Italy: recent legislative steps towards gender equality in the workplace
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Andrea Gangemi
Portolano Cavallo, Rome
agangemi@portolano.it
Tabita Costantino
Portolano Cavallo, Milan
tcostantino@portolano.it
Main changes introduced by the Equal Pay Law
The changes introduced by the Equal Pay Law generally concern measures to deal with direct and indirect discrimination. These are defined by the new version of Section 2-bis as any treatment or change in the organisation of working conditions and times that, by reason of sex, age, marital status, personal or family care needs, pregnancy, maternity or paternity, including adoption, or ownership and exercise of the relevant rights, shall: (1) disadvantage an employee compared to other employees in general; (2) limit an employee’s opportunities to participate in life or company choices; (3) limit an employee’s access to the system in place for career advancement.
The two major provisions involve the introduction of gender-equality certification (Certification) and the amendment of the legislative provision covering reporting on the status of female and male employees (Report) provided in Decree No 198 of 2006.
Gender-equality certification
Section 4 of the Equal Pay Law introduced the Certification, which came into effect on 1 January 2022. Its aim is to reduce the gender gap in opportunities for professional progression, equal pay for equal work, policies for managing gender differences, and maternity protection.
In addition, a permanent technical committee on gender certification at companies has been established in the Department of Equal Opportunity of the Presidency of the Council of Ministers.
The reference parameters are set out in the UNI Reference Practice (UNI/PdR 125:2022) published on 16 March 2022, titled ‘Guidelines on the gender equality management system, which requires the adoption of (key performance indicators) KPIs for gender equality policies in organisations.
The Reference Practice identifies six assessment areas used to distinguish between inclusive organisations that respect gender equality and those that do not:
- culture and strategy, assessing whether the principles and goals of inclusion, gender equality, and attention to gender diversity at a company are consistent with the vision and values of the work environment;
- governance, establishing whether the company’s governance model is appropriately developed to reach the goal of appropriate organisational safeguards and appropriate representation of the minority gender in organisational leadership and control bodies, as well as processes to identify and remedy any non-inclusion events that arise;
- HR processes, aiming to measure the developmental level of key processes in HR, relating to the different stages that characterise the lifecycle of a resource in the company and that should be based on principles of inclusion and respect for diversity;
- growth and inclusion opportunities for women in business, aiming to measure a company’s progress in relation to gender-neutral access to internal career and growth paths and its acceleration;
- salary equity, measuring how well companies are meeting goals for pay differential within a total compensation framework and thus including nonmonetary compensation such as welfare and wellbeing;
- protection of parenting and work-life balance, aiming to measure a company’s success in developing policies to support parenting in all its forms and the adoption of procedures that facilitate and support the presence of women with sons and daughters of preschool age.
Each of the above areas carries a certain weight, expressed as a percentage, within the overall assessment, and specific KPIs are identified for each. Companies are to be assessed through annual monitoring and biennial reviews.
KPIs relating to the six areas are to be applied proportionally based on company size classification: micro, small, medium, or large. The KPIs are both qualitative and quantitative, with the former measured in terms of presence or absence, and the latter via a percentage compared to an internal company or national average reference value or based on the type of economic activity performed (known as the Codice Ateco).
Each KPI is assigned a score, and the achievement or non-achievement of the KPI weighted in relation to the area in which it belongs.
A minimum total score of 60 per cent must be achieved for the organisation to gain Certification.
The guidelines do not have legal bearing but are important for companies seeking to obtain Certification and its related benefits. Certification is applicable to any type of organisation, whether in the private, public, or non-profit making sector, regardless of the size or nature of business.
Private companies which have attained Certification will receive an exemption from employer social security contribution payments. Tax relief is set at an amount no greater than one per cent and within a maximum limit of €50,000 per year for each company, applied on a monthly basis pro rata. The expenditure limit is €50m.
Furthermore, private companies with Certification as of 31 December of the previous year will be given a premium evaluation score from authorities in charge of national and regional EU funds when it comes to project proposals for the purpose of granting state aid to co-finance the necessary investments.
