With ruling no. 2629 of 10 November 2021, the Court of Milan considers that the dismissal prohibition introduced by the emergency legislation applies to executives.
Facts of the case
With an appeal under art. 414 of the Italian Code of Civil Procedure, an executive requested the Court of Milan to ascertain and declare the nullity of his dismissal for breach of the emergency regulations. Furthermore, he asked for reinstatement and compensation for damages equal to an indemnity proportional to the last total salary from the dismissal date to the reinstatement date and no less than five months’ salary, plus interest and revaluation from the date of settlement accrual and payment of social security contributions.
The executive’s former employer, which appeared before the Court, requested the rejection of the claims submitted by the manager.
The Court’s decision
In upholding the executive’s appeal, the Court pointed out that the dismissal letter showed that the executive had been dismissed for cost containment to manage the company more profitably, which was linked to the COVID-19 health emergency. The dismissal letter stated that “within twelve months, (…) he would have reached the age of 67, the age set by law for obtaining the pension, receiving the relevant emoluments and the indemnity instead of notice.”
According to the Court, it is clear from the letter of dismissal that this was not an ad nutum dismissal but an ineffective dismissal for financial reasons.
As far as we are concerned, the Court observed that the dismissal prohibition during the emergency period applies to executives. The interpretation according to which this prohibition would not apply to them cannot be reasonably confirmed by a constitutionally oriented understanding of Art. 14 of Decree Law no. 104/2021.
The reference to art. 3 of Law 604/1966 to identify the type of dismissal covered by the prohibition, namely dismissal for objective reasons, “is intended solely to identify the type of dismissal covered by the prohibition, namely dismissal for objective reasons, based on the reasons given in the termination notice.” The fact that the rules on dismissals apply only to managers, clerks and workers is irrelevant since the legislature intended to prohibit all “financial-based” dismissals. The reference made by art. 4 of Law 104/2020 is only to art. 3 and not to the entire Law 604/1966.
In addition, it is common ground that executives are subject to the rules governing collective redundancies. According to the Court, it was illogical to exclude executives from the dismissal prohibition scope, which includes their collective dismissal.
That conclusion appears to be supported by applying the protection’s sanctioning system for executives’ null and void dismissal because it was made in breach of a prohibition laid down by a mandatory rule.
According to the Court, the justified reason supporting an executive’s dismissal cannot be disregarded under Art. 5 of Law 604/1966. “The contractual justified reasons legitimising executive dismissals are contained in the less extensive objective justified reason for dismissal.”
Excluding executives from dismissal prohibition was inconsistent with a constitutionally-oriented interpretation of the rules concerning the principle of equality and reasonableness. The Court referred to the Court of Cassation, which stated different rules could be applied to executives “provided that they are situations capable of justifying an exceptional regime regarding other appreciable interests and the limits of reasonableness are not exceeded.”
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This ruling is part of the case law debate in which the Court of Rome, by order of 26 February 2021, firstly declared illegitimate the individual dismissal for financial reasons of an executive during the period when the dismissal prohibition was in force and then, by decision of 19 April, legitimised that type of dismissal.
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