NEWSFLASH: August decree - new measures on fixed-term contracts

20 Aug 2020

  • The obligatory extension of fixed-term contracts (including temporary agency work) and apprenticeships for a period corresponding to the suspension of work activity as a result of the Covid emergency, as provided for by the “Rilancio” Decree, has been repealed. Therefore, such obligatory extension is no longer in force from 15 August 2020. Any extensions already in place by virtue of this law and already communicated to employees remain valid in any case, if they took effect from a date preceding the date on which the August Decree entered into force (i.e. 15 August 2020). 
  • Until 31 December 2020 it will be possible - just once and for a maximum period of 12 months - to extend and renew fixed-term contracts without providing any justifying reason for the extension/renewal. Extensions or renewals must be stipulated by 31 December 2020 at the latest, but the expiry date of such contracts can be after such date. The maximum duration limit for contracts, equal to an aggregate total of 24 months, remains in place and cannot be exceeded, unless otherwise provided for by collective bargaining agreements. 
  • The possibility to extend without providing a justifying reason applies to all contracts, unlike the previous law (“Decreto Rilancio”), which provided for a limited extension without providing a reason until 30 August, but only for contracts already in place at 23 February 2020. 
  • Any obligatory extension applied as a result of the previous law that has now been repealed does not preclude companies from using the newly provided for possibility of a 12-month extension without providing a justifying reason. 
  • Similarly, it must be noted that any extension without reason provided for until 30 August, done under the previous law, does not preclude companies from using the new measure, since the requirement that there be one single extension cannot be retroactive. In any case, it is hoped that a clarification on how to interpret this point will be provided in the near future. 
  • Even though temporary agency work is not mentioned by the new law, it is believed that the power to extend/renew without providing any justifying reason must also be applicable to temporary agency work, given that it is a derogation from a general law that also applies to these types of contracts.