The Ordinary Wage Compensation Fund (CIGO) for the industry and building sectors supplements or replaces the payment of workers whose work has been suspended or reduced due to company circumstances caused by temporary events that are not attributable to the company or its dependent workers, including seasonal weather conditions and temporary market situations.
The Ordinary Wage Compensation Fund for the Industry and Building sectors was reformed by Legislative Decree n. 148 of 14 September 2015.
The Ordinary Wage Compensation Fund is aimed at workers hired under a subordinate employment contract (including apprentices with professional apprenticeship contracts), with the exclusion of directors and home workers (article 1, paragraph 1, Legislative Decree 148/2015).
Article 16 of Legislative Decree n. 148/15 stipulates that, by decree of the Ministry of Labour and Social Policies, the criteria required for granting the Ordinary Wage Compensation Fund are recognised. Legislative Decree n. 95442 of 15 April 2016, published in the Official Journal of 14 June 2016, identifies the following types of additional causes:
- lack of work/orders and market crises;
- closure of building site, end of work, end of work phase, alternative expert evaluation that is supplementary to the project;
- lack of raw materials or components;
- weather events;
- strike of a department or of another company;
- fires, floods, earthquakes, collapses, electrical power outages, impracticability of the premises, possibly by order of the public authority e.g. suspension or reduction of activity by order of the public authority for reasons not attributable to the company or workers;
- machinery malfunctions - extraordinary maintenance.
Standard assistance may be granted for production units experiencing a reduction in working hours as a result of the conclusion of a job security agreement provided that it concerns individual workers and does not last more than three months.
For production units benefiting from both the Ordinary Wage Compensation Fund and extraordinary wage subsidies, for the purposes of calculating the maximum total duration referred to in article 4, paragraph 1 of Legislative Decree n. 148/2015, the days on which the Ordinary Wage Compensation Fund and the job security agreements coincide are counted in full as Ordinary Wage Compensation Fund days.
The coexistence of the payment of compensation from the Ordinary Wage Compensation Fund and the Extraordinary Wage Compensation Fund (CIGS), within the same period and at the same production unit, is permitted provided that workers are not receiving both of the two benefits and that they are identified through dedicated directory of names. The inability to receive both benefits is effective from the start date of the coexistence of the two benefits and for its whole duration.
Start date and duration
Payments from the Ordinary Wage Compensation Fund are paid for a maximum period of 13 continuous weeks, which may be extended on a quarterly basis up to a maximum total of 52 weeks (article 12, paragraphs 1-4, Legislative Decree n. 148/2015). Wage subsidies relating to more than one non-consecutive period may not exceed a total of 52 weeks in a rolling two-year period; if the company has benefited from 52 consecutive weeks of wage subsidies, a new claim can be submitted for the same production unit only when a period of at least 52 weeks of normal working activity has elapsed.
For each production unit, payments received from the ordinary and Extraordinary Wage Compensation Funds may not exceed the maximum total duration of 24 months in a five-year rolling period, pursuant to article 4, paragraph 1, of Legislative Decree n. 148/2015. This extends to 30 months, pursuant to article 4, paragraph 2 of Legislative Decree n. 148/2015, for the following:
- industrial and artisanal building businesses and similar;
- industrial businesses carrying out the excavation and/or processing of stone material;
- artisanal businesses that carry out the excavation and processing of stone materials, with the exception of those that carry out the processing activities in laboratories with structures and institutes that are not involved with the excavation activities.
In order to calculate the maximum overall duration referred to in article 4, paragraph 1 of Legislative Decree n. 148/2015, the duration of the extraordinary wage subsidies for the fulfilment of the job security agreement is half calculated with regard to the part that does not exceed 24 months and half calculated based on the part (in whole) that exceeds 24 months (article 22, paragraph 5, Legislative Decree n. 148/2015).
Circular n. 24 of the Ministry of Labour and Social Policies of 5 October 2015 confirms the application of INPS circular n. 58 of 20 April 2009, which establishes the criterion for calculating the integrable week counted in days, for the purposes of calculating the wage subsidies .
In compliance with the maximum durations for which payments from the Ordinary Wage Compensation Fund can be received (article 12, paragraphs 1-4, Legislative Decree n. 148/2015), hours of wage subsidies exceeding the maximum amount of 1/3 of the ordinary working hours in the two-year rolling period are not permitted. This applies to all workers in the production unit who were generally considered to be employed in the six months preceding the claim for the income support payments (article 12, paragraph 5, Legislative Decree n. 148/2015).
What am I entitled to?
