INPS

Assistance from the Guarantee Fund can be requested by any dependent worker working for an employer required to pay the contribution to this Fund (including apprentices and industrial company managers) and whose employment has terminated. 

As of 1 July 1997 (Article 24(1) of Law No 196 of 24 June 1997), this assistance also extends to shareholders of worker cooperatives, including for periods prior to this date, provided that contribution payments are up-to-date (INPS Circular No 175 of 3 July 1997, INPS Circular No 273 of 30 December 1997, INPS Circular No 74 of 15 July 2008).

Claims can be made by heirs (spouses and children, and dependant relatives up to the third degree and in-laws up to the second degree – Article 2122 of the Italian Civil Code) and transferees (of transfers for a consideration) of severance indemnity on termination of employment (TFR) (INPS Circular No 89 of 26 June 2012).

The following are not eligible to receive assistance from the Fund:

• workers enrolled on the Collecting Agents Fund (severance indemnity on termination of employment [TFR] paid by the INPS - Collecting Agents Fund) and the Excise Officers Fund (severance indemnity on termination of employment [TFR] paid by CONSAP SpA);
• farm dependent workers, only employees and managers whose severance indemnity on termination of employment (TFR) are set aside for the National Social Security Institute for Workers and Employees in Agriculture (ENPAIA), and temporary workers;
• civil servants of government administrations and employees of parastatal, regional, provincial and municipal organisations;
• journalists, for whom the Guarantee Fund is managed by the National Welfare Institute for Journalists (INPGI).

The Guarantee Fund provides assistance with procedures that vary depending on whether or not the employer is subject to insolvency proceedings (INPS Circular No 74 of 15 July 2008).

According to Article 1 of Royal Decree No 267 of 16 March 1942 (Bankruptcy Law), entrepreneurs who carry out business activities, excluding public institutions, are subject to bankruptcy proceedings, whereas entrepreneurs who meet all of the following conditions are not subject to bankruptcy proceedings:

• have had, in each of the three financial years prior to the date the bankruptcy order was filed, or from the start of the business activity, if this was for a shorter period of time, property assets worth a total annual amount not exceeding EUR 300,000;
• have generated, in each of the three financial years prior to the date the bankruptcy order was filed, or from the start of the business activity, if this was for a shorter period of time, gross revenue for a total annual amount not exceeding EUR 200,000;
• have accrued debt, including debt that is not yet overdue, not exceeding EUR 500,000.

The entrepreneur is responsible for providing evidence to show that they meet all three requirements, and if they do not participate in the pre-bankruptcy investigation, they will be declared bankrupt.

Employers that are subject to isolvency proceedings must meet the following requirements to be able to receive assistance from the Fund:

• termination of the employment relationship;
• determination of insolvency and initiation of bankruptcy proceedings, arrangement with creditors, compulsory administrative winding-up or control by a government-appointed administrator;
• determination of the existence of the claim for severance indemnity on termination of employment (TFR) and/or of the last three monthly payments. Determination of bankruptcy, control by a government-appointed administrator and compulsory administrative winding-up occurs with admission of the claim to the statement of liabilities of the proceedings, which determines the extent of the Guarantee Fund's obligation.

The employment termination requirement must be carefully assessed in the event that there has been a transfer of the holding, including lease and usufruct. Article 2112 of the Italian Civil Code provides that the employment relationship with a transferee be maintained. Said transferee is required to pay severance indemnity on termination of employment (TFR) including for portions accrued with the transferor. It follows that the Fund shall only serve as a security for severance indemnity on termination of employment (TFR) in the event of insolvency of the transferee, not of the transferor.

Exceptions to the above include the sale of companies involved in bankruptcy proceedings, controlled by a government-appointed administrator, or involved in an arrangement with creditors with transfer of assets or compulsory administrative winding-up for which Article 47(5) of Law No 428 of 29 December 1990 provides that Article 2112 of the Italian Civil Code does not apply, except in the event of more favourable conditions. In these instances, assistance from the Guarantee Fund for severance indemnity on termination of employment (TFR) accrued on an employment relationship with the transferor may be provided until the transfer takes place, except where the preliminary union agreement provides, as a more favourable condition, that severance indemnity on termination of employment (TFR) be covered by the buying party or that employment be continued without interruption.

