THE CASE

DIRECTOR’S OFFICE OVERLAPPING WITH STATUS OF OPERATING QUOTAHOLDER – WHICH WELFARE SYSTEM SHOULD APPLY?

It can be a recurring situation that an individual carries out a collaboration activity (for instance, in the capacity as a director) and is, concurrently, the operating stakeholder of a company. Usually, in situations like this, the individual who is both director and quotaholder is likely to be enrolled with the welfare system called “Gestione Separata” (separate welfare fund) under Law no. 335/1995, while no enrolment is in practice made with the traders’ welfare fund under Law no. 662/1996 – which latter would apply if, under certain circumstances, the individual were just a stakeholder (although we have seen situations where that individual was enrolled with both funds and paid all the associated contributions).
The issue has become relevant in that the Social Security Agency (the so called INPS) has for longtime required (and still does) the enrollment with both funds, claiming the payment of all the associated charges.
Courts have been called to address the question of the double welfare system and a recent decision of the Milan Tribunal stated that “in the event of the concurrent discharge of different activities within the same entrepreneurial context, the enrollment with a welfare system must be only one. The feature of the prevailing activity is a unifying criterion and it is itself inconsistent with the enrollment with more funds” (Milan Employment Tribunal, March 25, 2009).
This interpretation is in line with the rulings issued by the Supreme Court over the last two years, essentially from 2007 on. Indeed, by decision no. 20886/07, the Supreme Court marked as unlawful the concurrent and double enrollment with the “Gestione Separata” welfare system and with the fund specific for trade people, with regard to an individual who was operating quotaholder of a company and, at the same time, carried out independent contractor’s activity as director of same.
In particular, the Court established that “according to Art. 29 first paragraph Law June 3, 1975 no. 160, as later replaced by Art. 1 paragraph 203 of Law December 23, 1996 no. 662, the individual who – in the context of a limited liability company – carries out the activity as operating quotaholder and as Director, is obliged to enroll with the welfare system corresponding to the activity he/she discharges on a usual and prevailing basis; while the double enrollment is not any compatible, it is up to INPS to take a decision as to the enrollment in direct relation to the prevailing activity”.
Therefore, it is material to investigate and check the actual prevailing activity, in order to determine the correct welfare system to be enrolled with and in view of the prospective request for the refund of the social security charges that have been overpaid.

NEWS – INTERESTING ITEMS

AN EMPLOYEE ON SICKNESS LEAVE CARRYING OUT ANOTHER WORKING ACTIVITY CAN BE SANCTIONED INCLUDING DISMISSAL

The Supreme Court, by decision dated April 21, 2009, no. 9474, has confirmed that an employee - who is formally on sickness leave and carries out, at the very same time, another job or similar activity for another principal - is likely to breach his obligations in terms of loyalty and good faith in the discharge of the contractual duties.
In proportion to the actual violation and to the kind of sickness by which the employee claims to be affected, the employee’s breach can be sanctioned up to his/her dismissal (please note that dismissal is the sanction in response to extremely severe and serious breaches).


THE WORK-BY-PROJECT CONTRACT MUST CLEARLY HIGHLIGHT A SPECIFIC PROJECT

The Court of Trieste (by decision issued on April 9, 2009), has recently confirmed the principle (regarded by settled case law as prevailing) that the project (of a work-by-project contract) must be specific, so that the activity required by said project should be clearly identified and strictly related to a final/partial outcome which must be different to the actual services provided by the principal. In particular, the Tribunal of Trieste requires the project to determine how the collaborator’s work is to adjust in the organizational frame of the principal, i.e. how his/her work should be used within the company structure. From the other hand, if the project is generic and lacks the above requirements, the independent contractor could be recharacterised as an employee (giving raise to claims in terms of remuneration and higher social security costs).


IMMIGRATION MATTERS – DOMESTIC AND AID WORKERS

The Government, with its Summer Act, has confirmed the procedure necessary to regularize domestic and aid workers, with regard to both Italian domestic workers irregularly employed and to the non-EU nationals who do not have a valid stay permit . The relevant application will need to be filed throughout the entire month of September 2009 and this transaction will imply a cost of € 500. This procedure addresses in detail all relevant requirements to be met, including limitations and sanctions (these latter in the event of applications based on false statements). In particular, the applications will need to be filed, from September 1 up to September 30, 2009 with the Social Security Agency with regard to Italian and EU-citizen domestic workers, while non-EU nationals will have to present it to the Immigration Office (“sportello unico per l’immigrazione”). Furthermore, applications will be limited, for each family, to one domestic worker and (under certain circumstances) to two nannies/aid workers.


THE PENSION OF THE AGENT CAN BE SEIZED WITHIN THE LIMITS SET BY THE LAW

By decision dated June 26, 2009, no. 183, the Constitutional Court has established the principle that agents and sales representatives’ pensions can be subject to seizure, although with regard to a limited portion. This ruling eventually equals the position of agents to other categories (for instance, the pensions granted by the Social Security Agency, etc.), whose pension entitlement has been held subject to limited seizure for some time now.


STILL ON THE DEBATED ISSUE WHETHER THE AGENTS’ CUSTOMER INDEMNITY CAN BE TAX-DEDUCTED

According to a recent decision of the Supreme Court (no. 13506 issued on June 11, 2009), the allowance account made by the principal for the agents’ customer indemnity, in an agency relationship, should be held tax-deductible .
The interpretation of the Supreme Court (5th Section) contributes, affirmatively, to the largely debated issue on the tax-deductibility of this indemnity.


THE COURT OF MILAN HAS UPDATED THE MEASURES IN THE DAMAGES’ TABLE REGARDING NON-MONETARY DAMAGE

The Court of Milan – prior to any other Court – has recently updated the criteria for the determination of damages resulting from a non-monetary damage, in keeping with a number of rulings of the Supreme Court (no. 26972, 26973, 26974 and 26975, all issued on November 11, 2008).
http://www.professionisti24.ilsole24ore.com/art/Professionisti24/Lavoro/Dossier-Lavoro/2009/tabelle_danno_biologico/tabelle_danno_biologico_index.shtml?uuid=96d25da6-6c91-11de-a42f-0ae3d5ec691e&DocRulesView=Libero


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Our Firm (Labor Department) will be at your disposal for any clarification and further explanation at the following email address: paolo.soo.invernizzi@palmer-legal.com