Under the law that regulates dismissals in Italy, specific selection criteria must be applied in identifying the relevant employees, throughout the entire corporate group. However, according to well-established case-law, recently confirmed by the Court of Cassation, Labour Division, judgment No. 3511 of 6 February 2023, at certain conditions, an employer may limit the pool of employees involved in a staff reduction, even only to those employed in a certain department, sector or unit of the company. In particular, according to the Court, the needs that may justify such restriction must be consistent with the information provided by the employer in the official notification of the proposed collective redundancy process; this is to allow the trade unions to verify that: (i) the staff are actually being made redundant for reasons strictly related to the units, departments or sectors concerned, as indicated by the employer; (ii) the roles performed by the employees involved in the redundancy are not interchangeable with those of employees assigned to other departments or corporate units not involved in the restructuring.

In ruling no. 11638 dated 11 April 2022, the Court of Cassation established that the single company attribution in the employment relationship implies that the verification of the redundancies must be carried out considering the entire workforce, i.e., the workers employed by the other companies of the established individual company organisation and not only those of the formal employer company.

Facts of the case

In the first and second instances, the existence of a single company organisation between two defendant companies was established, and the dismissal of a worker because of a collective dismissal procedure activated by his formal employer company was declared illegitimate.

According to the Court, the worker’s redundancy was attributable to the employment situation including the employees of the other defendant company already acquired and owned by the first company.

This circumstance, according to the court, entailed the need that the verification of redundancies in the collective procedure initiated by the formal employer, should be carried out considering the workers employed by the other company and not only those of the formal employer.

The losing companies appealed against the Court’s ruling in cassation, relying on four pleas in law, which the worker opposed with a counter-appeal. 

The Supreme Court of Cassation’s ruling

The Court of Cassation held that the assessment made by the local Court as to the existence of a single company attribution was above reproach.

In the Court of Cassation’s opinion, the established elements of connection between the companies went beyond the implications of a simple synergy between associated companies in terms of features and purposes. These elements encroached on an interpenetration of means and activities, where the latter is indicative of substantial subjective unity and of an individual decision-making centre.

The unavoidable consequence of the single employer attribution is, according to the Court of Cassation, the need for the collective procedure to involve the workers of the individual company organisation resulting from the integration of the two companies, this is because the prerequisites for limiting the number of workers to be dismissed to the sole workforce of the formal employer have not been deduced and proven.

Given the above, the Court of Cassation dismissed the appeal and ordered the two companies to pay the costs of the proceedings

Other related insights:

With the recent ruling no. 15118 of 31 May 2021, the Court of Cassation ruled that the initiation of multiple individual dismissal procedures for objective justified reasons under Article 7 of Law 604/66 does not count when calculating the minimum number of five dismissals required to open collective dismissal procedures.

The ruling stems from the dismissal for objective justified reasons of a worker who, in challenging her dismissal, claimed the company had failed to initiate the collective dismissal procedure. This is despite the fact the company had informed the local employment office within 120 days of its intention to dismiss seven employees for objective justified reasons. All employees had been terminated by mutual consent.

The worker’s claims were rejected in the first instance. In the second instance, they were upheld by the Court of Appeal of Trieste, which declared that the dismissal was illegal due to the failure to initiate the collective dismissal procedure.

The company appealed to the Court of Cassation against the local court’s decision, claiming violation and misapplication of art. 24 of Law 223/91 because the Court of Appeal wrongly equated the intention to dismiss under Art. 7 of Law 604/66 with a real dismissal. In upholding the worker’s appeal, the Court of Cassation based its decision on literal and systematic arguments.

As stated by the Court of Cassation, the expression “intends to dismiss” contained in Art. 24 of Law 223/91 constitutes a clear manifestation of the will to dismiss, while the expression “must declare the intention to dismiss for objective justified reasons” contained in art. 7 of Law 604/66 aims to initiate a compensation (or conciliation) procedure before the Local Employment Office – DTL (now Labour Inspectorate – ITL) and cannot be considered equivalent in itself to dismissal.

Continue reading the full version published in Norme & Tributi Plus Diritto of Il Sole 24 Ore.