On Oct. 26, the Italian Senate Committee on Employment and Social Security Matters unanimously passed a bill that enhanced and broadened gender-equality reporting obligations and introduced a public gender-equality certification. The legislature’s lower chamber had passed the bill earlier, and it will become law after presidential promulgation and subsequent publication on the Italian Official Gazette.
The new law will introduce obligations for employers and will pose new business risks and provide sanctions in case of breach; however, there will also be new incentives and opportunities. Companies and their HR leaders can stay away from the risks and seize the benefits by carefully considering these changes.
Enhanced Gender-Equality Reporting
In Italy, all employers with more than 100 employees have an obligation to prepare a report on gender equality every two years. The new law will extend such obligation to all employers with more than 50 employees. Moreover, employers below that threshold will also be able to comply with the same reporting obligations on a voluntary basis. This will make it likely that the actual scope of application of the law will include smaller companies, based on market and reputational pressure.
The new law provides that such report should include:
- The number of female and male workers employed.
- The number of pregnant workers.
- The number of female and male workers hired during the year.
- Any gap between the initial salary of workers of each sex.
- The contractual classification and the function performed by each worker, as well as the distribution of full-time and part-time contracts among workers.
- The amount of total remuneration paid, ancillary salary components, allowances (including those linked to results), bonuses and any other benefits in kind or any other payments that may have been made to each worker.
The report should further include information on recruitment selection processes and the criteria adopted for career advancement; access to professional qualifications and managerial training; tools and measures made available to promote work/life balance; and company policies guaranteeing an inclusive and respectful working environment.
The report should be completed on the Ministry of Labor website and be made available to works councils, regional equality counselors, local labor inspectors and individual employees who want to use it in litigation to protect their rights under the law.
After Jan. 1, 2022, employers will be able to have their workforces gender-equality certified. The Ministry of Labor will adopt regulations to outline the mechanisms and procedures to obtain such certification.
The new law already provided that the minimum parameters for the achievement of the certification of gender equality should address the remuneration paid, career progression opportunities and work/life conciliation measures.
Regional equality counselors and works councils will verify that the minimum parameters to obtain the certification have been met.
The rules that the Ministry of Labor adopts will also govern the forms of publicity of the certification.
In 2022, the companies that obtain the gender-equality certification will make a smaller social security contribution, and this measure might be continued in future years, subject to funding.
Moreover, authorities and agencies that award public funding of investments will be entitled to set criteria that favors those who have obtained the gender-equality certification.
The new law also provides sanctions for infringers.
If labor inspectors determine that a gender-equality report is incomplete or misleading, they may impose an administrative sanction ranging between 1,000 and 5,000 euro (approximately USD 1,148 and USD 5,741).
Companies that fail to complete their gender-equality report for 12 months will lose—for one year—any social security breaks they may currently be entitled to. The law also added a “name and shame” tool to encourage companies to comply with the obligation to complete and file an equality report: The Ministry of Labor website will list employers that complied with the obligation, as well as those that failed to do so.
Gender Quotas in the Boardroom
The same law also widened the scope of application of gender quotas within boards of directors. For some years, Italian law has mandated a 40-percent quota of the underrepresented sex in board member positions of listed companies. Now, the law on gender-equality reporting extended that requirement to all companies controlled by governing authorities.
Uberto Percivalle, a long-time SHRM member, is an attorney with Baker McKenzie in Milan. He can be reached at email@example.com.