Prepared by Marzio Scaglioni and Silvia Capobianco

INPS has completed the regulatory framework for the “Stabilization Incentive”, one of the key measures introduced under the 2026 Labour Decree to promote stable youth employment.

Following the guidance provided through Circular No. 72/2026 and subsequent Message No. 2518/2026, private employers may submit applications to access the contribution relief available for the conversion of fixed-term employment contracts into permanent employment relationships.

The measure consists of a 100% exemption from employer social security contributions, excluding INAIL insurance premiums, for a maximum period of 24 months, up to a limit of EUR 500 per month per employee.

The incentive applies to conversions carried out between 1 August and 31 December 2026 in respect of young workers who have not yet reached the age of 35 at the date of conversion and who have never previously held a permanent employment contract during their working life.

To qualify for the incentive, the fixed-term contract must have been entered into by 30 April 2026, have a total duration not exceeding 12 months, and be converted without interruption of employment continuity.

The incentive also applies to conversions into permanent agency work contracts, while apprenticeship contracts, domestic work, intermittent work arrangements and employees holding executive-level positions remain outside the scope of the measure.

Particular attention should be paid to the eligibility requirements. In addition to compliance with the general principles governing employment incentives, employers must ensure social security compliance, apply collectively bargained agreements signed by the most representative trade unions and employer organizations, and achieve a net increase in employment compared with the average workforce employed over the previous twelve months. Furthermore, employers must not have carried out dismissals for objective economic reasons or collective redundancies within the same business unit during the six months preceding the conversion and, during the six months following the conversion, must not dismiss either the incentivized employee or another employee in the same business unit with the same job classification on objective economic grounds, otherwise the incentive will be revoked.

INPS Message No. 2518/2026 made the measure operational, confirming that applications may be submitted through the Incentives Portal (formerly DiResCo) and providing instructions on the reporting of the relief through Uniemens filings.

The same provision also clarified that, where a contract is converted or stabilized within six months of the expiry of a fixed-term employment relationship, the mechanism allowing reimbursement of the additional 1.40% NASpI contribution continues to apply under the existing regulations.

The incentive cannot be combined with other contribution exemptions relating to the same employment relationship. However, it remains compatible with certain measures of a different nature, such as the gender equality certification incentive, contribution relief measures affecting only the employee’s share of social security contributions, and the enhanced tax deduction available in connection with new hires.

The new measure represents a significant opportunity for employers seeking to consolidate existing employment relationships, substantially reduce labour costs and foster stable employment opportunities for young workers.