Manager dismissal: justifiability and just cause compared (Modulo 24 Contenzioso Lavoro of Il Sole 24 Ore, 13 February 2023 – Vittorio De Luca, Alessandra Zilla)

In its order no.88 of 3 January 2023, the Supreme Court of Cassation explained the delicate
separation between just cause and justifiability in manager dismissals. The Supreme Court held that for the justifiability of the manager’s dismissal to exist, it is sufficient to prove two of the six disciplinary charges originally contested against the manager. The absence of just cause for dismissal, and the existence of justifiability, entails the manager’s right to receive the indemnity in lieu of notice but not the additional indemnity.

Justifiability and just cause: comparing notions
The employer’s termination of a manager employment relationship differs from other employment relationships, as it falls within the scope of free recidivism. The reason for this is found in the peculiarity of the manager’s role which is close to the employer position and, therefore, the entrepreneur of which the managers are a de facto alter ego. This creates a strong and unique trust bond between employer and manager. The legislator decided not to limit the entrepreneurial choice to terminate the
managerial employment relationship. Collective regulation was added to this regulatory framework
and outlined the notion of “justifiability” for manager dismissals. Case law emphasised that justifiability derives from negotiation and must be interpreted according to the general rules of contractual hermeneutics, including the general principles of good faith and fairness, under Art. 1175 1375 of the Italian Civil Code. Justifiability is distinguished from dismissal reasons under the law, since this is integrated whenever the termination is not arbitrary or vexatious and lacking in appreciable justification (ex multis Court of Cassation ruling no. 23894 of 2/10/2018). In this decision, the distinction between justifiability and just cause for dismissal is relevant. Only the latter legitimises the
summary dismissal, without the employer having to give notice. Art. 2119 of the Italian Civil Code
which governs just cause for termination, provides for the right to terminate the contract before the
expiry, if the contract is fixed term, or without notice if open-ended, “if there is a reason that does not permit the continuation of the relationship, even temporarily”.

Case law on manager dismissals specified that “just cause, which exempts the employer from the obligation to give notice or pay an indemnity in lieu, does not coincide with justifiability. This exempts the employer from the obligation to pay the additional indemnity under collective bargaining, since just cause consists of a fact which, when assessed practically, injures the fiduciary relationship that prevents its continuation, even temporarily” (Cassation Court ruling no. 6110 of 17/3/2014. On this issue see:
Court of Cassation ruling no. 34736 of 30/12/2019; Court of Cassation ruling no. 5671 of 10 April 2012). According to established case law, justifiability is independent and unrelated to the concepts of just cause or justified reason for dismissal; consequently, facts or conduct not constituting just cause or justified reason for dismissal in employment relations may justify the manager’s dismissal, since greater powers presuppose a greater trust and a wider scope of events capable of damaging it (Court of Cassation ruling no. 6950/2019). For dismissal justifiability purposes, any reason may be relevant, provided that it is legally appreciable, capable of upsetting the bond of trust with the employer and capable of excluding dismissal arbitrariness, considering the range of powers granted to the manager – (Court of Cassation ruling no. 27971/2018). Based on the special position held by the manager, the bond of trust could be damaged by inadequacy compared to the company’s expectations, or a significant deviation from the employer’s general directives, or non-work-related conduct affecting the company’s reputation due to the position held by the manager (Court of Cassation ruling no. 2205/2016).

Continue reading the full version published in Modulo 24 Contenzioso Lavoro (Form24 Labour Litigation) of Il Sole 24 Ore.