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HR Breakfast: “Dismissal: the latest safeguards, in light of recent legislative measures and a judgement of the Constitutional Court” – 29 January 2019

Law no. 98 of 9 August, converting Law Decree no. 87/2018 (the so-called Dignity Decree) with amendments, was published on Official Gazette no. 186/2018.

While not altering the method of determination – linked to seniority – referred to in art. 3 of Legislative Decree no. 23 dated 4 March 2015, the Dignity Decree establishes that compensation in cases of wrongful dismissal should be equivalent to at least 6 months’ salaries (compared to 4 under the former legislation) and at most 36 months’ salaries (compared to 24), based on the final salary used to calculate severance pay.

The method for determining compensation, instead, required the involvement of the Constitutional Court.

On 14 November last, Official Gazette no. 45 published the operative part of judgement no. 194/2018 with which the Constitutional Court declared the constitutional illegitimacy of art. 3, para. 1, of Legislative Decree No. 23/2015 exclusively as regards the wording “equivalent to two months’ salaries, based on the final salary used to calculate severance pay for every year of service”.

According to the Constitutional Court, the method for quantifying compensation under Legislative Decree No. 23/2015, also in the version amended by the Dignity Decree, results in a “rigid compensation system that applies uniformly to all workers and cannot be scaled based on parameters other than seniority of service. In this way, compensation becomes a standard, flat-rate liquidation…of the damage to workers arising from wrongful dismissal from permanent employment”.

This contrasts with the principles of equality and reasonableness, and therefore the determination of damage in the event of wrongful dismissal should be a matter for the Courts.

As a result of the ascertained unconstitutionality of the Legislative Decree, today, the courts also have ample discretion over the dismissal of resources hired after 7 March 2015, which discretion – according to the Constitutional Court – shall have to be exercised “within the minimum and maximum limits of compensation (the new limits dictated by the Dignity Decree – ed.)”, “taking into account a number of criteria in addition to seniority of service”.

The courts, therefore, may exercise discretion in determining the amount of compensation due to workers in the event of wrongful dismissal, with the difference that workers hired after the entry into force of the Jobs Act may – in certain cases – be awarded greater compensation than those hired before 7 March 2015, thereby falling under the provisions of art. 18 of Law 300/1970.

With Lawyers Enrico De Luca and Stefania Raviele, we intend to review the situation on workers’ safeguards and on the risks of a lawsuit due to wrongful dismissal.