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Severance pay (aka TFR): how to proceed if the company fails to pay ?

Pubblicato in Debt Recovery
da Antonella Marmo
Home > Severance pay (aka TFR): how to proceed if the company fails to pay ?

The Severance Pay, aka “Trattamento di fine rapporto” or TFR in Italy, is an element of the salary that is always due to the employee at the end of the work relationship, regardless of the reasons for its termination. 

In the following article:

  1. What is the Italian TFR, meaning Severance Pay?
  2. The judicial recovery of employment credits and severance pay
  3. The Guarantee Fund of INPS for the recovery of the Severance Pay (“TFR”).

* * *

1.- WHAT IS THE ITALIAN “TFR“, MEANING SEVERANCE PAY?

The employee is always entitled to Severance Pay (Trattamento di fine rapporto akaTFR), regardless of the reasons for the termination of the work relationship (e.g. dismissal, resignation or reaching retirement age).

The severance pay (TFR) is accrued monthly by the employer. The underlying idea is to create a sort of compensatory payment when the employment relationship is terminated. At that time, the accrued sum of money will actually be paid out.

It could however occur that the employer either refuses to provide the severance pay or, not having set aside these sums, is unable to compensate the employee. The Italian Law establishes specific guarantees to protect the worker in such cases. Here is explained what to do.

2.- THE JUDICIAL RECOVERY OF EMPLOYMENT CREDITS AND SEVERANCE PAY

Should the employee’s severance pay (TFR) not be paid, one of the possible strategies is to send a formal letter to the employer. The letter details the request and investigates the employer’s intentions.

Should the employer subsequently fail to pay or even to comply with the warning, it is advisable to seek the assistance of a lawyer and perhaps to initiate legal proceedings for debt recovery.

By requesting an injunction, for instance, the Employment Judge issues a provisionally enforceable payment order within a couple of weeks. The judge usually orders the employer to pay not only the amount due to the employee as severance pay, but also the legal costs incurred by the employee in obtaining the payment order.

Thanks to the Judge’s decree, which is equivalent to a judgment if not appealed, it is also possible to start the enforcement phase. The employee can obtain compensation by directly freezing the employer’s bank account or by seizing other company assets.

A bankruptcy petition can also be filed against the company if the conditions are met. Bankruptcy is dreaded most by both employers and employees, but there are some extra protections for employees. They are as follows.

3.- THE GUARANTEE FUND OF INPS FOR THE RECOVERY OF THE SEVERANCE PAY (“TFR”)

Should the company go bankrupt, the worker is granted special protection. If the employee has filed for bankruptcy (i.e. submitted an application in the bankruptcy procedure to recover his debt), he can immediately and directly apply to the Italian National Social Insurance Agency (INPS, Istituto Nazionale di Previdenza Sociale) to receive the overdue payment.

The so-called Guarantee Fund is available, allowing employees to obtain from INPS:

  • severance pay (TFR)
  • the last three unpaid salaries.

When we submit these applications to INPS (Istituto Nazionale di Previdenza Sociale) on behalf of our clients, we usually provide them with all the documentation relating to the inclusion in the bankruptcy liabilities and the quantification of the claim. Once INPS has confirmed that the application and the documentation submitted are valid, it will pay the amounts requested.

To sum up, it is very important to act promptly and correctly even in the event of companies in crisis – or even bankrupt – in order not to suffer any damage to your rights.

Data di pubblicazione: 22 February 2022

Antonella Marmo

Avvocato dello studio legale Canella Camaiora, iscritta all’Ordine di Milano, si occupa di Diritto Commerciale e del Lavoro.
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