Articles
12/11/2019

Does the increases in the additional contribution for unemployment benefit “NASpI” also apply to maritime labor? An anomaly that seriously jeopardizes the maintenance of current levels of employment

With circular letter No. 121, published on 6 September 2019, INPS (the National Institute for Social Security) has regrettably confirmed the fears of sector operators, who– after the publication of the so-called “Dignity Decree” – wondered whether the contribution increases provided therein for the generality of fixed-term employment contracts, were also applicable to seafarers employed on a fixed-term contract.

In order to illustrate the impact of the change introduced by the new statutory provisions, it is necessary to briefly outline the legal context in which the reform occurred.

In order to finance the unemployment, benefit potentially due upon the expiry of fixed-term employment relationships, the so-called “Legge Fornero” (and, namely, Article 2, paragraph 28 of Law No. 92/2012) established that – in the case of fixed-term employment – in addition to the ordinary contribution for unemployment (fixed at 1.61%), an additional contribution of 1.4% should also be paid. Hence, already in the past the contribution cost for fixed-term employment contracts was higher than that for open-ended employment contracts.

With the so-called “Dignity Decree” (Decree-Law No. 87 of 12 July 2018, converted into Law No. 96 of 9 August 2019), a further contribution burden was introduced for those employers habitually resorting to fixed-term employment relationships. In order to discourage the excessive use of this type of employment contract, an increase of 0.5% in the above-mentioned additional contribution shall apply whenever the employer renews a previous fixed-term employment contract.

The law does not provide for any maximum limit and, in theory, each time a fixed-term employment contract is renewed, the additional contribution is increased by 0.5%. Only (i) domestic workers, (ii) workers employed to carry out seasonal works, (iii) apprentices and (iv) civil service employees are excluded from the scope of the reform.

INPS Circular No 121/2019 issued with regard to the above-mentioned regulatory framework, clarifies that – although maritime employment relationships are regulated by laws governing a specific subject matter (lex specialis), which override laws governing only general matters (lex generalis) – the mechanism described above shall also apply to fixed-term employment contracts entered into with seafarers. The circular reads as follows: “The increase in the additional contribution [is] due with regard to the renewal of any type of fixed-term contract whatsoever to which the additional contribution applies, including contracts governing employment relationships in the maritime sector”.

The legislator’s choice to extend the mechanism also to maritime labor is highly questionable, since it does not take into due account that the maritime industry is ontologically distinguished by characteristics that are in no way comparable to those of ordinary employment relationships. Suffice it to mention that in this specific sector the use of fixed-term employment contracts is absolutely common and cannot be considered an anomaly. Indeed, maritime labor is intrinsically characterized by temporality and continuous turnover of workforce, which is the reason why the “Dignity Decree” proves to be particularly disadvantageous for this industry. As a matter of fact, for a significant part of the maritime activity it is not even conceivable to recruit seafarers under open-ended contracts.

It happens quite frequently (a) that contracts entered into with seafarers before the Placement Office for Seafarers are for a fixed term (not exceeding a maximum of 4 months), (b) that, at the expiry of the term, the employment relationship ceases and the seafarer is paid post-employment amounts due and severance indemnity and (c) that, after a nonshore rest, the seafarer enters into a new contract with the same shipowner. Therefore, in the Italian practice (but similar situations can be found anywhere in the world) it is not uncommon that a substantial continuity of collaborations between a seafarer and a shipowner exists, which is formalized through a series of fixed-term employment relationships.

Ironically, the rules introduced by the “Dignity Decree” will not only prevent the achievement of the stated aim to obtain a greater employment stability, but will probably end up causing diametrically opposite effects. The increase in contributions will make shipowners increasingly reluctant to enter into employment agreements with seafarers who had already been previously employed on board their ships, thus giving rise to a greater fragmentation of relationships. All this is very likely to cause perilous distortions of the employment market or seafarers, seriously jeopardizing the maintenance of current levels of employment as well as negatively impacting also on safety and working conditions of seafarers on board ships.

But even from a technical-regulatory point of view, the (probably unintentional) choice of the legislator, to apply a legislative policy to an industry, like the maritime one, which has little to share with the logics that characterize the “normal” employment relationship, is to be considered a patent anomaly.

It has to be recalled that – unlike the general employment legislation that identifies an “open-ended employment contract” as “the common form of employment relationship” (Article 1 of Legislative Decree No. 81/2015) – maritime law does not take such a decisive position. On the contrary, Article 325 of the Navigation Code considers fixed-term and open-ended employment contracts absolutely on the same level, thus agreeing therefore on the fact that in the maritime industry the use of fixed-term employment is not exceptional.

So, case-law (both at national and EU level) has repeatedly pointed out that – in the light of the special nature of maritime labor law within the system of sources of Italian law (see Article 1 of the Navigation Code) – the ordinary rules shall apply only in the event that maritime labor law does not provide for any rules and the regulatory gap cannot be filled by the special rules.

In the light of the above, it would seem legitimate to have a strong fear of the obvious negative impact that the legislation at issue could have on the sustainability of an industry in which – physiologically and since ever – it is usual to resort to fixed-term employment contracts.

We are aware that the main associations representing the interests of shipowners have already started an active dialogue with the legislative offices of the Ministry of Infrastructure and Transport and with the Ministry of Labor to seek a solution and to remedy the improvident legislative intervention.

Moreover, the maintenance of the rules of the “Dignity Decree”, would likely cause an increasing number of shipowners to apply for the registration of their ships in the International Register established by Decree Law No. 457/1997 for the sole purpose of benefiting from the relief from social security contributions under Article 6 of the aforementioned decree, creating an evident distortion of the market.

Therefore, it is to be hoped that there will be a prompt legislative intervention on the subject, which – acknowledging the special nature of maritime labor relationships and the consequent inapplicability of the logics of ordinary labor law – will deny the interpretation proposed by INPS, the National Institute for Social Security, with its circular; should this not be the case, it will not be possible to exclude serious repercussions for the sector, even in terms of employment levels.

 

 

 

This article is for information purposes only and is not intended as a professional opinion. For further information, please contact Ulrich Eller.

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