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The layoff of a manager for cost cutting reasons uncontestable (Il Quotidiano del Lavoro of Il Sole 24 Ore, 14 February 2019 – Alberto De Luca, Gabriele Scafati)

In judgment No. 436/2019 filed on 10 January 2019 the Court of Cassation confirmed that, based on the constitutional principle of freedom of private economic initiative (art. 41 of the Constitution), an entrepreneurial decision to eliminate a job position cannot be challenged.

The Court passed the judgment in a case concerning a director of human resources, administration and finance, who was dismissed due to the elimination of her job position, with the related duties concurrently assigned to the managing director. A decision that was justified by the need to cut costs. The appeal was brought on the grounds, inter alia, of the total lack of experience of the managing director – the newly graduated daughter of the Company’s president. Heading towards the adverse ruling of the judges in charge, which, in fact, both dismissed the appeal, the executive appealed to the Court of Cassation, claiming the violation and misapplication of the law.

Despite rejecting all requests to review the trial court decisions, the Court confirmed the appealed judgment was not flawed and highlighted, however, that the company’s decision to implement a cost cutting plan could not be questioned. Thereby confirming some of its previous rulings, even recent (e.g. Court of Cassation, Civil Law Labour Division, No. 12668/2016 and No. 3628/2012), the Court reiterated the legal principle whereby the dismissal of an executive may well be founded on objective reasons linked to the need to re-organise the business, which may not necessarily coincide with the impossibility of continuing the relationship or with a crisis situation that would make the continuation of such relationship particularly burdensome, considering that the principle of fairness and good faith – which represents the basis of measurement of the lawfulness of a dismissal, even of an executive – must be considered in parallel with the freedom of private economic initiative, as set out in art. 41 of the Constitution.

The Court of Cassation concluded that the Court of Appeal had rightly found that, having ascertained that the executive had been replaced by the managing director, and…

Click here to read the full version of the note to the judgment.