For the worker to receive extraordinary wage compensation (Extraordinary Wage Compensation Fund, CIGS) pursuant to Article 3 of Law No 233 of 23 July 1991, they must be in a real and non-fictitious employment relationship with the bankrupt holding until the end of the compensation. Consequently, the Fund can only serve as a security after employment has been terminated as a result of dismissal or redundancy.

Article 2(4) bis of Law 298/1982 stipulates that the Guarantee Fund shall also provide assistance in the event of insolvency proceedings that were initiated in another EU member state, on the condition that:

• the employer's business activity is carried out in the territory of at least two member states;
• the holding was incorporated according to the law of the member state where the insolvency proceedings were initiated;
• the employee ordinarily worked in Italy and therefore contributions to the Fund were required.

With the entry into force of Legislative Decree No 186 of 19 August 2005 (implementation of Directive 2002/74/EC which governs transnational situations), the Fund only provides assistance for proceedings that were initiated after 6 October 2005. Community insolvency proceedings that give rise to assistance from the Fund are the same proceedings in the country where said proceedings were initiated which enable assistance from guarantee institutions specified by Directive 80/987/EEC as amended.

When an employer cannot be declared bankrupt because they have been removed from the Company Register for more than one year (Article 10 and Article 11 of the Bankruptcy Law) or because the total amount of overdue and outstanding debt, as found during the pre-bankruptcy investigation conducted by the court, is less than EUR 3,000 (Article 15(9) of the Bankruptcy Law), the Guarantee Fund shall provide assistance on the basis of the requirements stipulated for employers that are not subject to bankruptcy procedures (Article 2(5) of Law 297/1982).

If after insolvency proceedings have been initiated, the court decides not to verify the statement of liabilities because assets cannot be acquired to distribute to any of the creditors pursuant to Article 102 of the Bankruptcy Law, the worker may request assistance from the Guarantee Fund provided they meet the requirements under Article 2(5) of Law 297/1982 (INPS Circular No 32 of 4 March 2010).

Employers that are not subject to insolvency proceedings must meet the following requirements to be able to receive assistance from the Fund:

• termination of the employment relationship;
• the un-enforceability of insolvency proceedings on the employer;
• existence of credit for outstanding severance indemnity on termination of employment (TFR);
• shortage of securities of the employer after foreclosure. This requirement is fulfilled when the worker can prove that they attempted to claim credit from the employer in a credible and appropriate manner by seeking, with due care, the employer's assets in places that can be traced back to the debtor personally.

Evidence of fulfilment of the requirement concerning the un-enforceability of insolvency proceedings on the employer can be shown by presenting a copy of the court's administrative order rejecting the application for bankruptcy. This document does not need to be presented when:

• the INPS already has the document as the insolvent employer attempted to be declared bankrupt in their own right;
• the employer is a limited liability company (also a single-member company) and the financial statements filed with the company register concerning the three years prior to the date of the Fund assistance claim was submitted, or prior to the date the company ceased trading, if this occurred before, show that all of the following requirements are met:
• • the value of property assets does not exceed EUR 300,000 in any of the three years under consideration;
  • gross revenue does not exceed EUR 200,000 in any of the three years under consideration;
  • the amount of due and overdue debt does not exceed EUR 500,000 in the latest financial statement under consideration;
• the employer, be they an individual entrepreneur or partnership, did not employ, on average, more than three employees in the three years prior to the date the claim for Fund assistance was submitted or prior to the date the company ceased trading, if this occurred before;
• the employer has been removed from the company register for more than one year.

