The finest in Italian expert opinions

The current global financial crisis has put both businesses and employees under an enormous amount of strain over the past six months. Companies, even those that have been established for many many years and have in the past overcome problems, are facing new challenges as the situation unfolds across the globe.

Theft by employees
In Italy we have observed an increase in cases being brought forward involving theft by employees – at all levels – which has been rather surprising. The situations have involved anything from physical theft of both company property and property belonging to other staff members, to data theft … and even fiddling expense claims and accounts. On a psychological level, of course people are worried about losing their jobs, but theft can only weaken the position of a company as it removes valuable assets – whether physical or intellectual.

In December 2008 the Institute for Corporate Productivity released ‘Workplace Theft Pulse’ which was a survey of 392 American businesses that indicated that 27 percent of large businesses (with 10,000 or more employees) and 15 percent of small to medium sized businesses had witnessed – as economic conditions worsened – an increase in theft by employees. This particular survey covered not only physical theft and data theft – but also ‘time theft’ which involves employees using company time for personal or non – work related reasons.

We do not have the exact statistics on employee theft for the Italian market – however in the past six months LABLAW has been contacted by companies more and more frequently to address this issue. Previously in Italy – when an employee was prosecuted for physical or data theft, the sentences handed out by judges were not terribly severe, unless there was a particularly strong case for suffered damages connected to the value of goods, or in cases where non-compete covenants were breached or trade and industrial secrets were breached. Recently we have seen judges in Italy becoming less lenient with their treatment of employees accused of theft – meaning that the penalties – including jail time – have become more severe.

In Italy ‘time theft’ is more of a disciplinary concern rather than judicial one – however it can easily become part of a legal proceeding to terminate an employment contract. There are actions that companies can take and processes which can be implemented in order to help protect a business’s assets – whether they be physical or intellectual. LABLAW regularly advises clients on these matters as part of their assistance with the day to day management of an activity.

Pensions at risk?
Pensions are an extremely delicate subject. Many American and English citizens have seen the value of their personal pensions either decrease or become at risk as they are invested in a falling stock market or tied to an employer that may be having difficulty. In addition to this, as more and more people become unemployed there are fewer and fewer contributions being made to the social security system through the taxation of payrolls.

To complicate matters further, there are cases such as General Motors of Canada Ltd which requested assistance from the government as their ratio of retired workers on the company pension scheme was more than double the number of active employees (14,000 workers supporting a pension scheme covering 34,000 people). And what about the 42,000 retired employees who were members of the Nortel UK pension scheme before its parent company filed for bankruptcy protection on January 14th, 2009? There are institutions in many countries (such as the UK’s Pension Protection Fund) which step in to assist with pensions when companies fail – however, at the time of the writing of this article the future of these two pension funds is still uncertain.

Italy is fortunate in that the state pension is predominantly guaranteed by the government.

In addition, the use of private and corporate pension funds invested in the stock market and other financial instruments is not as prevalent as in the UK and America.

That is not to say however that the subject of pensions in Italy is not delicate matter. For example, in the private sector, the old system was revised a few years ago and now employees must contribute for 35∞40 years into the system in order to receive a pension guaranteed by the state. Of course the actual amount paid out to the retiree has always been a point of discussion. The old system based the value on the average of the salary of employee’s last 5∞10 working years. The new system – which came into effect with a series of reforms brought about by laws which were approved in the 1990’s – now takes the value of the employee’s salary over their working life and pays only a percentage of the amounts accrued over the entire period.

In response to the current financial crisis, Italy is also making strategic moves towards protecting pensions.At the beginning of April, Giulio Tremonti, the Italian Minister of the Economy, was quoted in Il Corriere della Sera ( April 5th, 2009) saying “We have decided to move a large part of money from the public balance sheet towards social welfare, which does not provoke the breaking of the deficit and is, for now, sufficient.” For now, Italy appears to be safe on this front.

Opportunities to save jobs
It is not all doom and gloom. In fact, from the crisis may emerge opportunities for companies to rethink the organisational structure of their work force. It is actually at times like these that employees may be the key to a company’s success. A loss of employees may also mean a loss of valuable skills, quality of service, the ability to generate sales and also a loss of production capability. The choices which management make have repercussions beyond the bottom line of the spreadsheet.

