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Workers, salary differences and the limitation of rights

Published in: Employment law
by Debora Teruggia
Home > Workers, salary differences and the limitation of rights

The employer does not always pay what is owed to the employee in full, generating “pay differences” and, due to the passage of time, the risk of the statute of limitations on the right arises.

In this article:

What are "pay differences"?

In this article we will focus on the so-called “wage differences”, in other words, those amounts due to the employee as a result of the work performed, but which have not been paid in full by the employer.

Employment claims can be either wage or contribution-based. In the case of an employee-employer relationship, it is first useful to understand what the difference between wages and contributions is. The following make up the employee’s pay:

  1. the monthly pay (where accrued vacation and leave are understood to be included);
  2. the additional monthly payments (thirteenth and fourteenth month’s pay);
  3. severance pay;
  4. bonuses and awards (e.g.: loyalty and performance bonuses, etc.);
  5. miscellaneous allowances (e.g.: cash, travel, etc.);
  6. and, in general, all other sums paid by the employer that find their cause in the employment relationship.

Contributions, on the other hand, are a sum that is periodically paid by the employer to social insurance (INPS) or welfare (INAIL) institutions to guarantee the employee pension coverage or for other welfare purposes deemed worthy of protection by the system (maternity, sickness, etc.).

In light of the employer’s obligation, should the employer fail to make contributions – in whole or in part – he or she may face civil and criminal penalties.

One must pay special attention to one’s contribution position since unpaid contributions are time-barred in 5 years from the day the payment is due. However, if the worker promptly reports the nonpayment to the relevant agencies, the statute of limitations increases to 10 years.

How long does it take to prescribe work credits?

The statute of limitations is the mechanism by which if the creditor does not exercise his right within a specified period of time, then the right ceases to exist. The ordinary limitation period for claims is 10 years, but there are numerous cases in which the Law prescribes a shorter period. Let us see what are the other prescriptive periods in relation to labor claims:

  • 1 year for all emoluments payable for periods of work of less than one month (Art. 2955, No. 2);
  • 3 years for 13th month’s pay and in general for all additional remuneration calculated on periods of work exceeding one month and always paid at intervals exceeding one month (Art. 2956, no. 1);
  • 5 years for back wages subject to payment on an annual or less than annual basis (e.g., monthly);
  • 5 years for severance pay and severance pay (Art. 2948, no. 5);
  • 10 years for damages arising from other contractual torts, such as professional demotion, failure to recognize one’s proper classification, and so on.

We omit instead the discussion of how to react to a dismissal deemed unlawful, having already discussed it in this article.

When does the statute of limitations period start?

According to the general rule of Article 2935 of the Italian Civil Code, the statute of limitations for labor claims should start from the time when the right can be asserted, and thus also during the course of an employment relationship.

In 1966, however, a landmark decision of the Constitutional Court (No. 63/1966) occurred, by which it was declared partially unconstitutional that Articles 2948 No. 4, 2955 No. 2 and 2956 No. 1 were unconstitutional insofar as they allowed the statute of limitations to run during the course of an employment relationship. As a matter of fact, the Court – rightly – considered that the worker’s condition of “subordination” could induce him or her to give up the claim of his or her rights for fear of retaliation and even dismissal. The Constitutional Court – in effect – then shifted the starting date of the statute of limitations for employment claims to the time of termination of the relationship.

In light of the changes introduced by the Fornero Law (Law No. 92/2012) and the subsequent Jobs Act (Legislative Decree No. 23/2015), some Courts have gone so far as to say that in some cases the statute of limitations runs from the termination of the employment relationship and in others, instead, it runs from the time when the right can be asserted. Needless to say, the lack of uniformity of views has created and continues to create confusion on the issue.

While we hope for a clarifying intervention by the Legislature, the interpretative and jurisprudential disagreement seems to have been resolved with ruling No. 26246 published on Sept. 6, 2022 by the Supreme Court. The Supreme Court, in fact, states that: “The open-ended employment relationship, as modulated as a result of Law No. 92/2012 and Legislative Decree No. 23/2015, lacking the prerequisites of certain predetermination of the case of termination and their proper protection, is not assisted by a regime of stability. Hence, for all those rights that are not prescribed at the time of the entry into force of Law No. 92/2012, the limitation period runs, pursuant to the combined provisions of Articles 2948 No. 4 and 2935 Civil Code, from the termination of the employment relationship.”

Simply put, whenever the employment relationship is not protected by the right to reinstatement, the limitation period for asserting one’s employment claims will run from the time of termination of the relationship and will have a five-year statute of limitations.

How to act to protect yourself?

The tools to protect the employee are available: it is necessary to understand which ones can be applied to the specific case, paying particular attention to the time limits within which to exercise one’s rights.

As professionals active in the field, we at Canella Camaiora Law Firm are also and especially at your disposal to handle complex situations. A worker who intends to obtain payment of his or her labor claims from the defaulting employer will have to manifest his or her willingness to recover the debt. This can be done through a formal reminder via CEM, a letter of legal notice with default notice, but also – if desired – directly with an action in court.

Consider, however, the case of economic difficulties of the employer leading to the permanent cessation of business or the transfer of the company. In such cases, what can the worker do to recover his or her debt? In addition to the traditional credit recovery tools (foreclosures and so on), for companies subject to bankruptcy, we remind workers that a so-called “Guarantee Fund” has been established at INPS , which compensates for unpaid severance pay and wages accrued in the last 90 days, i.e., the last three months’ pay.

To protect, on the other hand, the worker who finds himself in the situation of the so-called “business transfer”, Article 2112 of the Italian Civil Code operates, which states, “In the event of a business transfer, the employment relationship continues with the transferee and the worker retains all the rights arising therefrom. The transferor and the transferee shall be jointly and severally liable for all claims that the worker had at the time of the transfer.

© Canella Camaiora Sta. All rights reserved.
Publication date: 8 November 2022
Last update: 7 September 2023

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