For the Fund to be able to provide assistance (pursuant to Article 2(5) of Law 297/1982), the work credit must be ascertained by:

• judgement;
• pay order;
• enforcement order of the settlement agreement pursuant to Article 411(3) of the Italian Code of Civil Procedure;
• enforcement order of the settlement agreement pursuant to Article 410 of the Italian Code of Civil Procedure;
• cease and desist order pursuant to Article 12 of Legislative Decree No 124 of 23 April 2004, when, by order of the director of the Provincial Labour Office, this order acquires the value of an expert testimony and is deemed valid as an enforcement order.

The requirement concerning the employer's shortage of securities is fulfilled when:

• the worker produces the report of the failed attempt to repossess goods on company premises and in the employer's place of residence, if the employer is an individual entrepreneur. If the employer is deceased, enforcement actions must be carried out on heirs. If those summoned have waived succession and estate in abeyance proceedings have been initiated or if the heirs have accepted succession with reservations, the worker may receive protection from the Fund only when, at the end of the winding-up proceedings pursuant to Article 499 of the Italian Code of Civil Procedure, all or part of the claim was left outstanding because the estate was insufficient;
• the worker produces the report of the failed attempt to repossess goods on company premises and in the places of residence of all those who have limited partnership liabilities, if the employer is a partnership;
• the worker produces the report of the failed attempt to repossess goods at company offices, including the registered offices and place of operation.

The worker must provide evidence to show that the repossession of property was either impossible or futile by enclosing a declaration in lieu of oath from which it can be inferred that, from the records held by the Land Registry, the employer is not listed as the owner of property in their place of birth or place of residence, or as the owner of property (which must be specified) that is encumbered by mortgages exceeding the value of the property.

For the Fund to provide assistance, a lack of attempt to repossess goods may be treated as a failed attempt to repossess goods when the bailiff has ascertained that the employer cannot be contacted or found at the home address listed in town council records and when the debtor's absence has been noted by the bailiff on two occasions when attempting to enter the property.

If the employer is a limited liability company or a società per azioni (joint stock company), in the event that the court decides not to verify liabilities, given that the Bankruptcy Law calls for the removal of the employer from the company register if the proceedings are closed due to insufficient assets, evidence of fulfilment of the shortage of securities requirement constitutes the decision to close the insolvency proceedings (Message No 4302 of 24 June 2015).

The Guarantee Fund also provides assistance for winding-up proceedings pursuant to Article 14-ter of Law No 3 of 27 January 2012 (Message No 4968 of 24 July 2015).

BENEFITS PAID OUT BY THE FUND: TFR SEVERANCE INDEMNITY AND Work creditS

Severance indemnity on termination of employment (TFR) are sums of money that the employer is required to pay to dependent workers on termination of employment, regardless of the grounds for termination. These allowances are governed by Article 2120 of the Italian Civil Code and are calculated on a yearly basis by adding the amount of annual wages divided by 13.5 to the recalculated amount accrued up until the previous year.

Severance indemnity on termination of employment (TFR) can be claimed on termination of employment and the limitation period of entitlement to these allowances is five years (Article 2948(5) of the Italian Civil Code). As this is a short limitation period, when these allowances are recognised by a final judgement, the limitation period is for 10 years (Article 2953 of the Italian Civil Code).

The Fund guarantees payment of the full amount of severance indemnity on termination of employment (TFR) that was ascertained as part of the insolvency or individual proceedings initiated against the employer.

In the event of an arrangement with creditors, the Guarantee Fund will provide assistance to the extent that satisfies the claim according to the plan. The Guarantee Fund provides assistance in lieu of the employer for amounts that they owe to workers, but not for amounts from which they have been discharged, with acceptance of the arrangement proposal.

The Guarantee Fund can cover work credits that relate to the last three months of employment (three calendar months or the period of time between the date of termination of employment and the same date in the previous month).