The sum of the benefit amounts to 80% of the total remuneration that would have been due to the worker for their unworked hours, ranging from zero hours to the contracted working hours. The payment is calculated by taking into account the working hours of each week, regardless of the pay period. If the reduction in working time involves working hours being spread out over predetermined periods of more than one week, the supplement shall be payable, within the limits of the previous periods, based on the average weekly working hours during the multi-week period concerned.
For workers with a fixed periodic wage, reduced in accordance with contractual rules as a result of a reduction in work, the supplement is payable within the limits referred to in paragraph 1, indicating (in hours) the fixed wage received in relation to normal working hours.
For the purpose of supplementary payments, the allowances paid in addition to the basic payment, with reference to a working day, are calculated in accordance with the criteria established by the provisions of the law and collective agreement governing the allowances themselves and, in any event, indicating the hourly allowance amount in relation to an eight-hour work schedule.
For workers paid by piecework and for those paid in full or in part with production bonuses, interest and the like, the supplement refers to the average hourly earnings received during the pay period for which the supplement is due.
The sum of the wage subsidies is subject to the provisions of article 26 of law n. 41 of 28 February 1986 and may not exceed the maximum monthly amounts established in a special circular each year. Said maximum amounts relate to the hours of authorised income support payments, which can be received in no more than twelve monthly payments, including the additional monthly instalments. The maximum amounts for 2016 are: €971.71 (gross amount) if the monthly payment amount used to calculate the benefit, including additional monthly instalments, is equal to or less than €2,102.24; €1,167.91 (gross amount) if the monthly payment amount used to calculate the benefit, including additional monthly instalments, is greater than €2,102.24.
Since 2016, with effect from 1 January of each year, the maximum monthly payment amounts, and the monthly reference payment amounts referred to above are, for families of workers and dependent workers, increased by 100% of the annual increase of consumer prices in the ISTAT index.
The maximum amounts referred to in paragraph 5 must be increased, in relation to the provisions of article 2, paragraph 17 of law n. 549 of 28 December 1995, by a further 20% for income support payments granted to companies in the building and stonework sector due to seasonal bad weather.
The maximum amounts do not apply to benefits granted for agricultural sector businesses for seasonal bad weather, in accordance with the provisions of article 18, paragraph 2 of Legislative Decree n. 148/2015).
The supplement is not granted for unpaid holidays or unpaid absences.
Workers in receipt of income support payments are entitled to the family allowance provided for in article 2 of decree-law n. 69 of 13 March 1988, converted, with amendments, by law n. 153 of 13 May 1988, as subsequently amended, in relation to the pay period adopted and under the same conditions as workers with normal working hours.
Payments from the Ordinary Wage Compensation Fund are authorised with balancing payments made by the employer. In circumstances of serious financial difficulties which are duly documented by the company, the direct payment of workers by INPS may be authorised by the competent INPS office upon claim by the company.
Concerning the balancing payment, advance payments made by the employer can be recovered through the monthly UNIEMENS report. In the event of termination of work activity, the company may claim reimbursement by submitting a modified UNIEMENS flow for the last month of work activity.
In accordance with article 10, Legislative Decree n. 148/2015, a contribution with percentages that vary according to the workforce employed, is to be paid by the companies to which the rules on wage subsidies apply. This ordinary contribution is set at:
- 1.70% of income taxable for social security purposes for dependent workers of industrial businesses with up to 50 dependent workers;
- 2% of income taxable for social security purposes for dependent workers of industrial businesses with more than 50 dependent workers;
- 4.70% of income taxable for social security purposes for workers in industrial and artisanal building businesses;
- 3.30% of income taxable for social security purposes for workers in industrial and artisanal stonework businesses;
- 1.70% of income taxable for social security purposes for dependent workers and executives of industrial and artisanal building and stonework businesses with up to 50 dependent workers;
- 2% of income taxable for social security purposes for workers and executives of industrial and artisanal building and stonework businesses with more than 50 dependent workers.
The limit on the number of dependent workers is determined, with effect from 1 January of each year, based on the average number of dependent workers in the workforce during the preceding year as declared by the business. Businesses established during the calendar year should refer to the number of dependent workers in the workforce at the end of the first month of operation. Businesses must inform INPS of any events that modify the number of dependent workers previously communicated, which may have an impact on the above-mentioned limit. All workers, including home workers and apprentices, who are employed either within or externally to the business are taken into account for the calculation.
Furthermore, additional contributions pursuant to article 5 of Legislative Decree n. 148/2015 are to be paid by companies applying for income support payments. Said additional contribution is equal to:
- 9% of the worker's total payment for hours not worked with regard to periods of ordinary or extraordinary wage subsidies received within one or more assistance periods granted up to an overall duration of 52 weeks in a rolling five-year period;
- 12% above the first threshold and up to 104 weeks in a rolling five-year period;
- 15% above the second threshold, in a rolling five-year period.
