Indicators of the single company attribution in labour relations

With its order no. 16975 of 25 May 2022, the Court of Cassation intervened on the single company attribution in employment relationships, outlining the indicators.

Facts of the case

In a ruling following a complaint under Law no. 92/2012, the local court found that the dismissal of an employee (i.e., the alleged divestiture of the hotel business) lacked a justified objective reason. Instead, the court found a single company attribution due to the relation between the formal employer and other affiliated companies and the applicable protection measure.

The Court of Appeal established that the contract for the provision of certain services stipulated between two companies was unlawful since the companies had the same registered office, corporate purpose and owner. It found the elements of corporate connection related to features and purposes had gone beyond a synergy between affiliates but represented a co-mingling of means and activities, which implies a substantial subjective unity.

After the workers employed in the affiliated companies were reviewed, the local court considered the manifest lack of the reason for the dismissal, and ordered the companies jointly and severally to reinstate the employee and pay her an indemnity of 12 months’ salary under art. 18, paragraphs 4 and 7 of Law no. 300 of 1970.

One of the affiliated companies appealed against the local court’s ruling in cassation, arguing that there was no connection and control between them under art. 2359 of the Italian Civil Code, nor a case of joint employers, since the employee worked exclusively for one company.

The Supreme Court of Cassation’s ruling

The Supreme Court, rejected the company’s appeal and ruled that the Court of Appeal conducted a careful examination of the facts of the case. This established the fictitious nature of the service contract (which turned out to be a mere labour contract) and the existence of a single company attribution, without finding any flaws in the legal logic of the case which were raised by the appellant company.

Based on its well-established case law, the Court of Cassation outlined the criteria and indicators to identify the single company attribution, namely:

1. A single organisational and production structure;
2. the integration of the activities carried out by the various group companies and the related common interest;
3. the technical and administrative-financial coordination such as to identify a single management centre that brings together the different business of individual companies towards a common purpose;
4. the simultaneous use of the work services by the various companies owning the separate enterprises, in the sense that they are carried out in an undifferentiated manner and simultaneously in favour of the various entrepreneurs.

The Court clarified that the financial-functional connection between enterprises managed by companies of the same group did not entail the lack of “independence of the individual companies which have separate legal status. They continue to be responsible for the employment relationships of personnel working at each company.” However, the obligations arising from an employment relationship can be extended to the individual companies, identifying a single company attribution where, as in this case, “the court, by examining the individual companies”, adequately proved that there was a simulation or conduct breaching the law when splitting a single business.

As for the objection relating to the failure to establish the excessive onerousness of workplace reinstatement, despite the manifest lack of the fact on which the dismissal was based, the Court of Cassation, pointed out that the Constitutional Court declared art. 18, paragraph 7, second sentence, of Law no. 300/1970 constitutionally illegitimate (for violation of art. 3 of the Constitution), as amended by art. 1, paragraph 42, letter b) of the Fornero Law, where it provided that the court, when it finds that the fact underlying the dismissal for objective justified reason was manifestly unfounded, “may apply” – instead of “shall apply” – the rules set out in art. 18, fourth paragraph (see ruling no. 597/2021). The Court of Cassation emphasised that the Constitutional Court rulings produce the annulment of the provisions of the law declared unconstitutional, with erga omnes effects, not only ex nunc, but ex tunc, with the sole limitation of the pre-defined relationships. Since this did not occur, in the Court of Cassation’s opinion, the reinstatement measure must be considered correctly applied (based on the combined provisions of paragraphs 7 and 4 of art. 18 of Law no. 300/1970) in the face of the established manifest lack of the reason for the dismissal (i.e., the divestiture of the hotel business).

Other related insights:

• Collective dismissal and single company attribution in the employment relationship