Italy labor reforms and Constitutional Court rulings on employment

The Italian Constitutional Court has issued a ruling (No. 174/2026) addressing compensation for workers in small businesses with fewer than 16 employees. For those hired before the 2015 Jobs Act, the previous six-month cap on indemnity for illegitimate dismissals has been removed. Depending on seniority, workers can now receive up to 10 months of compensation for over ten years of service, or up to 14 months for those with more than twenty years of service.

Separately, the 2027 budget maneuver is being drafted with a focus on youth employment incentives. Proposals include enhanced tax deductions for companies hiring workers under 35 and young mothers. For the employees themselves, officials are considering a 5 percent flat tax or a 50 percent reduction in taxable income. However, discrepancies exist in current drafts regarding age thresholds, where a company might qualify for a deduction for a 35-year-old, while the worker's tax benefits might only apply up to age 30.

In a separate labor discussion, Confintesa Secretary General Francesco Prudenzano has called for policy changes to reward collective bargaining agreements based on actual wage levels rather than the status of the signing union. He noted that some high-paying contracts currently do not receive the same fiscal advantages as those signed by leading unions.