The additional contribution is not due for objectively unavoidable events.
Withdrawal of Benefit
Workers carrying out self-employed or subordinate work activities are not entitled to payment for days of work carried out during the period in which they received income support payments. This non-totalisation (INPS circular n. 130 of 4 October 2010) also applies to work activities started before the worker was registered with the wage compensation fund.
Workers lose their right to income support payments if they do not promptly communicate the performance of work activity to the local INPS office. The mandatory communications sent directly by the employer (INPS circular no. 57 of 6 May 2014) are a valid means of fulfilling this communication. This practice aimed at simplifying the process also applies to communications made by temporary employment providers, which are therefore also a valid way of fulfilling the obligations of communicating the performance of other work activities during periods in which income support payments are received.
The company is required to inform, in advance, the trade union representatives, the company representatives or the unitary trade union representation (if any), as well as the regional branches of the trade union associations that are comparatively more representative at national level (article 14, paragraphs 1-5, Legislative Decree n. 148/2015) of the following:
- the reasons for the termination or reduction of working hours;
- the expected severity and duration;
- the number of workers affected.
This communication is followed, at the claim of one of the parties, by a joint examination of the situation regarding the protection of workers' interests in relation to the company crisis. The entire procedure must be completed within 25 days of the date of the communication, reduced to 10 days for companies with 50 dependent workers or fewer.
In the event of objectively unavoidable events that prevent the suspension or reduction of work activity from being postponed, the company is required to inform either the company trade union representatives, the unitary trade union representative (if any), or the local branches of the trade union associations that are comparatively more representative at national level, of the expected duration of the suspension or reduction and the number of workers affected. If the suspension or reduction of working hours is greater than 16 hours per week, a joint examination regarding the resumption of normal work activity and the criteria for the distribution of working hours shall be carried out, at the claim of the company or of the trade unions referred to above, within three days of such communication. The procedure must be carried out within five days of the claim.
The provisions relating to trade union information and notifications (article 14, paragraphs 1-4, Legislative Decree 148/2015) only apply to claims made by artisanal and industrial building and stonework businesses claiming an extension to the benefit period, with the suspension of work activity beyond the 13 continuous weeks.
Workers must have completed at least 90 days of work in the production unit for which the benefit is claimed at the date on which the relevant claim for the benefit is submitted. This requirement is not necessary for claims claiming wage subsidies relating to objectively unavoidable events. The actual length of service completed by workers who are transferred to a company that takes over the contract is calculated by taking into account the period during which they were employed in the contracted activity.
The industrial Ordinary Wage Compensation Fund is aimed at workers employed in:
- industrial manufacturing, transport, mining, plant installation companies, and energy, water and gas production and distribution companies;
- production and work cooperatives that carry out work activities similar to that of workers in industrial companies, with the exception of the cooperatives listed in Presidential Decree n. 602 of 30 April 1970;
- companies in the woodland, forestry and tobacco industries;
- agricultural and zootechnical cooperatives and their consortia engaged in the processing, handling and sale of their own agricultural products (dependent workers with permanent employment contracts only);
- film rental and distribution companies and companies carrying out the development and printing of cinematographic films;
- industrial olive pressing companies working on behalf of third parties;
- companies producing ready-mixed concrete;
- companies involved in electrical and telephone installations;
- railway building companies;
- industrial companies of public institutes, except if the capital is entirely publicly owned;
- industrial and artisanal building businesses and similar;
- industrial businesses carrying out the excavation and/or processing of stone material;
- artisanal businesses that carry out the excavation and processing of stone materials with the exception of those that carry out said processing in laboratories with structures and organisation that are not involved with the excavation activities.
When can I claim?
In order to be granted the wage subsidies, companies must submit a claim for assistance to INPS, using the appropriate electronic procedure. This claim must indicate the reason for the suspension or reduction of working hours, the expected duration, the names of the workers concerned, and the hours claimed. This information is submitted by INPS to the autonomous regions and provinces through the unified information system on labour policies, for the purposes of the activities and obligations referred to in article 8, paragraph 1.
The claim must be submitted within 15 days of the start of the suspension or reduction of work activity. Pursuant to article 2, paragraph 1, letter a) of Legislative Decree n. 185 of 24 September 2016, which amended article 15, paragraph 2 of Legislative Decree n. 148/2015, claims for objectively unavoidable events may be submitted by the end of the month following the one in which the event occurred.
In the event of late submission, any income support payments cannot be made for periods within one week prior to the submission date (namely, from Monday of the previous week).