2021 Budget Law
- Jan. 15, 2021
- Reading time: 13 min
This document outlines some of the most significant changes in labor law introduced by the 2021 Budget Law, Law No. 178 of December 30, 2020. Specifically, it summarizes the provisions relating to:
Tax deduction for employees (Article 1, paragraphs 8–9)
Contribution exemption for the hiring of young people under 36 (Article 1, paragraphs 10–15)
Contribution exemption for the hiring of women (Article 1, paragraphs 16–19)
Fund for the exemption from social security contributions owed by self-employed workers and professionals (Article 1, paragraphs 20–22)
Support for working mothers returning to work (Article 1, paragraphs 23–24)
Paternity leave (Section 1, subsections 25, 363–364)
Exemption from social security contributions for agricultural entrepreneurs and young farmers (Article 1, paragraph 33)
Social Security Contribution Relief for Southern Italy (Article 1, paragraphs 161–169)
Extension and renewal of fixed-term contracts (Section 1, paragraph 279)
Extension of COVID-19 furlough benefits (Article 1, paragraphs 299–314)
Moratorium on layoffs until March 31 (Article 1, paragraphs 309–311)
Interprofessional Expansion Agreement (Article 1, paragraph 349)
ISCRO (Section 1, paragraphs 386–401)
Vulnerable workers (Article 1, paragraphs 481–484)
Provisions regarding pensions (Article 1, paragraphs 336–339)
Baby Bonus (Article 1, paragraph 362)
Allowance for mothers with disabled children (Section 1, paragraph 365)
These provisions take effect on January 1, 2021.
Tax deduction for employees (Article 1, paragraphs 8–9)
As part of a structural overhaul of the tax deduction system, the deduction introduced in 2020 is being made permanent. This deduction applies to income from employment and certain types of income treated as employment income, a tax deduction for 2021 of €1,200 for a total income of €28,000, with the deduction scaled proportionally for incomes between €28,000 and €40,000.
Contribution exemption for the hiring of young people under 36 (Article 1, paragraphs 10–15)
In order to promote stable youth employment, the measure providing for an exemption from social security contributions for new permanent hires and for the conversion of fixed-term contracts into permanent contracts for young people, introduced by the 2018 Budget Law, is granted at 100% for the two-year period 2021–2022, for a maximum period of 36 months and in any case up to a maximum of €6,000.00 per year, for individuals who, as of the date of their first incentivized hire, have not yet reached the age of 36.
The period during which the exemption applies is extended to 48 months if the hiring involves an employee whose place of work is located in one of the following regions: Abruzzo, Molise, Campania, Basilicata, Sicily, Apulia, Calabria, and Sardinia.
The contribution exemption applies to employers who have not carried out, in the six months prior to hiring, nor will carry out, in the nine months following hiring, individual dismissals for just cause or collective dismissals of employees holding the same position within the same production unit.
The effectiveness of these provisions is subject to authorization by the European Commission.
Finally, the above exemption does not apply in the event that the apprenticeship contract is extended at the end of the training period, nor does it apply to permanent hires made within 6 months of obtaining a degree, for students who have completed a work-study program¹ or an apprenticeship leading to a vocational qualification or diploma with the same employer, a high school diploma, a certificate of advanced technical specialization, or periods of apprenticeship in higher education, for which the exemption from contribution payments remains valid at a rate of 50 percent, up to a maximum amount of 3,000 euros annually, for a maximum period of 12 months, provided that the worker has not reached the age of 30 as of the date of continuation (the provision set forth in Article 106 of Law 205/2017 remains in effect; in this case, the exemption applies starting from the first month following the expiration of the contribution benefit linked to the apprenticeship contract).
Contribution exemption for the hiring of women (Article 1, paragraphs 16–19)
For the hiring of female workers during the 2021–2022 period, on a pilot basis, the exemption introduced by Law No. 92/2012 is granted at a rate of 100%, up to a maximum amount of €6,000.00 per year.
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