DLP Insights

Unlawful dismissal: compensation to be calculated over the dismissal period

Categories: DLP Insights, Case Law | Tag: unlawful dismissal

14 Jul 2022

In its order no. 20313 of 23 June 2022, the Court of Cassation stated that the compensation due to the worker unlawfully dismissed must be based on the last overall remuneration from the dismissal day until the day of reinstatement. Any amount received by the worker by way of aliunde perceptum or percipiendum (earnings from other work) and within the maximum of 12 months’ salary must be deducted from the compensation, during the dismissal period. The timing of the work carried out by the dismissed employee during the dismissal period is not to be considered.

Facts of the case

An employee of an airline company had challenged her dismissal in court on the grounds that it was discriminatory and in breach of the legal provisions on collective redundancies.

The Court of First Instance, after ruling out the discriminatory nature, declared the dismissal unlawful because it failed to follow the selection criteria in the collective dismissal procedure. The company was ordered to reinstate the employee and pay her up to 12 months’ salary compensation, less the aliunde perceptum.

The company challenged the decision of the Court of First Instance on appeal, while the employee lodged a cross-appeal on the grounds that the court of first instance had erroneously quantified the compensation to which she was entitled because of the unlawful dismissal.

The local court (i) confirmed the ruling of the first instance, the exclusion of the dismissal’s discriminatory nature and its illegitimacy for breach of the selection criteria, and (ii) rejected the worker’s cross-appeal about the erroneous compensation.

This resulted in the Company’s appeal in cassation (later abandoned) and the cross-appeal of the employee concerning the calculation of the period in which the aliunde perceptum deduction applied.

The Supreme Court of Cassation’s ruling

The Court of Cassation, declared the trial of the main appeal settled considering the waiver, and declared the request for redefinition of the compensation advanced by the employee well-founded.

The Court of Cassation cited the principle expressed in previous case law according to which the aliunde perceptum and percipiendum entail the corresponding reduction of the compensation for the damage suffered by the worker for the dismissal and defined by art. 18, paragraph 4 of the Workers’ Statute. This reduction must be proportionate to the remuneration received or receivable in the period between the dismissal and reinstatement.

According to the Court of Cassation, from a reading of the above article, it follows that the calculation of the compensation must be carried out for the lost wages and those aliunde received or receivable, and not based on the time referred to the periods of unemployment or employment.

In the Court of Cassation’s opinion, the local court disregarded these principles, considering the sums received by the worker under her new employment to be deductible from the maximum 12-monthly compensation, without first calculating the damage suffered for the loss of wages during her dismissal period. The deduction could have been made only after that calculation.

The Court of Cassation stated that the aliunde sums received or receivable by the worker during the dismissal period must be deducted, by arithmetical calculation, from the loss suffered as a result of the termination. If the result of this calculation is greater than or equal to the amount corresponding to 12 months’ salary, the compensation must be paid in an amount equal to that maximum.

The legislative provision of the maximum of 12 months’ salary does not affect the calculation of the damage suffered by the worker due to the dismissal and is relevant only after the calculation when considering the maximum limit within which the compensation can be recognised.

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