasant position where they are forced to pay employees (indeed, only a shutdown imposed by the public authorities would justify a suspension of the remuneration) while they cannot in fact work.

In this respect, we would expect that in the coming weeks further Government actions are taken to finally remedy this discrepancy. Among the several measures that the Government is considering, there seems to be a further extension of the wage subsidy plans (as well as of the firing ban) until the end of 2020, which could be implemented also through the use of European funds.

[1] Except for a few exceptions in the tourism, entertainment, exhibitions and congresses sectors.