Report on the status of male and female employees
The other major change introduced by the Equal Pay Law is the implementation of Section 49 of the National Code of Equal Opportunities. This relates to the report issued every two years on the status of male and female employees, which was previously only required from companies with more than 100 employees.
The field of application designed by Section 3 of the Equal Pay Law now includes mandatory reporting for private and public companies with more than 50 employees. Companies employing 50 or fewer employees will be given the option of reporting on a voluntary basis.
Reporting is to be completed online through a form available on the Ministry of Labour and Social Policies website, and also conveyed to any trade union representatives applicable to the company.
The Equal Pay Law states that a Ministerial Decree (Decree), enacted as of 29 March 2022, shall state: (1) the guidelines for drafting the Report, which shall include certain information, such as the number of female and male employees, the number of pregnant female employees, and others listed in the legal text; (2) the obligation to include data on selection processes at the recruitment stage, procedures for access to professional qualification and management training, tools and measures made available to promote work-life balance, existence of company policies to guarantee an inclusive and respectful workplace, and criteria for career advancement; as well as (3) other information concerning procedures for employee and trade union representative access to the Report, in compliance with regulations on the protection of personal data.
According to the provisions of the Equal Pay Law, the Decree establishes modalities for logging in and completing the form and states that companies shall use the Public Digital Identity System or the Electronic Identity Card (known, respectively, by the acronyms SPID and CIE).
Employers shall fill in the form by entering the genders of employees rather than their names. The data, specifying the genders of employees, shall be grouped by homogeneous areas.
The main sections of the Report (a hard-copy version of which is included in the Decree as Annex A) are: (1) general information about the company, including applicable collective bargaining agreements; (2) general information on the total number of employees, including total employment as of 31 December 2021, broken down by professional category and level, type of contract, layoffs (in Italian, Cassaintegrazione guadagni) and leave of absence, income, expenditure, changes to contracts by category during the year as of 31 December 2021, professional training by category for the year 2021, general information on processes and tools for selection, recruitment, access to professional and managerial qualification, starting salaries, and annual remuneration by level of classification; (3) general information on production units in the municipal area.
Once the form has been correctly completed, a receipt will be issued to show that the system has been accessed. A copy of the Report, together with the receipt, shall be sent online by the employer to the company’s trade union representatives by 30 September 2022, for the first two-year period 2020–2021, and by 30 April 2023, for subsequent two-year periods. These are also the deadlines for filling out the form.
A regional list of companies required to generate Reports shall be made available to regional equal opportunity councillors and equality councillors of metropolitan cities and area authorities, who also have access to the data through a unique identification code issued by the system. This access is for processing relevant results and the data shall be transmitted to the territorial offices of the National Labour Inspectorate, the national councillor of equality, the Ministry of Labour and Social Policies, the Department of Equal Opportunity of the Presidency of the Council of Ministers, the National Institute of Statistics, and the National Council of Economy and Labour.
If any companies fail to transmit the Report, the Regional Labour Directorate, on notification, shall invite the companies to do so within 60 days. In cases of noncompliance, an administrative sanction of €103 to €516 will be imposed. If noncompliance continues for more than twelve months, a one-year suspension of any contributory benefits shall be ordered. False or incomplete reporting uncovered during the National Labour Inspectorate’s verification processes will be subject to an administrative fine ranging from €1,000 to €5,000.
Conclusion
The changes introduced by the Equal Pay Law are important steps towards achieving gender equality through both incentives related to the issuance of Certification and penalties associated with failure to submit a Report.
These changes will not exist solely on paper or in the form of good intentions on the part of the legislature. Although penalties are relatively low and the incentives may not offer huge economic benefits for employers, it is important to bear in mind that implementing these provisions will make businesses more attractive to investors, as well as yielding benefits in terms of image, reputation, and an equitable working environment.
Note
The UNI (Ente Italiano di Normazione) is a private non-profit making association founded in 1921. Recognised by the state and the EU, it studies develops, approves, and publishes voluntary technical standards and guidelines (informally known as UNI Standards) in all industrial, commercial, and tertiary sectors.