THE EFFECTIVENESS OF THE 231 ORGANIZATIONAL MODEL IN LABOR EXPLOITATION CRIMES

THE EFFECTIVENESS OF THE 231 ORGANIZATIONAL MODEL IN LABOR EXPLOITATION CRIMES

We quote the article by our own Marco D'Orsogna Bucci found in the fourth issue 2024 of the ODCEC Work Area Group magazine “Us and Work,” http://bit.ly/3VltESG, where the topic of the effectiveness of organizational model 231 in labor exploitation crimes is discussed.

Regulatory context: Legislative Decree 231/2001

The subject of the liability of entities for administrative offenses dependent on crime is regulated by Legislative Decree No. 231 of June 8, 2001-Discipline of the administrative liability of legal persons, companies and associations, including those with legal personality, within the limits and in compliance with the guiding principles and criteria indicated in Delegated Law No. 300 of September 29, 2000.

Legislative Decree No. 231/2001 conceived a complex administrative offence, that is, a punitive system that “combines the essential features of the criminal and administrative systems, in an attempt to reconcile the reasons of preventive effectiveness with the non-avoidable reasons of maximum guarantee.”

A criminal liability of the entity (entities provided with legal personality and companies and associations, including those without legal personality) is introduced for the first time in our system, and through the sanctioning instrument, of a pecuniary and disqualifying nature, the company's assets and its ability to operate in the market are affected.

The legal entity may exempt itself from such liability by adopting organization and management models aimed at preventing such crimes. In such an eventuality, fraudulent avoidance of the monitoring mechanism by the offender does not nullify the effectiveness of the exemption, provided that the entity is able to prove that it did everything possible to prevent the crimes (so-called reversal of the burden of proof) and provided that it can be shown that the model itself was effectively implemented.

Liability attaches to the entity when certain offenses are committed by top management, employees and those under its direction or supervision (individuals with whom there is a relationship of organic identification or subordination).

In particular, the individuals listed in Article 5 of Legislative Decree 231/2001:

any person who within the Entity holds functions of representation, administration or management;
any person who within an organizational unit of the Entity itself, endowed with financial and functional autonomy, holds functions of representation, administration or management;
any person who exercises, even de facto, the management and control of the Entity;
persons subject to the management or supervision of any of the above.
Obviously, the Entity's liability is excluded in cases where the persons indicated have acted exclusively in their own interest or in the interest of third parties.

The predicate offenses under Legislative Decree 231/2001 related to exploitation of labor and crimes against individual personality

On August 9, 2012, Legislative Decree No. 109/2012 came into force (published in the Official Gazette No. 172 of July 25, 2012), which introduced into Legislative Decree 231/01 Article 25 duodecies - Employment of third-country nationals whose stay is irregular: “In relation to the commission of the crime referred to in Article 22, paragraph 12-bis, of Legislative Decree No. 286 of July 25, 1998, the entity is subject to a fine of 100 to 200 quotas, within the limit of 150,000 euros.”

In practice, liability is extended to entities when the exploitation of irregular labor exceeds certain established limits, in terms of number of workers, age and working conditions, set out in Legislative Decree 286/98, the so-called “Consolidated Immigration Act.” Article 25k, after paragraph 1, continues:

1-bis. In relation to the commission of the crimes set forth in Article 12, paragraphs 3, 3-bis and 3-ter, of the Consolidated Act set forth in Legislative Decree No. 286 of July 25, 1998, and subsequent amendments, the entity is subject to a fine of four hundred to one thousand quotas.

1-ter. In relation to the commission of the crimes referred to in Article 12, paragraph 5, of the Consolidated Act referred to in Legislative Decree No. 286 of July 25, 1998, and subsequent amendments, the pecuniary sanction of one hundred to two hundred quotas is applied to the entity.

1-quater. In cases of conviction for the crimes referred to in paragraphs 1-bis and 1-ter of this article, the disqualification penalties provided for in Article 9, paragraph 2, for a duration of not less than one year shall apply.

The other case of predicate offense under Legislative Decree 231/2001, concerning hypotheses of mala gestio in the field of human resources is Article 25-quinquies called “Crimes against the individual” referable to the so-called crime of “caporalato” as defined by Article 603-bis of the Criminal Code (Illegal intermediation and exploitation of labor): “Unless the act constitutes a more serious offense, it shall be punished by imprisonment from one to six years and a fine ranging from € 500.00 to 1. 000.00 for each worker recruited, whoever: 1) recruits labor for the purpose of assigning it to work for third parties in exploitative conditions, taking advantage of the workers' state of need; 2) uses, hires or employs labor, including through the activity of intermediation referred to in number 1), subjecting workers to exploitative conditions and taking advantage of their state of need. If the acts are committed through violence or threat, the punishment of imprisonment from five to eight years and a fine from €1,000.00 to €2,000.00 for each worker recruited shall apply. For the purposes of this article, the existence of one or more of the following conditions constitutes an indication of exploitation:

1) the repeated payment of wages in a manner manifestly different from the national or territorial collective bargaining agreements entered into by the most representative trade unions at the national level, or otherwise disproportionate to the quantity and quality of work performed; 2) the repeated violation of regulations on working hours, rest periods, weekly rest, mandatory leave, and vacations; 3) the existence of violations of regulations on safety and hygiene in the workplace