However, to be covered by the Fund, the last three months must fall within the 12-month period that precedes the following periods of time (Article 2(1) of Legislative Decree 80/1992):

• the date of the claim to initiate the insolvency proceedings against the employer, if the worker's employment terminated before these proceedings were initiated. If the worker has taken legal action to satisfy claims for which they are requesting payment from the Fund before this date, the starting point to consider when calculating the 12-month period, within which the last three months of employment lie, will be the date that the relative petition was filed with the court. The request for the compulsory conciliation attempt cannot be equated to court action (Article 410 of the Italian Code of Procedure) as it relates to a pre-dispute stage. Only workers who have taken court action beforehand are able to have the period moved back to a date prior to the claim to initiate insolvency proceedings, without other employees being able to take advantage of this;
• the date on which the petition for work credits protection is filed with the court, in the event that the Fund provides assistance after individual enforcement;
• the date of the winding-up order, the date of termination of the provisional process, the date of revocation of the authorisation for the company to stay in business, for workers who, after initiating insolvency proceedings, continued to effectively work for the company.

If employment relationship is terminated whilst the company has been authorised to stay in business, the 12-month period must be calculated starting from the date the worker was dismissed or made redundant. This provision is only to be applied to workers who effectively worked for the company after the proceedings were initiated, and not to those who were made redundant during the entire subsequent period.

If the last three months of employment coincide, all or in part, with a period of redundancy in which no entitlement to wages arose – for example, to take unpaid time off work or to receive social security compensation as a full replacement of wages – the securities provided by the Fund will apply to the three months immediately prior to said redundancy, provided these three months fall within the 12-month period described above.

For work credits, the Fund can provide securities limited to an amount equating to three times the maximum monthly extraordinary salary supplement compensation, net of welfare and social security deductions (INPS Circular No 74 of 15 July 2008).

The Fund can only cover work credits (other than severance indemnity on termination of employment, [TFR]) that are strictly wage related, including 13th monthly payments and other additional monthly payments (up to three payments), as well as sums owed by the employer for sick pay and the maternity allowance. However, this excludes compensation in lieu of notice, compensation for untaken holidays and sick pay paid out by the INPS that the employer would have been required to pay in advance.

Together with Severance indemnity on termination of employment (TFR), interest and revaluation, are paid from the date of termination of employment until the date on which obligations are effectively fulfilled, whereas for work credits, the term for interest and allowance for revaluation starts from the date of the claim and ends on the date on which obligations are effectively fulfilled.

The amounts paid out by the Guarantee Fund for severance indemnity on termination of employment (TFR), work credits and additional charges are subject to taxation by the INPS, as the withholding agent, pursuant to the tax law in force. The withholding tax applied by the INPS is provisional by nature, as Legislative Decree No 47 of 18 February 2000 provides that financial departments shall pay the withholding tax back on the basis of the average rate of taxation for the five years prior to the year in which entitlement to severance indemnity was reached. 

Benefits from the Guarantee Fund are paid out at bank branches with an arrangement with the INPS, as specified in the application approval notice, on presentation of an identity document and the IBAN number for the current bank/post office account where these amounts are to be paid in. On payment, the worker must issue a receipt.

If the worker is unable to collect payments personally, they must grant special authority for collection, which expressly provides for power of attorney to issue a receipt.

HOW CAN I CLAIM?

As of 1 April 2012, claims can be made online to the INPS using the appropriate service.

Alternatively, claims can be made through:

•  the contact centre on 803 164 (free for landline calls from Italy) or on +39 06 164 164 from mobile phones;
•  aid offices and intermediaries of the institute, using the electronic services that these provide.
• Claims must be addressed directly to the competent regional office based on the worker's declared place of residence.

Documents may be enclosed with the online claim, except the original copy of the enforcement order in the event of assistance from the Fund pursuant to Article 2(5) of Law No 297 of 29 May 1982. In this instance, claimants are required to provide a declaration of conformity to the original copies of the documents enclosed.

If the claim is submitted by an aid office or lawyer, a copy of the worker's identity document and the assistance and agency delegation must be enclosed.