In the Anglo∞Saxon press there have been more and more articles emerging about management presenting employees with two options – job cuts or voluntary reductions in salaries across the board in order to save the jobs of their colleagues. There have even been a few reported instances of employees approaching management with proposals of reduced work times and salaries in order to try to stave off inevitable reductions in the workforce. These are excellent examples of an employee-employer relationship… that is working together as a team for the good of the company.

However in Italy it may not be so easy to implement this approach as there are quite strict employment laws, set up to protect the workers, especially when it comes to working times and conditions. Most people employed by medium and large enterprises would fall into CCNL bands (which are national collective agreements known in Italy as Contratto Collettivo Nazionale di Lavoro) which govern not only the range of their salary – but also how many hours employees work each day.

Saying that, there are two examples of flexible instruments Italian businesses can implement in order to buffer the effects of the financial crisis. They are through the use of cassa integrazione or through the use of autogestione.

In simple terms, with cassa integrazione employees are put – in English terms – ‘on gardening leave’. That is their work is ‘suspended’ and they are sent home. In this case they do not lose their jobs and through INPS (Istituto Nazionale Previdenza Sociale), the worker still receives a salary – even though it will not be 100 percent of what they would be paid if they were in full employment. The idea is that companies are temporarily relieved of paying salaries and employment related taxes for a certain amount of days a year. More importantly however, it limits the risk for a business of losing valuable knowledge and resources when the market picks up again.

With autogestione an agreement is created between an employee and an employer allowing the employee to agree to a part∞time work contract in exchange for a 10-20 percent decrease in salary and the forfeit of any bonuses. Again, when the market picks up in the future the employee has the right to claim back their original role in the company with the original benefits. Again this is a simplified explanation of the meaning of autogestione which is intended to illustrate options available to businesses in times of crisis.

There are many complex rules and regulations governing both cassa integrazione and autogestione. LABLAW is a point of reference for both businesses and managers who need to study solutions and strategies in order to safely navigate the waters in these uncertain economic times. Dismissals, reductions in the workforce, downsizings, collective dismissals… there are now two new avenues to explore – the ones which could save both jobs and one’s company in the future.

LABLAW
In the past few months LABLAW has seen an increase in client requests for legal advice and assistance. In fact the firm has seen a 30 percent growth in activity in the first two months of 2009 in comparison to the same period the previous year. “It is during uncertain times, like these, that businesses need to protect themselves the most,” says founding partner Francesco Rotondi. “In fact, in order to meet the increasing demands of both our new and established clients,” continues founding partner Luca Failla, “we are expanding to Rome – not only with a new LABLAW office but also with a new project called Anthropos, in collaboration with EOS Srl (www.eosmc.com).”

“The objective of Anthropos,” elaborates Francesco Rotondi, “is to offer a specialised human resources consultancy for businesses that do not have this function internally.” LABLAW’s professional team has over 20 years of experience assisting clients with the management of human resources, employee contracts and benefits, reductions in the workforce – including collective dismissals – pensions and trade union negotiations. Today this employment law boutique employs over 15 professionals, all of whom, through their academic education, their postgraduate courses, masters degrees and through their work experience, have a very specific expertise in labour law and industrial relations.

LABLAW is the winner of New Economy’s “Best Italian Employment & Labour Law Team 2009”. In 2008 LABLAW also won World Finance’s Award for the “Best Italian Industrial Relations and Labour Law Team.” LABLAW – after just three years of activity – was recognised in 2008 by Legal 500, as one of the top three employment and labour law firms in Italy. This leading international legal directory said that LABLAW ‘is particularly famed for its ‘marvellous’ employment-related dispute practice. Clients appreciate the team’s ‘trustworthy and concise advice. Lawyers are extremely service- focused – you can get a hold of them 24/7

Further information:
LABLAW
Failla Rotondi & Partners
Piazza San Babila, Galleria Passarella, 1, 20122 Milano
+39 02 30 31 11
info@lablaw.com
www.lablaw.com