The unilateral termination of the contract by the employer before its expiry is unlawful

The Court of Cassation, under ruling no. 21537 of 20 August 2019, declared the unilateral termination by the employer of the collective agreement before its natural expiry date unlawful, even if said contract is withdrawn from its trade association (in this specific case, Confindustria).

Facts of the case

The District Court had partially reformed the first instance decision, confirming it insofar as it had rejected the objection of the Federazione Italiana Lavoratori Chimica Tessile Energia Manifatturiera – CGIL Provinciale [Provincial General Confederation of Italian Workers] and the counterclaim of the employer company against that decision. The Court considered the conduct of the company to be anti-union, involving its failure to inform and consult a representative trade union regarding the negotiation and subsequent conclusion of a new collective agreement with the other trade unions.

The Court of Appeal found that the employer company, having withdrawn from Confindustria, was no longer required to comply with the trade union agreements signed by the association of the sector (in this specific case, Federgomma) and, therefore, was free to apply to its employees the National Collective Bargaining Agreement referred to in the company agreement.

The trade union that signed the contract with Federgomma appealed in cassation against the decision of the Court of Appeal, to which the Company stood up to with its defence.

The decision of the Court of Cassation

Firstly, the Supreme Court referred to its previous opinion, according to which in the collective agreement, the possibility of termination only applies to the contracting parties, i.e. the trade unions and employers’ associations, whilst the individual employer is not permitted to withdraw unilaterally therefrom, not even on the grounds of excessive costs under Article. 1467 of the Italian Civil Code, except in the case of company agreements entered into by the individual employer with local trade unions.

The Court then referred to another previous opinion in respect of which the employer is granted the right to withdraw from a post-corporate collective agreement entered into for an indefinite period of time and without a predetermined expiry date. This is because the agreement cannot bind all the contracting parties forever. Otherwise, the cause and social function of the collective bargaining agreement would be invalidated, the governance of which mustalways be based on a constantly evolving socio-economic reality.

Again, according to the Court, this principle is valid provided that the withdrawal is exercised in accordance with the criteria of good faith and fairness in the execution of the agreement and must not be detrimental to the intangible rights of workers, resulting from the previous, more favourable, regulations and entered definitively in their assets.

In this context, the Court refers to two rulings (please see ruling 14511/2013 and ruling 24268/2013), according to which, in our legal system, there is no obligation for the employer to negotiate and enter into collective agreements with all trade unions, with the possibility of signing a new collective agreement with trade unions other than those that have negotiated and signed the previous agreement coming under negotiating autonomy.

However, in the Court’s opinion, the issue in question in this specific case is the application of the collective agreement until its natural expiry date, in the absence of notice of termination by the eligible persons.

On this point, the Court considers that there is no principle or rule which would lead to the conclusion that a new collective agreement can be applied before the expiry date of the collective agreement currently in force, which the parties have undertaken to comply with.

As a result, the Supreme Court referred the ruling back to the District Court, with a different composition, which shall be responsible for reconsidering it based on the principles set out in the ruling in question, in addition to the settlement of litigation costs.