2.5% TFR deduction for fixed-term workers: the Rome Court of Appeal confirms it is unlawful
The Rome Court of Appeal, by judgment no. 4033 of 13 October 2026, confirmed that the 2.5% TFR deduction applied to fixed-term public sector workers is unlawful. Relying on Court of Cassation orders no. 11663 and no. 19697 of 2023, the ruling clarifies that the pay reduction provided for by Article 1 of the Prime Ministerial Decree of 20 December 1999 applies only to permanent staff, whereas fixed-term relationships are governed by the private-sector rules of Article 2120 of the Civil Code, which impose no deduction on the employee. The decision strengthens the right to recover the amounts withheld and to have the deduction stopped, with direct consequences for substitute teachers, educators and administrative and technical staff.
By judgment no. 4033 of 13 October 2026, the Employment Division of the Rome Court of Appeal confirmed that the 2.5% TFR deduction applied to the pay of fixed-term workers is unlawful. The ruling consolidates a now well-established line of Court of Cassation case law and is of considerable practical importance for thousands of substitute teachers, educators and school administrative staff who see this deduction taken from their payslip every month, a deduction which, according to the judges, has no legal basis whatsoever.
The case and the regulatory framework
The dispute arose from a claim brought by a group of fixed-term employees of Roma Capitale working as nursery educators, teachers and Catholic religion teachers. The Rome Tribunal upheld their claim, finding the pay reduction unlawful and ordering the employer to repay the amounts withheld; the administration then appealed.
By way of background, Law no. 335/1995 extended the end-of-service allowance (TFR) under Article 2120 of the Civil Code to public employees hired from 1 January 1996, while Article 26(19) of Law no. 448/1998 required that the transition from the former TFS scheme to TFR should not alter overall net pay. The implementing rules are set out in the National Framework Agreement of 29 July 1999 between ARAN and the trade unions, transposed by the Prime Ministerial Decree (D.P.C.M.) of 20 December 1999.
For permanent staff, Article 1(3) and (4) of the Decree provide that gross pay is reduced by an amount equal to the abolished 2.5% social security contribution, with a notional recovery for pension and TFR purposes. This is the item that appears on the NoiPA payslips of school staff as "TFR art.1 c.3 DPCM 20/12/1999", calculated on 80% of the relevant pay and therefore amounting in practice to around 2% of gross salary.
The legal issue
The point in dispute concerns the extension of this mechanism to fixed-term workers. Public administrations, including the Ministry of Education and Merit, apply the reduction to all employees under the TFR scheme without distinguishing between permanent and fixed-term contracts.
The legislative framework, however, treats the two categories separately. For fixed-term staff, Article 7 of the Framework Agreement and Article 1(9) of the Decree lay down a self-standing regime, which refers to the private-sector TFR rules and makes no reference whatsoever to the reduction provided for permanent employees. The question was therefore whether, in the absence of an express reference, the deduction could nonetheless apply by virtue of the general principle of net pay neutrality.
The Court's decision and the principle of law
The Court of Appeal dismissed Roma Capitale's appeal, following the approach taken by the Court of Cassation in orders no. 11663 of 4 May 2023 and no. 19697 of 11 July 2023, the latter issued against the Ministry of Education itself.
According to the judges, paragraph 9 of Article 1 of the Decree, which governs fixed-term relationships, does not reproduce paragraph 4, just as Article 7 of the Framework Agreement does not replicate Article 6 on permanent staff. In other words, the social partners and the delegated legislator chose to apply the private-sector model of Article 2120 of the Civil Code to fixed-term workers in full, a model that provides for no contribution borne by the employee.
As for the principle of net pay neutrality, the Court clarified that it is meaningful only when comparing permanent employees who remained under the TFS scheme with permanent employees who moved to TFR: it is in that context that the gross reduction performs an equalising function. For fixed-term workers no such need arises, and the deduction amounts to a cut in contractually due pay without any legal basis.
Nor is it relevant that fixed-term workers thereby enjoy more favourable net pay than their permanent colleagues. As the Court of Cassation has already observed, clause 4 of the Framework Agreement annexed to Directive 1999/70/EC prohibits less favourable treatment of fixed-term workers, but does not preclude more favourable treatment flowing directly from the sector-specific rules.
The distinction from permanent staff
The ruling does not contradict the case law that has upheld the deduction. The Constitutional Court in judgment no. 213 of 2018, and the Court of Cassation in orders no. 19108 and no. 19438 of July 2023, dealt exclusively with permanent staff, including those hired after 31 December 2000, under paragraphs 3 and 4 of the Decree. None of those decisions examined the special rules for fixed-term relationships, which are instead the specific subject of the line of case law opened by order no. 11663/2023.
A clear dividing line follows: for periods of permanent service the reduction remains, for now, lawful; for periods worked under fixed-term contracts within the TFR scheme, it is not due.
Practical implications for substitute and fixed-term staff
The practical consequences concern above all the school sector, where the Ministry continues to apply the deduction to every monthly payment under substitute teaching contracts, including the thirteenth-month payment. Teachers, administrative and technical staff, educators and religion teachers may assert their rights for all periods worked on a fixed-term basis, whether they are still working as substitutes, have left service or have since obtained a permanent post, limited to their years of fixed-term employment.
The amounts withheld qualify as unpaid wages and can therefore be recovered as pay arrears, together with the higher of statutory interest and inflation adjustment. As regards time limits, since these are periodic pay claims it appears prudent to refer to the five-year limitation period under Article 2948(4) of the Civil Code, which, according to the Joint Divisions of the Court of Cassation (judgment no. 36197/2023), in contractualised public employment runs even while the employment relationship is ongoing, including where fixed-term contracts follow one another. It is therefore advisable to act promptly, including by sending formal notices interrupting the limitation period, so as not to lose the oldest monthly amounts.
In addition to recovering arrears, workers still in service may seek a declaration that the reduction is unlawful for their current contract and an order requiring the administration to stop applying it. Given the modest value of individual claims, usually a few thousand euros at most, proceedings before the employment judge are the most suitable means of obtaining effective protection, all the more so in light of a now settled body of case law.
