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One of the major legislation decided by Italy over the last few years is Decree-Law No. 62/2026 ‘Relazioni collettive del lavoro re issue’ also known as ‘the 2026 Labour Decree’. In contrast to the universal minimum wage option, an approach has been selected that will make the existing collective bargaining system more robust and make the minimum market wage “fairly” defined by legislation.
The reform is an attempt to do away with the wage differentials, enhance transparency, and to ensure workers are not victims of unfair practices in salary differentials. The key of the new system is an innovative alphanumeric code system that is tied to Italy’s National Collective Bargaining Agreements (NCBAs), enabling the more efficient employer compliance verification process of the labour inspectors.
What is the Fair Wage System?
In contrast to countries with a single national minimum wage, Italy uses industry minimums that are established by the nation’s largest trade union and employer organisations that come to an agreement on wages. These covenants set minimum wage levels and benefits, working times and employment standards in various sectors.
These agreements will be legally grounded and the final criterion for fair compensation is recognized by the 2026 Labour Decree. Employers now have the responsibility to ensure employee pay meets the relevant NCBA for their industry.
Importance of the Alphanumeric Code
Of the many changes there are under the new decree, one of the most significant is the requirement that every employment contract and pay slip contain an NCBA alphanumeric code. This code specifies the collective agreement in which all the workers’ activities will be carried out.
The increased transparency will foster greater transparency by allowing labour inspectors to immediately determine whether an agreement is being used or not. It also makes it much tougher for firms to bypass and deal contractually or to come up with a lower priced contract to bring down labor costs.
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Some employers took advantage of agreements negotiated by smaller or less representative unions, allowing them to pay employees less than industry standards so the government has made an explicit point of targeting this practice by contractual anti-dumping.
The new legislation prohibits the use of such minority agreements as these arrangements may lead to reduced employee wages. Collective agreements can only be the legal basis for negotiating payroll that is considered fair if they are signed by the country’s most representative national organizations.
Protection When Agreements Expire
A second crucial protection is for a deadline in collective bargaining deadlocks. It is the immediate right of employees who have a recognized NCBA, but must not be renewed within a 12-month period, to receive a temporary wage increase.
The provisional increase is 30% of the increase in the index of consumer prices (IPCA), to protect workers’ purchasing power while a new collective agreement is negotiated.
Why Does the Alphanumeric Code Matters?
The reform brings better wage protection, transparency and protection against unfair labour practices for employees. Employees also become more able to trust that their salaries are being based on a country negotiated course of action, versus simply the employer with no interference from anyone else.
The standardized coding system makes compliance easier and less nebulous for employers. Compliance with the proper NCBA framework can be shown within a short period, via the employment contracts and payroll records, if properly documented.
Ending Contractual Wage Dumping
The fair wage framework is one of the key changes in the Italian employment framework. Instead of replacing collective bargaining with a hard-set minimum wage, the government has enhanced the collective bargaining systems and greater transparency with digitization of verification.
This new path would be expected to decrease inequality of wages, strengthen protections for workers and establish a more uniform regulatory process in the industry. It further accentuates Italy’s larger trend toward modernisation of labour law and maintains the long-standing practice of collective bargaining in Italy.
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