Social security issues

Social security issues - INPDAP (National Social Insurance Institute for Civil Servants) contributions

The Group currently employs staff registered with both Inpdap and Inps (National Institute of Social Insurance) pension funds. Certain contribution rates applied by the two entities differ greatly; these include those for family allowance payments, for which Inpdap applies a rate that is 3.72% higher than that applied by Inps.

In response to the failure to pass legislation bringing the pension and social security contributions into line, the Group decided that from November 2002 it would pay CUAF (family allowance fund) contributions at the more favourable rate. On the other hand, the underlying legal basis is rather unclear: Inps circular no. 103 of 16 June 2002 reiterated that, whilst awaiting clarification from the Ministry of Economy and Finance and the Ministry of Labour, the rate of 6.20% applied to staff registered with the Inpdap pension fund was to be considered provisional. In terms of legal action, the Parent Company, ACEA Distribuzione, ACEA Ato2, Laboratori and ACEA Luce appealed through the administrative courts. The judgements handed down at first instance during the second half of 2006 found in favour of Laboratori and ACEA Luce (the latter being an ACEA Group company at the time), whilst the appeals submitted by ACEA, ACEA Distribuzione and ACEA Ato2 were turned down. The aforementioned companies each filed an appeal, which all met with unfavourable outcomes.

An additional appeal was submitted against the second instance ruling, which also met with an unfavourable outcome at the hearing on 9 April 2009; at the current state of play, a ruling has yet to be deposited, leaving more time to assess whether to appeal before the Supreme Court.

A similar problem regards contributions for maternity benefits, where the difference in the cost to companies, based on taxable pay, is 0.57 percentage points higher for staff covered by Inpdap compared with those covered by Inps. The ACEA Group applied a reduced rate as of October 2003 for said contribution too. It should be noted that as regards said contribution legislation was introduced with Law Decree no. 112 of 25/6/2008 converted with amendments into law no. 133 of 6/8/2008, where paragraph 2 of article 20 regulates, effective from 1 January 2009, uniformity of contributions for private employers across the board.

ACEA, ACEA Ato2, ACEA Ato5 S.p.A., ACEA Distribuzione, Arse, AceaElectrabel Produzione and AceaElectrabel Elettricità (also as the merged company of AceaElectrabel Energia) filed appeals which, although turned down, gave rise to the presentation of an appeal request which also ended unfavourably for said parties. Appeals lodged by Laboratori and ACEA Luce met with favourable outcomes.

Following a series of unfavourable outcomes for Group companies, a Court of First Instance (in Brescia) has upheld the position taken by a former municipalised utility, recognising the company’s right to pay the above contributions at the reduced rate and declaring the tax demands issued by Inps to have no basis in law. The court’s opinion appears to be substantially in line with the arguments adopted in the appeals submitted by Group companies.

The Group made the necessary allocations to cover the risk related to these problems.

Health insurance contributions

The case concerns certain health insurance contributions levied at a rate of 2.22% on the salaries of blue collar workers. Acea argues that the obligation of Inps to pay certain sickness benefits, which is the reason underlying the employer’s obligation to pay the contribution involved in this dispute, is expressly excluded by art. 6, paragraph 2 of Law 138 of 11 January 1943 in cases where the payment of this benefit is assured by law or by collective labour agreements by the employer or other bodies, to an extent either equal to or greater than what is established by collective labour agreements.

However, Inps started to request payment of the contribution from the entry into force of law no. 41 of 28 February 1986 (1986 Finance Act), which reformed the health and social welfare contribution system, reducing the rate for the sickness benefit, abolishing the additional rate of the old sickness contribution, establishing the contribution for the National Health Service and the welfare contribution.
This initiative led to a great deal of legal activity involving the companies which considered the contribution undue, with favourable and unfavourable outcomes to said proceedings.

By means of Supreme Court (joint session) ruling no. 10232 of 27 June 2003, promoted by INPS, the principle diametrically opposed to the one provided for by law was sanctioned, making the contribution due from companies of a solidaristic rather than welfare nature.

However, companies are still awaiting legislation which would fully regulate the previous one, realised with the issue of law no. 133 of 6 August 2008, converting Law Decree 112/2008.

The law definitively provided an authentic interpretation of the second paragraph of article 6 of law no. 138 dated 11 January 1943, establishing that employers are not obliged to pay health insurance contributions in cases where they have, by law or under the provisions of a collective labour agreement, paid sick pay, thus amending previous periods and providing for the payment obligation to take effect from 1 January 2009.

Therefore, ACEA Group companies started to pay health insurance contributions from January 2009; the provision set aside relates to the period running from the date of the change to collective agreement regulations to the date law 133/2008 was issued.

Unemployment and mobility contributions

This is the contribution companies have to pay due to INPS, to finance the income support fund for workers that have become unemployed; it is decidedly insurance-related in nature, for which only the previously insured provider has the right to performance.

The obligation exists toward all employees in general, with some exceptions, e.g. for those who benefit from the guarantee of job security (art. 40 of Royal Decree 1827/35) given they are employees of public administrations, public companies or exercise public services where the element of stability is based on norms regulating the legal status and remuneration of personnel or ensured, upon request, by a provision from the Ministry of Labour.

As previously mentioned, despite altering the legal and economic nature of the company, the requirement of job stability was however met by the collective labour agreement applied to personnel, which for companies operating in both the electricity and water services segments consisted of the national collective labour agreement of 9/7/1996 for employees working in local electricity companies.

Stipulation of the sole agreement of the electricity sector in July 2001, and the subsequent succession and interpretation agreement of April 2002 and the agreement of contractual migration from electricity to water, in July 2001 too, led to periods without job stability before the companies adopted regulations aimed at restoring the requirement.

Favourable first and second instance rulings were appealed by INPS; the hearing set for 7 February 2011 was put back to 9 January 2012.