Social security damages, Rome Court of Appeal in line with the Supreme Court (Modulo24 Contenzioso Lavoro (Form24 Labour Litigation) of Il Sole 24 Ore, 13 May – Vittorio De Luca, Marco Giangrande)

The Court of Appeal of Rome established the subordinate nature of an employment relationship formally configured as self-employed work, declaring the employee’s right to compensation for pension differential damages under art. 2116 of the Italian Civil Code. for social security contributions never paid and which lapsed the statute of limitation. The Court specified that for the purposes of determining damages, the contribution paid into the Separate Management Scheme as a continuous coordinated work is irrelevant; a contribution that can be refunded to the worker

In ruling no. 4225 of 21/12/2021, the Court of Appeal of Rome confirmed a principle affirmed many times by the Court of Cassation, according to which the omission of the contribution produces a double pecuniary prejudice for the worker, consisting of the total or partial loss of the pension benefit that occurs when the employee reaches retirement age, and the need to establish a provision to obtain a financial benefit corresponding to the pension, through a replacement pension, by building up the annuity referred to in Law no. 1338 of 12 August 1962, art. 13 (Court of Cassation labour section Ruling 07/02/2018, no. 2964; Court of Cassation labour section Ruling 08/09/2020, no. 18661).

Before reaching retirement age, the subjective legal status of which the employee may be entitled against the employer consists of the damage from contribution non-compliance, against which the employee may bring an action for a general order to pay damages under art. 2116 of the Italian Civil Code, or the verification of the failure to pay contributions as potentially damaging conduct. This right to compensation for damages is subject to a ten-year statute of limitation ( Court of Cassation labour section  Ruling 07/11/2005, no. 26990).

Before analysing this ruling in detail, it is appropriate to examine the provisions of art. 2116 of the Italian Civil Code and art. 13, Law no. 1338 of 12 August 1962, in relation to the well-known “automatic benefits” principle which represents one of the cornerstones of social security, configuring itself as a “protection” of the protections available to workers in the exercise of their subjective rights.

Regulatory reference

According to art. 2116 of the Italian Civil Code, the benefits listed in art. 2114 of the Italian Civil Code are due to the employee, even when the employer has not regularly paid the contributions due to social security and welfare institutions, unless otherwise provided for by special laws.

The second paragraph of art. 2116 of the Italian Civil Code specifies that when security and welfare institutions are not obliged to pay all or part of the benefits due to non-payment or non-compliant contribution, the employer is liable for the damage caused to the worker.

This paragraph states the principle that the worker’s right to social security benefits is due regardless of whether the employer has paid the contributions due, and this is in application of the general principle of automatic social security benefits.

Art. 13, Law no. 1338 of 12 August 1962 is important. Under this article an employer who has omitted to pay contributions for compulsory invalidity, old age and survivors’ insurance and can no longer pay them due to the lapse of the statute of limitations, may request INPS to establish a reversionary life annuity equal to the pension or adequate pension quota of the compulsory insurance, which the worker would be entitled for the omitted contributions.

The corresponding mathematical reserve shall be devolved, for their respective quotas, to compulsory insurance allocated to the person concerned in the form of a basic contribution corresponding in value and number to those considered when calculating the annuity. The Annuity supplements the existing pension with immediate effect; otherwise, the basic contributions are valued for the purposes of compulsory insurance for invalidity, old age and survivors.

The rule specifies that the employer is allowed to exercise this option by submitting documents with a precise date to INPS, from which the existence, duration of the employment relationship, amount of salary paid to the worker concerned can be deduced.

If the worker cannot obtain the establishment of the annuity under art. 13 above from their employer, they may replace their employer, without prejudice to the right to compensation for damages, on condition that they provide INPS evidence of the existence of the employment relationship and the salary received.

To establish the annuity, the employer or worker must pay INPS the mathematical reserve calculated based on rates to be determined and amended, when necessary, by decree of the Minister of Labour and Social Security, after consulting the INPS Board of Directors.

The Court of Cassation specified that: “The damage suffered by the worker for the loss of their pension, resulting from the employer’s failure to make social security contributions under art. 2116 of the Italian Civil Code, occurs when the worker reaches retirement age, with the consequence that the ten-year statute of limitation for the right to compensation starts from that moment. Once the damage has been established, the worker is required to prove that they have unsuccessfully requested the employer to set up a life annuity under art. 13, Law no. 1338 of 12 August 1962, otherwise it must be held that they contributed to causing the damage due to their negligence, which may consequently be reduced or excluded under art. 1227 of the Italian Civil Code” (Court of Cassation labour section Ruling 11/09/2013, no. 20827).

Continue reading the full version published in Modulo24 Contenzioso Lavoro (Form24 Labour Litigation of Il Sole 24 ore.