4) the worker's subjection to degrading working conditions, surveillance methods, or housing situations. They constitute a specific aggravating circumstance and carry a penalty increase of one-third to one-half:

1) the fact that the number of recruited workers is more than three; 2) the fact that one or more of the recruited subjects are minors of non-working age; 3) having committed the act by exposing the exploited workers to situations of serious danger, having regard to the characteristics of the services to be performed and the working conditions.” It is easy to see how the scope of application of 603 bis c.p., in the current version amended by Law 199/2016, is not limited to hypotheses of exploitation in the fields. The issue of caporalato and exploitation can invest any productive, service sector. This is demonstrated by investigations in recent years concerning hypotheses of exploitation in logistics and transport, large-scale distribution, the fashion industry, but also in tourism and construction.

Article 603 bis c.p. identifies, as stated above, the indices of exploitation in the presence of “one or more of the following conditions.”

the repeated payment of remuneration in a manner manifestly different from the national or territorial collective agreements entered into by the most representative trade unions at the national level, or in any case disproportionate to the quantity and quality of work performed
the repeated violation of regulations on working hours, rest periods, weekly rest, compulsory leave, vacations;
the existence of violations of regulations on safety and hygiene in the workplace; subjecting the worker to degrading working conditions, methods of surveillance, or housing situations.

It constitutes an indication of exploitation, therefore, the existence of even one of the conditions identified above by the norm. It cannot escape insiders how sensitive the issue is, but especially how blurry the boundary between criminal premise and lawful behavior is. The wording of the rule does not help in this regard. The terms used leave ample room for interpretation and risk. The reiteration of conduct, from the vocabulary of the Italian language, is nothing but a repetition (even once) of the same conduct (Voc. Treccani “Doing the same thing again, replicating it, repeating it”). Of the concept of blatant deviation from collective bargaining I have already written in a previous article in this same magazine on the crime of caporalato (n.3/2023 ed.). The writer, notwithstanding, prefers that collective bargaining should determine the minimum wage and not a legal norm. However, if indeed the normative route were to be decided upon, it is believed that Article 603 bis of the Penal Code alone is suitable to “accommodate” the determination of minimum wage. An amount that is the boundary between lawful and unlawful, between exploitation and poor labor, valid for all jobs (subordinate, self-employed, parasubordinate).

Critical contexts: the supply chain

In addition to the possibility of committing the above crimes directly, administrative liability can also involve the entity indirectly, in cases of contracting/subcontracting, outsourcing of non-core-business activities, where the crime is committed by the supply chain for the benefit of the principal or sub-customer as well. Clearly, the advantage of the end principal could be conscious or unconscious, intentional or negligent (negligent). Consider, for example, a major fashion house that legitimately decides to contract out the entire production to third-party companies after evaluating and qualifying suppliers, and these in turn decide, without the former's knowledge, perhaps even in the constancy of contractual clauses prohibiting subcontracting, to subcontract some (if not all) stages of production to unscrupulous workshops employing illegal and clandestine labor. Differently, again by way of example, the case of the distribution company that knowingly, in order to obtain tax and financial advantages, entrusted logistics to “paper mill” cooperatives with the hiring of personnel on a part-time basis, with employment instead for more than 10 hours a day and non-payment of actual working hours and overtime, in addition to non-compliance with tax and social security obligations.

Law 161/2017 made significant amendments to the Code of Anti-Mafia Laws and Prevention Measures (Legislative Decree 159 of September 6, 2011). One of these was the inclusion in Article 34 of Legislative Decree 159/2011 of the provision of judicial administration in cases related to Article 603 bis of the Criminal Code. When there are sufficient indications to believe that the free exercise of economic-business activities may “facilitate” the activities of persons subject to criminal proceedings for the crimes referred to in Article 603 bis of the Criminal Code, the court responsible for the application of preventive measures against the aforementioned persons shall order the judicial administration of companies or assets that can be used for the conduct of their economic activities.

Returning, therefore, to our examples, the major fashion house that through its economic activity has “facilitated” the textile workshop to the commission of crimes under Article 603 bis of the Criminal Code and for which the representatives have been subject to criminal proceedings, subsisting the requirements of the law, will undergo judicial administration under Art. 34 D. Legislative Decree 159/2011. The person “facilitated” by the economic activities of a “facilitating” subject must belong to one of the two categories of subjects identified by the legislator: 1) those to whom a personal or patrimonial measure of prevention has been proposed or applied; 2) persons subject to criminal proceedings for any of the predicate offenses identified in the same; these include the case referred to in Article 603 bis of the Criminal Code.

The “facilitating” subject, in our example the fashion house, within the framework of the discipline under Article 34 Legislative Decree 159/2011, on the other hand, has carried out an auxiliary activity, not necessarily of an illicit nature in that with its economic activity it has facilitated those subject to criminal proceedings. The “facilitator” subject, therefore, moves in the sphere of guilt, negligence, without crossing the threshold of full awareness or malice where it would risk hypotheses of complicity in the crime, but also the judicial commission under Art. 15 of Legislative Decree 231/2001 applicable because the criminal activity is consciously carried out in the interest of the company.

