February 28, 2025
Executives
Remuneration to directors: deductible only if subordinate and with additional duties
Supreme Court, Labour Section
A company had deducted the remuneration paid to its directors for tax purposes. The Tax Authority, deeming such costs non-deductible, issued a tax assessment. The dispute, initially resolved in favor of the company at the appellate level, eventually reached the Supreme Court.
The Court clarified that the deductibility of remuneration paid to directors of capital companies depends on verifying whether they performed duties beyond those inherent in the role and whether a real subordinate employment relationship existed.
This verification cannot be merely formal but must establish the existence of hierarchical, managerial, and disciplinary powers exercised by another corporate body. In the absence of such elements—such as in the case of the chairman of the board or a sole director—the activity performed does not constitute an employment relationship and, therefore, the related remuneration is not deductible.
In other words, compatibility between being a shareholder-director and an employee must be assessed based on concrete evidence demonstrating an actual hierarchical and managerial subordination. Upholding the Tax Authority’s claims, the Supreme Court reaffirmed that, under income tax law, one cannot simultaneously serve as an employee and the chairman of the board or sole director of a capital company. Therefore, a person holding the position of chairman of the board cannot also perform subordinate work within the same company; if a shareholder is a board member, the existence of a parallel subordinate employment relationship must be concretely verified.
April 8, 2025
Employment contract – Ancillary agreements
Non-compete clause invalid if compensation is inadequate, but must be assessed concretely
Supreme Court, Labour Section
An employee challenged a non-compete agreement signed with the company, claiming that the agreed compensation was too low. After conflicting outcomes in previous rulings, the matter reached the Supreme Court.
The Court clarified that a non-compete agreement may be nullified for two independent types of flaws: those relating to its creation or text, and those concerning inadequate compensation.
In particular, the latter cannot be judged using an abstract or standardized approach: a specific evaluation of the context and actual circumstances is required, considering the real limitation imposed on the worker’s freedom.
Furthermore, the Court noted that any irregularities in the employment relationship itself do not automatically affect the validity of the non-compete agreement, as the two are distinct, though connected.
This ruling reaffirms the importance of a case-by-case evaluation of the adequacy of compensation as a key element for the validity of non-compete clauses.
December 4, 2024
Contracting (outsourcing)
Intercompany contracting and network contracts: the Court rules out unlawful labor intermediation
Rome Court
A group of workers sued a telecommunications company, arguing that their employment with another company—wholly owned by the former—was a cover for illegal labor intermediation. They cited indicators such as direction by the parent company and lack of organizational independence of the contractor.
The Rome Court dismissed the case, finding the company’s organizational model legitimate. Key to this ruling was the existence of a network contract between the two companies aimed at jointly managing specific activities, along with a subcontract including a profit margin for the contractor.
According to the judge, the creation of a wholly owned newco (new company), to which a business unit had been transferred and services outsourced under a network agreement, constitutes a lawful business strategy, in line with economic freedom principles. There was no evidence of interference that would undermine the contractor’s independence.
March 8, 2025
Probationary dismissal
Extension of probation period is legitimate only if agreed before the original deadline
Venice Court of Appeal
An executive challenged his dismissal for failing to pass the probation period, contesting the validity of the extension of the probationary agreement.
The Court of Appeal rejected the claim, holding that if the extension is agreed before the original term expires and within the maximum period allowed, it does not constitute a waiver of inalienable rights. At the time of the extension, the employment relationship is still freely terminable and the worker has no right to job permanence.
Moreover, the rule that the probation clause must be agreed at or before the beginning of employment only applies to its initial creation; subsequent changes are not automatically invalid.
In this case, the extension was agreed in writing within the time limits set by the applicable collective bargaining agreement, thus deemed valid.
March 6, 2025
Law no. 104/1992
Dismissal for misuse of leave under Law 104/1992 is legitimate if the assisted person is hospitalized
Supreme Court, Labour Section
An employee challenged his dismissal for allegedly abusing leave entitlements under Law 104/1992.
The Court of Appeal dismissed the claim, finding that the disabled relative was hospitalized during the contested leave days, and the employee spent minimal time visiting them.
The Supreme Court upheld the decision, clarifying that hospitalization provides continuous medical care, making it equivalent to hospital treatment. According to the law, such circumstances eliminate the right to paid daily leave.
Based on these premises, the Court confirmed the legitimacy of the dismissal.
March 9, 2025
Working hours, leave, time off
Holiday pay must include regularly paid variable allowances
Supreme Court, Labour Section
A railway train driver filed a lawsuit to have variable components—daily usage allowance and out-of-residence allowance—included in his holiday pay. Lower courts dismissed the claim, but the Supreme Court upheld the worker’s appeal.
The Court noted that, in line with EU Court of Justice rulings, the right to annual paid leave includes maintaining usual pay, encompassing components regularly earned during employment. Otherwise, workers may be discouraged from taking leave.
The Court emphasized assessing whether disputed pay items are closely linked to job duties. In this case, both the out-of-residence allowance—typical for train drivers without a fixed station—and the variable professional allowance were deemed ordinarily paid and therefore must be factored into holiday pay based on an annual average.
December 30, 2024
Equal opportunities – Discrimination
Gender equality: contribution relief of up to €50,000 for certified companies
INPS
Private employers who obtained gender equality certification by December 31, 2024, may apply for social security contribution relief by submitting an online request to INPS by April 30, 2025.
The certification, issued by accredited bodies in line with UNI/PdR 125:2022 practices, attests to corporate policies on pay equity, career growth, inclusion, and maternity protection. The relief consists of a 1% reduction in employer contributions, up to a maximum of €50,000 annually, applicable only during the validity period of the certification.
Eligibility requires several conditions, including valid social security compliance (DURC), observance of labor laws, and no suspension orders from the national labor inspectorate. It may be combined with other relief measures, provided they are compatible and within the total contribution owed.
Applications must be submitted via the “Incentives Portal” (formerly DiResCo) on the INPS website, using the “SGRAVIO PAR_GEN” form and specifying average wages, contribution rate, workforce data, certification details, and the issuing body. If approved, the company will be assigned the authorization code “4R,” required to apply the relief.
