Collective dismissal: possibility of limiting the procedure to certain offices only

The Court of Cassation, in its ruling of 6 May 2021, no. 12040, declared that it was legitimate to limit the scope of a collective dismissal procedure to the production units undergoing reorganisation instead of covering the entire company workforce.

Facts of the case

In December 2016, a company initiated a collective dismissal procedure, limiting the downsizing project to only two production units and, without involving the entire workforce in applying the criteria for selecting the workers to be dismissed.

In the notice initiating the procedure, it was explained that the choice was due first to the geographical distance of the production units from the other company sites. This made it uneconomic for the company’s organisational needs to make a collective transfer of employees instead of redundancies. The second reason for this choice was the non-fungibility of the tasks carried out by employees working in the two units concerned compared with those working in other sites.

Some of the dismissed workers appealed to the judicial authority to extend the workers affected by the dismissal to the entire workforce. After the local Court of Appeal found the notice of procedure opening met the requirements laid down by Art. 4, third paragraph, of Law no. 223/1991 – the workers appealed to the Court of Cassation.

The Supreme Court of Cassation’s ruling

The Court of Cassation, agreeing with the local court’s arguments, reiterated that (i) the business cessation is an entrepreneurial choice and an unquestionable exercise of freedom of enterprise guaranteed by Article 41 of the Constitution and (iii) the procedure for collective dismissal has the sole function of allowing union supervision on the effectiveness of this choice. The judicial review does not concern the reasons for the personnel reduction, but only the operation procedural correctness.

The Court of Cassation tackles the central issue of the case, concluding with its well-established orientation according to which the limitation is legitimate if the restructuring project refers to one or more production units, provided that the technical-production and organisational reasons for the restriction are clearly stated in the procedure opening notice, for the possible fungibility of the tasks carried out by the employees of the offices involved. They must be consistent with the reasons underlying the personnel reduction. In the Court’s opinion, the non-fungibility of the tasks was identified in the uniqueness of each production site, the orders, which would have made the transfer from one site to another impracticable.

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With this ruling, the Court of Cassation essentially accepts the use of technical, organisational and production requirements as the sole criterion for choosing the staff to be laid off in a collective dismissal procedure. It is understood that such needs must be explained in the procedure opening notice and must be consistent with the reasons given for the personnel reduction.

Other related insights:

• European Court of Justice: interpretation of the directive on collective redundancies