Compliance tools to protect employers: the 231 organizational model

In this context, it is important for economic entities to carry out compliance activities not necessarily required by law in order to protect economic activities, corporate assets, and the image built over time. One of these is the adoption of suitable organizational management and control models under Legislative Decree 231/2001.

Preventive adoption

The virtuous decision to adopt an organizational, management and control model pursuant to Legislative Decree 231/2001 demonstrates the willingness of corporate governance to put in place procedures, principles of behavior, and strengthening of internal control garrisons, all activities aimed at minimizing the risk of committing 231 offenses. If we think of the supply chain, which we have seen in recent years to be a mine of risk-crime for companies even of national and international importance, it is important to provide strict controls in activities entrusted to third parties, both in the selection phase and in the subsequent qualification and monitoring phase. By way of example, we can mention appropriate reputational checks on suppliers and their representatives, the possession of international certifications, the adoption of Codes of Ethics or 231 organization control and management models in their turn.

Still the verification of regularity in safety and/or insurance and contributions, compliance with the most representative national collective bargaining agreements. A very important and often underestimated aspect, also because of the costs involved, is to organize and carry out specific audits at suppliers, contractors/subcontractors. Particular attention should also be paid within organizations and not only at the outsourcing stage. The agricultural sector is, not surprisingly, the origin of the crime of caporalato regulated by Article 603 bis of the Criminal Code. Agricultural companies that decide to adopt an organizational, management and control model pursuant to Legislative Decree 231/2001 cannot disregard the provision of strict procedures aimed at avoiding the commission of offenses related to the employment of citizens without residence permits, consequently providing for roles and control garrisons during the selection of non-EU labor, the detection of housing situations and, of course, contractual grading, respecting both national and territorial bargaining (typical of the agricultural sector). Adopt a 231 organizational model that is as tailor made as possible, which is not just a standard manual, appoint competent supervisory bodies, chosen by curriculum vitae appropriate to the company's reality, certainly ensures prevention toward the commission of predicate offenses, and also organizational efficiency through more effective internal controls, formalized, brought to the attention through appropriate training and information activities of stakeholders.

The expansion over time of predicate offenses, the focus of prosecutors' offices in particular on crimes against the public administration, and the provision of sanctions up to and including business interdiction, mean that today adopting a 231 organizational model is no longer a matter for “large companies.” On the contrary, demonstrating attention to the organization with a view to exemption certainly increases the reputation of the economic reality and the possibility of operating in the market, especially as suppliers of large companies. Legislative Decree 231/2001, however, also offers possibilities for protection in cases of adoption after the commission of crimes or judicial administration under Article 34 Legislative Decree 159/2011.

Subsequent Adoption

A number of relevant investigations in recent years, particularly by the Milan prosecutor's office, have seen major companies undergo the provision of receivership under Article 34 of Legislative Decree 159/2011. However, at the same time, the court imposed on the administrators

judicial administrators a “remediation” activity through the adoption (or improvement in the case of already existing models) of organizational models pursuant to Legislative Decree 231/2001 so much so that in some cases, the achievement of concrete results in the short term allowed the revocation, before the deadline, of the judicial administration. A second aspect, in the opinion of the writer is also important, and it is what is provided for in Article 17 of Legislative Decree 231/2001 “Reparation of the consequences of the crime.” The possibility for the entity to remedy a situation of illegality detected in the investigation, benefiting from a mitigation of penalties. Paragraph 1, in fact, states, “Without prejudice to the application of pecuniary sanctions, disqualifying sanctions shall not be applied when, before the declaration of the opening of the first instance hearing, the following conditions concur:

a) the entity has fully compensated for the damage and eliminated the harmful or dangerous consequences of the crime or has otherwise effectively done so;

b) the entity has eliminated the organizational deficiencies that led to the crime through the adoption and implementation of organizational models suitable to prevent crimes of the kind that occurred;

We can see how the adoption of organizational, management and control models under Legislative Decree 231/2001 today has an inconstant role evolving as a tool that is also restorative and not only preventive. It is precisely when it takes on the restorative guise that the tool itself becomes complex. In fact, the entity must demonstrate that it has adopted an exempting system of organization and file the model within the tight deadline of the declaration of the opening of the first instance hearing, avoiding superficial self-cleaning or completely standardized manuals.

The tool of the organizational, management and control model under Legislative Decree 231/2001 is of considerable importance in guaranteeing a sustainable organization (after all, the supply chain is one of the most important aspects in ESG-ambit Social reporting), effective in guarding against the commission of predicate offenses, protecting economic activities and related corporate assets. Probably the model's exemptive effectiveness will be preserved until adoption becomes a legally mandated process (desired by many mass compliance stakeholders), thus generating models that are completely standardized and likely to gather dust on corporate shelves.

Edited by: Marco D'Orsogna Bucci, Chartered Accountant of Labor and Statutory Auditor

You can download the article in PDF here

For more information:

marcodorsogna@valoreassociati.it

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