Employee participation in corporate governance is now law

Edited by Gianluigi Baroni, Lorenzo Zanotti, Federica Carelli, Margherita Massarotti

On May 14th, 2025, the law entitled “Provisions for employee participation in the management, capital, and profits of companies” was definitively approved. It will come into force on June 10th, 2025, and is the result of a popular initiative proposed by CISL.

While the legislative framework retains an innovative and potentially disruptive nature in terms of its effects, it has been significantly weakened compared to the original intentions. This is since its implementation is left to the discretion of companies, albeit within the context of collective bargaining, without becoming a fully-fledged right granted directly to workers by law or collective agreements.

The new legislation addresses numerous aspects, with a single goal: to implement Article 46 of the Constitution “in order to strengthen cooperation between employers and workers”, and to enhance and expand democratic and sustainable processes within companies.

In particular, the law provides for forms of managerial, economic and financial, organizational, and consultative participation of employees in corporate governance.

Below are the main new features.

Managerial participation of employees

For companies organized under the dualistic system, the participation of one or more employee representatives on the supervisory board is provided for. In other companies, participation on the board of directors and, where established, on the management control committee is foreseen, with one or more directors representing the interests of the employees, chosen from among the company’s employees.

In both cases, employee participation in the management of the company (without a “minimum quota” of representation, as was instead envisaged in the original proposal) remains an optional element for companies. It is subject to an explicit provision in this regard in collective bargaining and must be regulated, if introduced, in the company’s bylaws, which will also govern the methods for identifying/appointing employee representatives, subject to requirements of independence, integrity, and professionalism.

The original proposal, by contrast, identified collective bargaining as the sole regulatory source for employee participation in company management.

Economic and financial participation

A reduced tax rate of 5% has been introduced, up to a maximum of €5,000, on business profits distributed to employees, provided that this distribution is carried out in accordance with provisions contained in company or territorial collective agreements under Art. 51 of Legislative Decree 81/2015 and amounts to no less than 10% of the company’s total profits.

In terms of “incentives” for employee financial participation plans, a tax exemption for 2025 has been introduced on income from dividends paid to employees and derived from shares granted in place of performance bonuses, up to €1,500 per year and within the limit of 50% of their total value.

Organizational and consultative participation of employees

Companies are allowed to promote the establishment of joint committees, made up equally of company and employee representatives, tasked with proposing improvement and innovation plans, including for work organization. A specific consultation procedure has also been introduced, which may be initiated by the employer towards these joint committees.
Furthermore, the possibility (but not the obligation, as originally proposed) is introduced to consult in advance, based on the provisions of collective agreements, the RSU or RSA, or in their absence, employee representatives.

Companies may also introduce, through company-level collective agreements, internal organizational roles such as points of contact for training, welfare plans, and compensation policies.

Training of employee representatives

To ensure the development of the knowledge and technical, specialist, and cross-functional skills required by representatives who are part of joint committees or corporate bodies, a minimum of ten hours of training per year is required (reduced from twenty-four hours as originally proposed).

Establishment of the Permanent National Commission for employee participation

Finally, the law establishes the Permanent National Commission for employee participation at the CNEL. This body is tasked, for example, with issuing non-binding opinions on interpretative disputes regarding company procedures, proposing corrective measures to joint bodies in cases of procedural violations, and submitting proposals to CNEL aimed at encouraging managerial, economic and financial, organizational, and consultative participation of employees in companies.

Provisions removed from the original proposal

Among the provisions in the original proposal promoted by CISL that were completely removed from the final law approved were, for example, the possibility for employees to enter into a fiduciary trust agreement to delegate voting rights at company meetings, and the right of employee representatives to consult external experts on specific topics at the company’s expense.