MONTHLY ADVANCE PAYMENT OF SEVERANCE PAY: CLARIFICATIONS FROM THE NATIONAL LABOR AUTHORITY
Through note No. 616 of 3 April 2025, the National Labor Authority (INL) dealt with the issue, raised by the Milan Metropolitan Inspectorate, concerning the widespread practice of companies (especially in the sphere of fixed-term and seasonal employment contracts) to advance the severance pay as a monthly instalment in the pay envelope, with particular focus on the legitimacy of this practice outside the experimental regime provided for by Law No. 190/2014 relating to the pay periods 1 March 2015 - 30 June 2018.
According to the provisions of the note, even when the NCBA provides otherwise, it is legitimate for the collective or individual severance indemnity agreement pursuant to Article 2120 of the Italian Civil Code to have as its object an advance payment of the provision accrued at the time of the agreement, but this is quite different from the automatic and systematic monthly transfer of portions of the severance indemnity itself to the pay packet: the latter, to be considered illegitimate, in fact, constitutes a mere integration of the salary and, as such, should be subject to the relevant social security and tax regime.
As a result, the inspection staff, where it detects the existence of situations of unlawful advance payments of severance pay, through the disposition provision under Article 14 of Legislative Decree No. 124/2004, will order the employer to set aside those portions unlawfully advanced, to be paid at the end of the employment relationship.