In the event of bankruptcy, control by a government-appointed administrator or compulsory winding-up proceedings, the following documents must be included with the claim:

• a certified copy of the statement of enforceable liabilities (excerpts also accepted). This is not required if the person responsible for the insolvency proceedings or the court's registrar have submitted a digital copy of this document to the INPS;
• the declaration in lieu of the certificate issued by the court attesting that the claim was not subject to an objection or appeal pursuant to Article 98 of the Bankruptcy Law. Since 21 March 2014, this declaration has been incorporated into the electronic claim for assistance from the Guarantee Fund;
• the SR52 form, duly filled in and signed by the person responsible for the insolvency proceeding. In the event of demonstrated refusal by the person responsible for the insolvency proceeding to fill out the form, the information required for the winding-up procedure will have to be provided directly by the worker by producing appropriate documentation (such as the proof of claim, together with all documentation) and the SR54 form;
• a certified copy of the order ruling any objection or appeal proceedings;
• a copy of the proof of claim, together with all documentation. To be enclosed when proof of the subordinate nature of the employment relationship in force with the insolvent employer was requested with the assessment of the claim.

In the event that the insolvency proceedings were initiated in another member state, claims must include:

• a certified copy of the statement of liabilities, together with a legal translation, from which it must be possible to unequivocally deduce that the amounts due are for severance indemnity on termination of employment (TFR) and/or for wages for the months for which assistance from the Guarantee Fund is being requested;
• declaration issued by the court or the person responsible for proceedings, together with a legal translation, which attests that the statement of liabilities is final and is not subject to amendments, as regards the worker's claim;
• the SR54 form to be filled out and signed by the worker by way of declaration in lieu of an oath;
• a copy of pay stubs for severance indemnity on termination of employment (TFR) and monthly wage payments for which assistance from the Guarantee Fund is being requested;
• a copy of the letter of engagement or employment contract and the dismissal letter.

In the event of an arrangement with creditors (concordato preventivo), the following documents must be enclosed with the claim:

• a certified copy of the decree of validation;
• a copy of the notice pursuant to Article 171 of the Bankruptcy Law, containing the debtor's proposal regarding the worker's claims. If the SR52 form was not enclosed and it was not possible to infer the extent to which work credits have been satisfied from the decree of validation;
• the SR52 form, signed by the court commissioner or receiver appointed by the court in the event of an arrangement with a transfer of assets and of the demonstrated refusal of the person responsible for the insolvency proceedings, the information required for winding-up proceedings may be provided directly by the worker by producing suitable documentation and the SR54 form;
• a copy of pay stubs for monthly wage payments for which assistance from the Guarantee Fund is being requested (if the SR52 form is not enclosed);

In the event of individual enforcement (esecuzione individuale), the claim must be submitted together with:

• the SR53 form to be filled out and signed by the worker by way of declaration in lieu of an oath;
• the court's decision to reject the bankruptcy application, except for specific exceptions;
• an original copy of the enforcement order that gave rise to foreclosure being carried out (to be handed in or sent by post to the competent regional office);
• a copy of the petition which resulted in the enforcement order being obtained, including all documents (if any);
• a copy of the failed repossession of goods report;
• the declaration in lieu of an oath certifying that, based on records in the Land Registry, the employer is not listed as the owner of property in their place of birth or place of residence, or as the owner of property (which must be specified) that is encumbered by mortgages exceeding the value of the property.

In the event of estate in abeyance (eredità giacente), the following documents must be enclosed with the claim:

• the SR53 form, to be filled out and signed by the worker by way of declaration in lieu of an oath;
• an original copy of the enforcement order based on which the worker's claim for severance indemnity on termination of employment (TFR) was recognised;
• a certified copy of the classification of creditors pursuant to Article 499 of the Italian Civil Code;
• a certified copy of the final distribution;
• a certified copy of the closure of winding-up proceedings.

In the event that winding-up proceedings are initiated (Article 14-ter of Law No 3 of 27 January 2012), the following documents must be enclosed with the claim:

• a copy of the court's administrative order declaring initiation of the winding-up proceedings pursuant to Article 14-ter of Law 3/2012;
• a certified copy of the final statement of liabilities drawn up by the receiver or appointed judge;
• the SR52 form, filled out by the court-appointed receiver;
• a copy of the order to close proceedings (where necessary);
• a certified copy of the orders for the division of the funds obtained from the winding-up proceedings (where necessary).

