Lawfulness of dismissal based on need to cut costs (Newsletter Norme & Tributi n. 174 Camera di Commercio Italo-Germanica – Vittorio De Luca, Luca Cairoli)

With Order no. 31660 of 14 November 2023, the Italian Court of Cassation ruled on a dismissal for a justified objective reason based on the need to cut costs. In this case, the employer had not demonstrated that the costs savings should be those specifically relating to the dismissed worker’s position rather than other positions that were more “expensive” than the one affected by the dismissal. The Italian Court of Cassation, hearing the case, established that for the purposes of ascertaining the lawfulness of a dismissal because of a general need to cut costs, the reasons why the employer chose a particular worker must be assessed. In this regard it is also necessary to consider other job positions, especially if they are comparable to the one abolished, to verify the existence of the causal link between the alleged organisational reason and the abolition of the job. Following the majority approach, the Court therefore ruled that if the dismissal for a justified objective is imposed to cut costs, the burden is on the employer to indicate the reasons why the particular worker has been chosen.     .