Disciplinary power: employer’s discretion and dismissal lawfulness (Spanish Chamber of Commerce in Italy news, 14 February 2023 – Enrico De Luca, Luca Cairoli)

To verify the existence of just cause or justified subjective reason for dismissal, the fact that a contractual breach similar to that contested against the dismissed employee, committed by another employee, and assessed differently by the employer is irrelevant. This was the Court of Cassation’s opinion, labour section, order no. 88 of 3 January 2023.

Facts of the case

The case examined by the order, originates from a dismissal for just cause of a manager responsible for the risk and credit management department. The manager was charged by the company with failing to apply new credit management rules and disregarding company directives requiring him to wait for the new CEO’s authorisation and organising a meeting of the credit committee without convening the CEO.

The Court of Milan declared the manager’s disciplinary dismissal unlawful and ordered the company to pay him the indemnity in lieu of notice and 15 months’ salary as additional indemnity, plus ancillary expenses.

Partially reforming the first instance ruling, the Court of Appeal of Milan, held that the charges made by the company against the manager in the disciplinary notice were proven and justified the dismissal (although not for “just cause”), since such conduct was considered “inappropriate for his managerial role and could justify the employer’s decision, (which was neither arbitrary nor vexatious), to terminate the relationship, taking into account the manager’s significant strategic tasks.”

While confirming the indemnity in lieu of notice, since the contested facts could not constitute a just cause for dismissal, the local Court ordered the manager to return the additional indemnity.

The manager appealed to the Court of Cassation against the Milan Court of Appeal’s ruling. Among several grounds of appeal, he complained that the Court of Appeal failed to assess the fact that the charges were attributable to the responsibility of others whose conduct was not contested. Considering these facts would have led the Court to believe the dismissal was arbitrary and unlawful.

The Court of Cassation order

In explaining the appeal’s groundlessness, the Court of Cassation referred to the legal principle according to which “if a breach of duty by the dismissed employee irreparably compromised the fiduciary relationship, as a rule, a similar breach, committed by another employee, and assessed differently by the employer is irrelevant for just cause or justified reason for dismissal assessment purposes. This fact cannot be subject to review in a court of law if it is free from obvious logical defects (See Court of Cassation ruling no. 14251/2015, no. 10640/2017). This means that the employer exercising disciplinary discretion on differentiated positions cannot be qualified as discriminatory if it is related to specific factual elements.”