Seen as a throwback, the reintroduction of criminal relevance to fraudulent building contracts and contract dumping is a strong and decisive response by the legislature to protect workers’ rights and transparency in contractual relations.

Through the recent PNRR Decree 4 (Decree Law No. 19/2024, converted into Law No. 56/2024) aimed at fighting unfair practices by companies winning public building contracts.

This measure is part of a regulatory framework aimed at strengthening the protection of workers and hitting hard at the evasive practices implemented by companies that win public contracts in response to repeated abuse in the use of non-genuine contracts.

Fraudulent building contracts: definition and legal implications

This phenomenon occurs in cases where, as defined by Legislative Decree 81/2015 (Jobs Act): ‘labor administration is implemented with the specific purpose of circumventing mandatory rules of law or collective agreement applied to the worker‘.

Building contracts, whose regulations require the contractor to operate with organizational autonomy, using its own resources and assuming the business risk, in order to conceal an employment relationship that is in fact exercised under the control of the principal, who thus shirks his legal and contractual responsibilities.

The reality will thus no longer be that of a contracting out but of an illicit labor administration.

Same field of sanctions is in the case of activities carried out by licensed labor agencies, thus complying with contractual requirements.

The penalty apparatus provided by PNNR Decree 4 is articulated with the application of a prison sentence of up to one month or a fine of 60 euros for each worker employed irregularly, for each day’s work.

The case of posting personnel without a discernible genuine interest on the part of the seconding party falls within the same scope of sanctions. There is also an aggravating factor in the case of specific intent: that is, with the deliberate intent to circumvent mandatory rules of law or collective agreement applicable to workers.

Contract dumping and countermeasures

This phenomenon occurs whenever a contractor or subcontractor applies collective bargaining agreements with lower minimum wages than industry standards, without guaranteeing the minimum economic treatment guaranteed to the worker and stipulated in the national and territorial collective agreement.

A real ‘pirate’ bargaining, which generates harmful phenomena of unfair competition between companies, to the detriment of entrepreneurs who rightly, seek and promote the development of the best professionalism.

The intervention of the legislature, by forcing compliance with minimum contractual levels, aims to protect workers’ right to fair contractual conditions and prevent exploitative phenomena.

The regulations pay special attention to compliance with economic conditions, obliging contractors so as to prevent the circumvention of protections through the choice of collective agreements less favorable to the worker.

In particular, by ensuring scrupulous verification of the compliance of their contractors’ contracts and operating methods to avoid incurring criminal penalties and undermining the legitimacy of established labor relations, considering intra-company contracts to be of greater risk.