Reclassification of temporary self-employment: consequences for compensation

With order no. 17450 of 25 June 2024, the Italian Court of Cassation – confirming its previous position – ruled that in the event that an employment relationship which is only ‘formally’ one of self-employment is found to be a subordinate employment relationship the indemnity regime typical of fixed-term contracts does not apply, but instead the compensatory regime applies, starting from the formal notice.

The facts of the case

A journalist, who had entered into multiple fixed-term self-employment contracts with the company over a period of almost 12 years, brought an action before the courts to obtain a finding of the existence of a permanent employment relationship, and to order the employer to pay full compensation for damages, equal to the wages accrued from the formal notice following the expiry of the last self-employment contract and until effective reemployment.

The Italian Court of Appeal partially upheld the said claim, finding, on the one hand, the subordinate nature of the employment relationship between the parties, but rejecting, on the other, the claim for compensation in the terms requested by the worker.

With regard to the latter aspect, the Italian Court of Appeal specified that, even with reference to fixed-term employment contracts that are only formally autonomous, the compensation regime typical of fixed-term contracts applies, i.e., the all-inclusive indemnity to the extent of between a minimum of 2.5 and a maximum of 12 monthly instalments.

The order

The worker referred the proceedings to the Italian Court of Cassation, with a cross-claim by the company. The Italian Court of Cassation found preliminarily that, in relation to a permanent employment relationship, the compensation regime relating to fixed-term contracts does not apply.

According to the Italian Court of Cassation Judges the legislation relating to fixed-term contracts (providing for an amount varying from 2.5 to 12 monthly instalments) applies in the event of a declaration of unlawfulness of the term set out in the employment contract, which did not cover the present case.

The Judges held that, if a self-employment contract is reclassified – which presupposes a thorough judicial investigation conducted on the basis of indicators that reveal the parties’ rights, obligations and powers – the worker is entitled to full compensation for the damage, equal to the remuneration accrued from the formal notice until reemployment.

In the light of the foregoing, the Italian Supreme Court upheld the worker’s ground of appeal, quashing the contested judgment and referring it for a second review by the Court of Appeal.

Other related insights:

• Reclassification of the self-employment relationship even in the absence of direct evidence of employer direction
• Social safety nets linked to retraining (Il Sole 24 Ore, 23 February 2022 – Vittorio De Luca)