With ruling no. 2629 of 10 November 2021, the Court of Milan considers that the dismissal prohibition introduced by the emergency legislation applies to executives.
Facts of the case
With an appeal under art. 414 of the Italian Code of Civil Procedure, an executive requested the Court of Milan to ascertain and declare the nullity of his dismissal for breach of the emergency regulations. Furthermore, he asked for reinstatement and compensation for damages equal to an indemnity proportional to the last total salary from the dismissal date to the reinstatement date and no less than five months’ salary, plus interest and revaluation from the date of settlement accrual and payment of social security contributions.
The executive’s former employer, which appeared before the Court, requested the rejection of the claims submitted by the manager.
The Court’s decision
In upholding the executive’s appeal, the Court pointed out that the dismissal letter showed that the executive had been dismissed for cost containment to manage the company more profitably, which was linked to the COVID-19 health emergency. The dismissal letter stated that “within twelve months, (…) he would have reached the age of 67, the age set by law for obtaining the pension, receiving the relevant emoluments and the indemnity instead of notice.”
According to the Court, it is clear from the letter of dismissal that this was not an ad nutum dismissal but an ineffective dismissal for financial reasons.
As far as we are concerned, the Court observed that the dismissal prohibition during the emergency period applies to executives. The interpretation according to which this prohibition would not apply to them cannot be reasonably confirmed by a constitutionally oriented understanding of Art. 14 of Decree Law no. 104/2021.
The reference to art. 3 of Law 604/1966 to identify the type of dismissal covered by the prohibition, namely dismissal for objective reasons, “is intended solely to identify the type of dismissal covered by the prohibition, namely dismissal for objective reasons, based on the reasons given in the termination notice.” The fact that the rules on dismissals apply only to managers, clerks and workers is irrelevant since the legislature intended to prohibit all “financial-based” dismissals. The reference made by art. 4 of Law 104/2020 is only to art. 3 and not to the entire Law 604/1966.
In addition, it is common ground that executives are subject to the rules governing collective redundancies. According to the Court, it was illogical to exclude executives from the dismissal prohibition scope, which includes their collective dismissal.
That conclusion appears to be supported by applying the protection’s sanctioning system for executives’ null and void dismissal because it was made in breach of a prohibition laid down by a mandatory rule.
According to the Court, the justified reason supporting an executive’s dismissal cannot be disregarded under Art. 5 of Law 604/1966. “The contractual justified reasons legitimising executive dismissals are contained in the less extensive objective justified reason for dismissal.”
Excluding executives from dismissal prohibition was inconsistent with a constitutionally-oriented interpretation of the rules concerning the principle of equality and reasonableness. The Court referred to the Court of Cassation, which stated different rules could be applied to executives “provided that they are situations capable of justifying an exceptional regime regarding other appreciable interests and the limits of reasonableness are not exceeded.”
This ruling is part of the case law debate in which the Court of Rome, by order of 26 February 2021, firstly declared illegitimate the individual dismissal for financial reasons of an executive during the period when the dismissal prohibition was in force and then, by decision of 19 April, legitimised that type of dismissal.
Altri insight correlati:
The current emergency due to the spread of Covid-19 led the Italian Government to ban dismissals for objective justified reason and suspend layoff proceedings. Initially introduced with the Cure Italy Decree, it was later extended with additional Government conditions. The most recent, art. 12, par. 11, of Decree Law 137/2020 (“Ristori Decree”) extended it until 31 January 2021. However, the Government added exceptions to the ban, including the reduction of personnel under company collective contracts containing a layoff incentive for subscribing employees. The union counterparties of these agreements are those that are comparatively more representative at national level. The concept of collective contract was introduced by art. 51 of Legislative Decree 81/2015 stating that such contracts are “national, territorial or company contracts signed by unions comparatively more representative at national level”. However, unlike art. 51, these agreements cannot be signed at amalgamated or company Unions for sectors not covered by interconfederal agreements. These workers will receive involuntary unemployment benefits (NASPI).
Our HR Breakfasts are back in webinar mode.
Thursday 19 November, De Luca & Partners and HR Capital organised the HR Virtual Breakfast with a technical and legal focus on the latest developments in employment.
Our Senior Associate Alessandra Zilla and HR Capital Labour Consultant Nunzio Lena took stock of recent emergency decrees moderated by our Managing Partner, Vittorio De Luca.
The event was held 9-10 am using the Zoom platform.
Attendance is free subject to registration
An employment emergency measure package added to Italian Decree Law 137/2020 approved by the Council of Ministers on 28 October 2020, includes a brief extension of the emergency wages guarantee fund (both ordinary and derogatory) and wage integration fund (FIS) equal to six weeks that can be used from 16 November 2020 until 31 January 2021. The latter date is also tied to the extension of the ban on dismissals for economic reasons which is thus further deferred in a generalised manner. The following are excluded from this ban: (i) dismissal justified by final closure of the company’s business and later putting it into liquidation which does not include continuation of the business (even only partly), unless it entails closure of a complex of assets/activities which constitutes a transfer of a company (or business unit) as per art. 2112 c.c.; (ii) case of a company collective agreement, signed by the trade unions comparatively more representative at national level, which includes incentives for termination of employment (limited to workers who decide to subscribe to this agreement); dismissals ordered in the event of bankruptcy, when the company business is not temporarily continued. Instead, in terms of “de-contribution”, the decree in question states that private employers who do not request emergency wage integration, are exempt from payment of the social security contributions they owe, for a maximum period of 4 months, usable by 31 January 2021, limited to the hours of wage integration already used in June 2020. The additional six months of wages guarantee (both ordinary and derogatory) or wage integration fund (FIS), as mentioned above, must be used within the period between 16 November 2020 and 31 January 2021, while the period of integration previously requested and authorised under the “August Decree” and even partly used in periods after 15 November 2020, are considered part of the six weeks of the “Ristori Decree”. It also states that these additional six weeks of benefits are granted against payment of an additional contribution, calculated inversely proportional to the drop in revenue suffered by the company during the first half of 2020 compared to the same period in 2019. Payment of the additional contribution will not be requested from employers who sustained a reduction of revenue equal to or greater than 20% in the first half of 2020, or those who started their business after 1 January 2019, or are subject to the restrictions introduced by the DPCM of last 28 October.
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