The long-awaited fulfilment of my new year’s resolution, a bit of writing that hones in on Italian law and, more specifically, Italian law in translation.
This matter that could directly affect me and any other professional working with or in Italy: a reduction in payment terms to between 30 and 60 days. I’m going to discuss how the situation was prior to the introduction of these changes, what the changes are and, to give some wider context and translation-related information, the legislation governing those changes. Let’s begin.
What were the terms in place before this?
gg fm df (bb)
Anyone invoicing Italy will have seen the confusing abbreviation “gg fm df” – sometimes there’s even a “bb” thrown in. It is usually preceded by 30, 60 or even 90. It stands for “giorni fine mese data fattura“, which means you’ll be paid within 30/60/90 days of the end of the month in which the invoice is issued. In effect, I’ve found that’s usually plus another 10 days.
Yet it’s common to hear that maximum payment terms for an invoice were 30 days. So why have these agencies in Italy been getting away with paying up to 90 days End of Month (as the English term goes)?
The matter is governed by the EU Directive on combating late payment in commercial transactions, which was updated with the Directive 2011/7/EU of the European Parliament and of the Council. As a Directive, it required each EU member state to come into line with it.
In Italy that took the form of amendments made to the original Legislative Decree (the effective equivalent of an Act in the UK) no. 231 of 9th October 2002, which were published in the Official Gazette on 15th November 2012 (Legislative Decree no. 192 of 9th November). The answer to why a longer term can be specified lies in the EU Directive, which sets forth that the 30 days applies only “if the date or period for payment is not fixed in the contract”. Hence, small agencies have been wont to include their own terms.
Anyone failing to comply was obliged to pay interest on the delayed and/or defaulted payment. A “statutory” interest rate was given in the Directive. It was the European Central Bank rate applied during its “most recent main refinancing operation” plus 7% or, for countries such as the UK, not participating in the economic and monetary union, a rate set by the national central bank.
What are the latest changes?
New legislation in Italy
The long description heading up the legislation published in the Italian Official Gazzette is: “Misure per la tutela del lavoro autonomo non imprenditoriale e misure volte a favorire l’articolazione flessibile nei tempi e nei luoghi del lavoro subordinato“.
The short? It has been nicknamed “Jobs Act Autonomi” – Jobs Act for the Self-Empoyed.
It brings in a wide range of new protections for freelancers, including pensions, maternity and paternity, sick leave, and various changes to taxes (including promoting CPD with tax breaks). This in addition to our focus, payment terms, for which it stipulates that companies/agencies now have 30-60 days to pay: that’s 60 days from the date of the invoice OR 30 days from delivery of goods/services if that is taking place after the invoice is issued.
In effect, it means better protection for small to medium companies – which one website described as the main beneficiaries of the new rules – as well as closing the gap in time between inbound payments and expenses. That is marginally less relevant for freelancers, in that our main project expense is the time we spend on it (still a cost, of course), but it should offer us some protection against late payments – provided that we know how and are willing to quote the relevant details to back ourselves up.
Interestingly – and not to do with payment delays but the actual sums – the Jobs Act was also supposed to set certain rate levels for the “typical” products and (most importantly) services offered by various professions, in a bid to combat work being undervalued. Sounds exactly like the kind of thing the translation industry needs, but I’ve yet to see anything about the Jobs Act setting standard rates for translation.
The consequences for agencies failing to comply
A breach of the new limits means much the same as it did for the old ones: automatic or agreed interest rates (the former are the rates set forth in the EC directive; the latter, those agreed in a contract) applied pursuant to Dlgs 231/2002.
Equivalent or similar legislation in the UK
A European Parliament document actually suggests that the introduction of “specific EU legislative measures targeting late payments in commercial transactions were likely inspired by those contained in the United Kingdom Late Payments of Commercial Debts (Interest) Act of 1998” and in the UK we have claimed it was “the first dedicated piece of legislation on late payments to be introduced by a Member State”.
What this means in effect is that introducing the terms of the 2011 late payments directive into our own system was fairly seamless, due to many of its provisions already featuring in UK law.
When the changes Directive was amended in 2011, we used a “Statutory Instrument” to make Amendments to the Act accordingly.
In the UK, the process for claiming money owed is by way of statutory demand – this is essentially a standard form. In Italy, on the other hand, we’d need to craft our own “lettera di sollecito pagamento“, a letter formally requesting payment, and spell out under which provisions the payment is late and for which we’re demanding interest.
And in translation…?
The decree governing interest rates (i.e. the sanction for not meeting payment terms) is somewhat “easy” due to this being the implementation of an EC directive – the language is largely there to be used in both Italian and English, including all the definitions.
As for gg fm df and other typically Italian payment terms, they essentially remain – it’s the numbers that change, whether we’re looking to translate them or simply to get paid on time.
Next time – #2
My hope is that this will come in handy or at least be of interest to readers, whether they work in/with Italy or need to translate the above terms.
In the next entry to this series, I’d like to take a looking into Collective Bargaining Agreements, which I have found research into these a necessary part of various HR and business translations and Italian contract translations.