In the event of legitimate succession (successione legittima), if the claim is submitted by heirs of the worker, in addition to the documents required for the specific type of assistance, the following documents must also be enclosed:

• declaration in lieu of the death certificate of the deceased worker;
• the oath certifying:
• • the personal details of the deceased, including their place and date of birth, civil status and last place of residence and domicile;
  • the personal details of all heirs;
  • that no final separation order was delivered between the deceased and the surviving spouse, with the fault being charged against the separated spouse;
  • indication of the individuals who have power of attorney or who care for children or individuals of unsound mind who are among the beneficiaries of inheritance;
  • indication of the individuals whose existence cannot be ascertained (missing, continued absence, presumption of death) who are among the beneficiaries of inheritance;
  • that it is legitimate succession, as the will of the deceased did not distribute the benefits being claimed;
• the collection delegation in favour of one of the heirs only (SR22 form).

In the event of testamentary succession (successione testamentaria), if the claim is submitted by heirs of the worker, in addition to the documents required for the specific type of assistance, the following documents must also be enclosed:

• a certified copy of the public will or record of the publication of the holographic or secret will, containing the death certificate;
• documentation that may prove necessary based on the provisions of the will (designation of the heir or legatee);
• the collection delegation in favour of one of the heirs only (if any).

If there are children or individuals of unsound mind among the heirs, the claim must include a certified copy of the authorisation from the judge with responsibility for guardianship cases to collect severance indemnity on termination of employment (TFR) and other work credits.

In the event of the transfer of severance indemnity on termination of employment (TFR) as collateral for a loan, a copy of the transfer agreement and the SR131 form, with all sections filled out, must be enclosed together with the transferee's declaration stating that there is no collection action under way or that they undertake to cease such action for the time necessary for investigation procedures relating to the claim.

Further information on the documents to enclose with the claim is provided in INPS Circular No 74 of 15 July 2008 and in Message No 2084 of 11 May 2016.

WHEN CAN I CLAIM?

When the employer is subject to bankruptcy proceedings or placed under control by a government-appointed administrator, the claim may be submitted as of the 30th day after receipt of the notice pursuant to Article 97 of the Bankruptcy Law in which the receiver communicates that the statement of liabilities has been made enforceable. After reform of the Bankruptcy Law, the original 15-day cut-off period for filing an objection or appeal against the enforceable statement of liabilities was brought from 15 to 30 days and shall be construed as extended.

If the employer is involved in compulsory winding-up proceedings, the claim may be submitted 30 days from the filing of the statement of liabilities pursuant to Article 209 of the Bankruptcy Law. If appeals or objections have been brought against the worker's claim, the period begins from the day after the decree was filed. If the employer has been admitted to proceedings for an arrangement with creditors, the claim must be submitted the day after the decree of validation was published.

For individual enforcement, the claim may be submitted the day after the date of the report of the failed attempt to repossess goods.

Law 297/82 does not provide for any specific limitation period (prescrizione) by which, on claim for payment of severance indemnity on termination of employment (TFR) by the Guarantee Fund, the associated entitlement must be exercised. As such, this period is the same five-year period stipulated by Article 2948(5) of the Italian Civil Code.

However, as regards employment credits, Article 2(5) of Legislative Decree 80/1992 stipulates that entitlement to the benefit will lapse after one year.

The INPS is required to pay the benefits within 60 days from the date the claim was submitted, together with all the required documents.

Appeals to the administrative authority against decisions rejecting or partially approving the claim may be admitted to the provincial council within 90 days from the date the claim was rejected (Article 46(5) of Law 88/89). Appeals must be lodged using the Online Appeals (Ricorsi Online, RiOL) procedure or through an aid office or other authorised intermediaries.

If there is no response after 90 days have passed from when the appeal was lodged, the worker may take legal action within the one-year limitation period. Appeals to the administrative authority lodged after the limitation period stipulated for legal action cannot be examined on their merits by the provincial council.