European Employment Insight – February 2024

The Andersen European Employment Service Line consists of specialist lawyers and tax advisors who proactively guide national and international companies in various sectors. The professionals assist the client throughout the entire employment relationship, from the signing of the contract to its termination.

The monthly newsletter Employment Insights provides an overview of the latest developments in employment law, guidelines, case law and collective agreements from various countries. The February issue features contributions from 20 different European jurisdictions.

The Italian experts led by partner Uberto Percivalle focus their attention on the novelties contained in the 2024 Budget Law, in particular on the pension rules and the reduction of labour costs.


2024 Budget Law and retirement rules

The Budget Law outlined the rules applicable in 2024 regarding retirement, including the following:

  • defining old age retirement (with an age of at least 67 and at least 20 years’ pension contributions)
  • defining early retirement (with 42 yrs and 10 mths contributions for men and 41 yrs and 10 mths contributions for women, and an age of at least 64)
  • “Level 103” early retirment (age of 62 + 41 years of contributions, but subject to pension payment limitations); (iv) “Women Option” early retirement (age 61 + 35 yrs. contributions, but subject to critical conditions of disability, or caregiving, or major business crisis affecting the employing company)

2024 Budget Law and labor cost reductions

The Budget Law outlined certain measures meant to reduce labor costs and/or increase value to employees. Among them:

  • a 6 percentage points reduction of the employees’ share of social contribution for wages not exceeding euro 2,692.00 monthly and a 7 percentage points reduction for wages not exceeding
    euro 1,923.00 monthly
  • a 5% income tax cap on incentives not exceeding euro 3,000 euro gross (iii) a tax exemption on
    certain benefits provided to employees up to 1,000 euro gross per year (2,000 euro for workers with children)
  • an exemption from the employees’ share of social contribution, up to 3,000 euro per year, for women workers with at least two children

Exemption for Southern Regions

The European Commission accepted Italy’s request to extend the “Social Contribution Partial Exemption for Southern Regions” for an additional 6 months, until June 30, 2024. Said measure provides a social contribution reduction of up to 30% in favor of private employers based in one of Italy’s southern
regions (Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia, Sicily).


Social contribution remains due on the indemnity in lieu of notice, notwithstanding employees waiving their entitlement to the indemnity.

With decision 395/2024 the Court of Cassation opined that an employer’s obligation to pay social security to the social security agency is autonomous and distinct from the obligation to pay the underlying indemnity in lieu of notice to an employee. For this reason, even if an employee has
validly waived his/her right to the indemnity, the social contribution on it remains due. The Court’s reasoning is in line with past precedents and is an important reminder to employers, since waivers to indemnity in lieu of notice are frequent clauses in settlement agreements that follow individual and
collective redundancies.

Workers may take vacation, while on an illness leave, in order to minimize the risk to lose their job
for excessive illness

With decision dated January 8, 2024, the Court again addressed the relationship between illness leave and vacation leave. The Court confirmed the possibility, for workers on an illness leave, to take vacation
while on an illness leave, in order to change the ground of an absence from work to vacation, and avoid the loss of employment for excessive illness. In such cases, while workers do not have an unconditional
entitlement to take a vacation leave, their employers must properly balance the business needs of their company, if any, to deny the use of vacation, with the workers’ needs. Such a company obligation to
attentively balance company and workers’ needs would not be reasonable, on the other hand, in cases where the relevant collective agreement provides for other ways, such as unpaid leaves of absence, to avert the ill workers’ loss of jobs.