The Court of Rome, in its ruling no. 3605 of 19 April, 2021, ruled on the application of the dismissal prohibition, provided for by art. 46 of the “Cure Italy” decree and confirmed by the emergency measures that followed, to executives. Contrary to the conclusions reached on 26 February, the Court ruled that “the literal wording of the regulation, together with the philosophy that supports it, did not allow executives to be included in the prohibition.”
Facts of the case
To deal with a crisis, worsened by the consequences of the pandemic, a company, with a notice dated 29 April 2020, dismissed its Chief Operating Officer due to the position removal and redistribution of the functions assigned to him among other company managers.
The executive challenged the termination by objecting to its nullity due to violation of art. 46 of Decree Law 18/2020 (“Cure Italy Decree”) on the assumption that the prohibition of individual dismissal introduced by the emergency legislation should apply to executives and the dismissal illegitimacy.
The Court’s decision
In rejecting the appeal brought by the executive, the Court of Rome preliminarily noted that art. 46 of the “Cure Italy” Decree – and the subsequent emergency measures that extended the dismissal prohibition – expressly excluded the possibility of ordering dismissals for justified objective reasons under art. 3 of Italian Law no. 604/66)
However, based on the literal content of the regulation and the assumption that art. 3 of Law 604/66 does not apply to executives, based on the express provisions of the legislation (art. 10 L. 604/66) and by constant case-law orientation, the Court ruled out that executives can be included in the dismissal prohibition.
The Court found the “clear and evident symmetry” between the dismissal prohibition and the use of social shock absorbers, which has allowed companies to reduce labour costs in a generalised manner to cope with losses. This symmetry is confirmed by the possibility for employers to revoke dismissals already announced before the prohibition, introduced by art. 46 of the “Cure Italy” Decree in paragraph 1-bis. This applies if a request to access the redundancy fund was made simultaneously.
According to the Court, the combination “dismissal prohibition” and “use of social shock absorbers” cannot be applied to executives, as they cannot benefit from social shock absorbers while in office. An interpretation that would allow the inclusion of executives in the dismissal prohibition would be unconstitutional. It would leave the employer responsible for the costs of the managerial employment relationship even in the presence of a justified termination.
The Court held that it could not come to a different conclusion, not even because of the order from the same Court dated 26 February 2021. Under this order the prohibition would apply to executives because “according to a ‘constitutionally oriented interpretation’ the exclusion of executives from the prohibition is unclear, given the regulation is supposed to prevent general dismissal without any distinction.”
With this ruling, the Court disagreed with the reasoning contained in the 26 February order. Under this order, it would be unreasonable not to include executives in the prohibition because they are protected by the rules of collective dismissal. With this ruling, the Court declared the cases were different. This justifies a difference in approach and it cannot be a valid reason to apply the dismissal prohibition to the individual executive.
The logical-juridical process that led the Court to exclude the extension of the dismissal prohibition to management personnel can be shared since it follows legal provisions and the entire emergency regulatory system’s reason.
However, the case law on the interpretation of the same regulatory source provided diametrically opposed solutions, resulting in uncertainty for companies about the outcomes and costs of any dismissal of senior figures.
Other related insights: