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From July 2018, stop cash to pay salaries

There had been talk for many months about the government’s intention to introduce mandatory payroll payment through banks or post offices in order to prevent employees, under the blackmail of being fired or not hired, from being pressured to sign a paycheck showing a regular paycheck even if in reality less than the minimums stipulated in the collective bargaining agreement are paid.

And now it is a reality: as of July 1, 2018, payment of wages in cash is banned; payment of wages by bank or postal transfer or otherwise electronic payment instruments is mandatory.

Those who pay salaries in cash face a penalty of 1,000 to 5,000 euros.

Not only that, the signature of the paycheck does not constitute proof of payment of wages.

The bill (House Act 1041), first signatory the Honorable Titti Di Salvo (Pd), introduced in 2013, with amendments, became law with the introduction of paragraph 910 et seq. to Art. 1 of the 2018 Budget Law (Law 205 of December 27, 2017).

According to the proponents of the introduction of the ban on the payment of wages in cash, it is a “solution to a problem that affects so many workers. In fact, it is well known that some employers, under the blackmail of dismissal or non-employment, pay workers less than the minimums set by collective bargaining, while having the worker very often sign a paycheck from which regular pay is shown.

This deplorable practice is a serious detriment to workers who are not only deprived of part of the work they perform, but whose dignity and right to just pay are violated, in violation of Articles 1, 35 and, above all, 36 of the Constitution. On the contrary, the payment of a lower wage results in an illicit advantage for the employer.”

New mandatory ways of paying salaries

Paragraph 910 of Art. 1 of the 2018 Budget Law introduces mandatory legal ways of paying wages:

“910. As of July 1, 2018, employers or principals shall pay wages, as well as any advance payment thereof, to workers through a bank or post office by one of the following means:

(a) transfer to the account identified by the IBAN code given by the worker;

(b) electronic payment instruments;

(c) cash payment at the bank or post office counter where the employer has opened a treasury account with a payment mandate;

(d) issuance of a check delivered directly to the employee or, if the employee is demonstrably unable to do so, to the employee’s proxy.

The impediment shall be deemed proven when the proxy to receive payment is the spouse, domestic partner or a member of the employee’s immediate or collateral family, provided that he or she is not less than sixteen years of age.”

Payment of salaries in cash banned as of July 1, 2018

Paragraph 911 of Art. 1 of the 2018 Budget Law establishes a ban on the payment of salaries in cash:

“911. Employers or principals may not pay wages by means of cash directly to the employee, regardless of the type of employment relationship established.”

Payments of salaries by wire transfer, by bank check, or even by cash payment but at a bank or post office counter are therefore allowed, so always in a traceable mode.

Employers required to pay wages by wire transfer or check

Paragraph 912 of the 2018 Budget Law provides precise guidance, not so much on which employers are obliged to follow the new payroll regulations, but literally which employment relationships the regulations apply to, and thus for which payrolls or payrolls the obligation to pay salaries with traceable instruments through bank or mail, and the consequent ban on the payment of salaries in cash.

“912. Employment relationship, for the purposes of Paragraph 910, means any subordinate employment relationship referred to in Article 2094 of the Civil Code, regardless of the manner of performance and the duration of the relationship, as well as any employment relationship originating from coordinated and continuous collaboration contracts and employment contracts established in any form by cooperatives with their members pursuant to Law No. 910 of April 3, 2001. 142″.

The consequence is that mandatory payment of salaries through bank or post office, or otherwise payment of salaries in cash is prohibited, with respect to the following labor relations:

  • permanent employment contract;
  • Fixed-term employment contract or fixed-term contract, including part-time:
  • Part-time or part-time employment contract;
  • apprenticeship contract;
  • coordinated and continuous collaboration or cococo;
  • Intermittent or incidental or on-call work;
  • Employment contracts with cooperative members;
  • Any employment relationship.

Payroll signature and burden of proof

Not only does the law, again in Section 912 of Art. 1 of Law no. 205 of Dec. 27, 2017 (Budget Law 2018) clarifies that salary payment obligations cover all employees under Art. 2094 of the Civil Code, regardless of the employment contract and its duration. But it also stipulates that “The signature of the paycheck affixed by the worker does not constitute proof of payment of wages.”

So the logical consequence, even for the traceability of payment of wages introduced in a compulsory manner by law, the payment of wages is attested only by the copy of the payment of wages itself, thus copy of the bank transfer, photocopy of the check or otherwise bank or postal certificate.

Salary returned in cash by the worker

Although the legislation contains greater protections for workers who are victims of non-payment of wages, it does not intervene to counter the phenomenon of payment of net pay in the paycheck by wire transfer or bank check, but with the employee returning to the employer, in cash, part of the money received by traceable means.

Domestic work excluded

The legislation introduces in paragraph 913 of Art. 1 of the Budget Law 2018 of the exclusions for civil servants and domestic work: “The provisions of paragraphs 910 and 911 do not apply to employment relationships established with public administrations referred to in Article 1, paragraph 2, of Legislative Decree No. 165 of March 30, 2001, those referred to in Law No. 339 of April 2, 1958, or those otherwise falling within the scope of application of national collective agreements for family and domestic service workers, entered into by the comparatively most representative trade unions at the national level.”

Paying salaries in cash: penalties of up to 5 thousand euros

The same Paragraph 913 introduces penalties for the ban on the payment of salaries in cash.

Originally, the bill called for penalties ranging from 5,000 to 50,000 euros. Instead, the approved legislation reduces this penalty regime. Not only that, the proposed law also contained employer obligations to provide notice of the establishment of the employment relationship (unilav hiring) with an indication of the banking institution or the post office (which in turn must issue a statement that “certifies the activation of the payment channel in favor of the employee”). And in the absence of such an indication in the hiring unilav, the employer was subject to an administrative fine consisting of the payment of a sum of 500 euros. But that part of the proposal did not pass.

Paragraph 913 approved is as follows: “An employer or principal who violates the obligation set forth in paragraph 509-bis shall be subject to an administrative fine consisting of the payment of a sum of 1,000 euros to 5,000 euros.”

This is a decidedly attenuated penalty regime and appears to refer to the totality of employment relationships, thus regardless of the number of violations.

Salary payment regulations effective July 1, 2018

Paragraph 914 of the 2018 Budget Law provides that “The obligations set forth in paragraphs 910, 911 and 912 and the related penalties shall apply as of the 180th day following the effective date of this law.” Thus, this is the entry into force of the regulations as of July 1, 2018.

Indeed, the government’s intention is to organize with information campaigns, but also to allow employers to organize.

Paragraph 914 further stipulates that“Within three months of the effective date. of this law, the government shall enter into an agreement with the most representative labor and employers’ unions at the national level, the Italian Banking Association and the Italian Postal Service Spa company, by which suitable communication tools are identified to promote awareness and proper implementation of the provisions of paragraphs 910, 911 and 912.

The Presidency of the Council of Ministers, in cooperation with the Ministry of Economy and Finance, prepares information campaigns, making use of the main media, as well as media and press organs and private entities. For the purpose of implementing the provisions of this paragraph, the expenditure of 100,000 euros is authorized for the year 2018.”

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