“Dismissal and indemnity – the rules do not provide certainty” (Affari&Finanza, 4 March 2019 – Vittorio De Luca)

The increase in disputes and the rising financial value of settlements, together with a scenario that has become more unstable and uncertain, could be discouraging employers from recruiting. For Vittorio De Luca, a managing partner at De Luca & Partners, these are some of the effects that could emerge from a recent ruling by the Constitutional Court. In fact, the Court declared part of the progressive entitlement contract to be unconstitutional, where it establishes that, in the event of the unlawful dismissal of an employee hired after 2015, the employer would be ordered to pay compensatory indemnity equivalent to two months’ salary per year of service, within a sliding scale ranging from a minimum of four to a maximum of twenty-four months. “The legislator’s intention was to reduce the amount of discretion and arbitrariness affecting the rulings, leaving judges to simply assess whether the dismissal was unlawful or not”, explains De Luca. However, for this expert, the ruling represents a step in the other direction: “In fact, according to the Court, the judge cannot be stripped of the possibility of establishing the due indemnity, for which the court may consider factors such as the number of employees, the size of the business, and the conduct and conditions of the parties”. For De Luca, however, these criteria are subjective and distort the basis on which the legislator introduced “progressive entitlement” contracts in 2015. Added to this, there is the so-called “Dignity Decree” issued by the new government, which raised the minimum threshold from four to six months’ salary, and the maximum threshold from 24 to 36 months. According to De Luca, this could have a potentially explosive effect, considering that the judge can decide to award indemnity for a value of between 6 and 36 months’ salary despite the number of years the employee has been in service. Thus, “we have returned to an uncertain legislative framework, having eliminated the ability to foresee the cost of dismissals, which could ultimately discourage companies from recruiting”. To conclude, De Luca points out that other foreseeable effects include “an increase in disputes, with workers being more prepared to go to court, and in the financial value of settlements”.