Project Work Contracts Are Shelved in Italy

With the coming into force of the Jobs Act, it will be no longer possible for employers to enter into contracts for project work, while those already signed will continue to have effect until expiration.

So, one of the most controversial types of labor contract is shelved, 12 years after it was introduced by the Biagi Law. It is worth remembering the reasons that made legislators establish the contract for project work in Italy and those that have determined its demise. Before 2003, in Italy there had been an abnormal growth of contract workers out of proportion with respect to other European countries. Businesses, crushed by the direct and indirect labor costs related to the permanent employment contract, had found an escape in so-called co.co.co. labor, the popular acronym for temporary contracts used as functional substitutes of permanent employees.

It was to try to put a stop to this rampant labor insecurity among younger cohorts that the Biagi law tied "coordinated and continuous collaborations" to specific projects, by requiring employers to specify the characteristics of semi-autonomous work and providing certain safeguards, however tenuous, for the workers involved. With time, however, the limits to the contracts for project work were sidestepped, just as in the co.co.co. contracts they were meant to replace, and firms just used contract work to keep on lowering the cost of labor improperly.

Moving from this recognition about the misuse of contracts for project work, the Jobs Act has decided to put an end to that experience, by abrogating the law and adopting a radically different approach from the past in the fight against labor insecurity. On the one hand, the Jobs Act has made more affordable for employers the recourse to standard full-time employment contracts in terms of lower labor taxes, while expanding the coverage of the rules on dependent employment, which from 1 January 2016 will also be applicable to "continuous and exclusively personal collaborations, whose mode of execution is organized by a client with reference to the time and place of the job".
In practice, companies had learned to circumvent the regulations on dependent employment by inserting temporary project workers in business organizations, without however acknowledging their employee status, which is characterized as "execution under direction" by art. 2094 of the Italian Civil Code.

With the new policy, the concept of "hetero-direction" is introduced and this will ensure the protection of labor conditions for the new generations of workers who, while not responding directly to a hierarchical superior, structurally place their job performance within a business organization. This will also help restore the full legitimacy of all the other genuinely autonomous forms of productive cooperation, by legally addressing the status of self-employment, in special statutes anticipated by the Budget Law for 2016, whose regulatory content will be defined in the coming months.