Collective dismissal, ‘extended’ comparison even if restructuring affects a single unit (Norme & Tributi Plus Diritto of Il Sole 24 Ore, 19 May 2023 – Valentino Biasi, Luigi Picciarelli)

The comparison between redundant employees can be limited only to employees of a unit or sector, subject to their ability, due to previous employment in other company departments, to perform the jobs of other colleagues – Employees bear the burden proof of showing that the various duties are interchangeable.

The Italian Court of Cassation, in order No 9128 of 31 March 2023, established that, in relation to collective redundancies due to staff reductions, where the restructuring of the company affects a specific production unit or sector, the comparison between redundant workers can be limited only to employees of that unit or sector, subject to their ability, due to previous employment in other company departments, to perform the jobs of other colleagues. Employees bear the burden proof of showing that the various duties are interchangeable.

In this context, the Court of Cassation continues, the burden falls on the employer to prove the circumstances justifying the narrower scope of the decision that was made, in addition to showing that the chosen workers are not interchangeable with the employees assigned to other departments or offices.

The ruling of the Court of Cassation originates from the dismissal of an employee following a collective dismissal procedure, which was held to be lawful at first instance by the Court of Cassino.

Repealing the first instance judgment, the Court of Appeal of Rome accepted the appeal presented by the employee. The Court of Appeal ascertained that, during the aforementioned collective dismissal procedure, the employer company had breached the selection criteria under Article 5, Italian Law No 223/1991 for not having considered, in deciding which employees to be dismissed, the employee’s previous professional experience in other departments not involved in the corporate reorganisation.

Based on the findings of fact and law, the Court of Appeal of Rome, with judgment No 2287 of 28 October 2020, accepted the employee’s complaint. The Court ordered the employer to reinstate the employee and pay compensation equal to the overall actual remuneration from the day of the dismissal until that of reinstatement, for a period not exceeding 12 months.

The employer company filed an appeal against the decision taken by the Court of Appeal of Rome, which the employee resisted with a counter-appeal.

Specifically, the company alleged, among other things, the breach and misapplication of Articles 4 and 5 of Italian Law No 223/1991 and the rule on the distribution of the burden of proof under Article 2697 of the Italian Civil Code and Article 115 of the Italian Code of Civil Procedure. The company argued that the Court of Appeal of Rome had erred in upholding the unlawfulness of the dismissal on the grounds that the employer had limited its consideration of the employee’s job to a single business unit, also given the lack of evidence on the employee’s actual duties in other departments.

Nevertheless, the Court of Cassation held the company’s complaints to be unfounded.  The Court highlighted how the Court of Appeal of Rome had complied with a principle widely established in case law (Court of Cassation, Employment Division, judgments No 18190/2016 and No 2284/2018) according to which, in the event of collective dismissal that concerns a specific production unit or sector, the comparison of the employees to be made redundant can be limited to the personnel assigned to that unit or sector. This is, however, on condition that the employees of the department to be abolished, due to their career history, are not capable of performing the jobs of colleagues in departments or sectors of the company not involved in the reorganisation.

In terms of proof, the Court of Cassation judges reaffirmed the principle, already expressed in previous Court of Cassation case law (Court of Cassation, Employment Division, judgments No 8474/2005,  No 13783/2006, No 33889/2022, No 203/2015, No 19105/2017 and No 15953/2021), according to which the burden proof of proving the interchangeable nature of the various duties is on the employees, while the burden is on the employer to prove
a) the circumstances that justify the narrower business context in which to make the choice of the employees to be dismissed and
b) that the employees did not carry out duties that were interchangeable with those of colleagues from other departments.
The full version of this article can be accessed at Norme e Tributi Plus Law of Il Sole 24 Ore.