From 1 July 2018, the Italian government introduces the Budget Law 2018 which puts limitations on the forms of payment of employee salaries. It will no longer be possible to pay employees in cash.
The purpose of this new law is to prevent fraud and malpractices. Payments to employees or continuous collaboration contracts (i.e.“collaborazioni coordinate e continuative”) can only be made via traceable methods, such as bank transfer, electronic payment instruments or cash payment at the bank counter with a special payment order on treasury account.
While excluding that the signature placed by an employee on the payslip constitutes proof of payment of the remuneration, paragraph 912 defines the scope of application of the law, which will affect the following cases:
- Employment relationships referred to in article 2094 Civil Code;
- Working relationships originated from coordinated and continuous collaboration relationships;
- Employment contracts established in any form by cooperatives with their members.
The employment relationships established with Public Administrations and those relating to family and domestic services are excluded. In case of violation, an employer can be fined between €1,000 - €5,000. Advanced cash payments on wages can be fined as well.
It is important for any business with employees based in Italy to take note of this new law coming into effect next week to avoid fines. We believe this absolute novelty in the Italian legislative scenery undoubtedly represents a simplification in the relationship between employer and employee.
Author: Marco Gragnoli and Luca Insabato, Studio Taxlex