On 23 September, Decree Law 144/2022 ( Aiuti-ter (Aid ter) decree) was published on the Official Gazette. The Decree introduced significant changes which benefit workers and established new and different allowances for employees, self-employed workers and other categories. This is additional to the provisions of the Aiuti (Aid) decree (Decree Law 50/2022) and modifies the rules introduced by the Budget Law 2022 on production termination of large companies.
Among the many important changes introduced by the aiuti-ter decree, relocations are the most significant.
Budget Law 2022 (Law no. 234 of December 2021), introduced a new and complex procedure into our legal system, for companies with at least 250 workers. This preserves the employment and production fabric. During business termination or reduction, the employers must initiate a consultation procedure and submit and discuss a plan for limiting the employment and financial fallout, with trade union representatives, the involved regions, Ministry of Labour, Ministry of Economic Development and ANPAL.
With the entry into force of the aiuti-ter decree, the government made some restrictive changes to the budget law procedure. The decree requires the reimbursement of public subsidies, grants, and financial aids or advantages by the beneficiary production plants which terminate or downsize their business.
Decree changes analysis.
The “relocation” procedure timeframes were extended.
The period following the consultation procedure commencement was doubled (from 90 to 180 days). During this period any dismissal notified by the employer is null and void.
The period during which the employer and trade unions, regions, ministries of labour and economic development, and ANPAL must discuss the above plan was quadrupled (from 30 to 120 days).
A provision contained in the original rule was removed. This stated that, if a collective dismissal procedure was initiated following the failure to sign the plan, the ordinary duration of the mandatory consultation would have been reduced from 75 to 30 days. With the aiuti-ter decree, any collective dismissal procedure under Law no. 223/91 must be followed.
The penalty for the increased dismissal tax is raised by 500 per cent if the trade unions do not sign the plan.
The regulation introduced an obligation to repay public subsidies received in the previous ten years by production plants subject to layoffs or downsizing and calculated proportionally to the staff reduction percentage. The provision applies if the staff reduction is more than 40 per cent of personnel employed on average in the last year, nationally or locally, or in the department subject to relocation or closure.
The Court of Cassation with its order no. 1242 of 17 January 2022, ruled on the limitation, to a certain department, of the range of employees to dismiss for a collective procedure, setting out the requirements so that such limitation can be considered lawful.
The event originated from a collective dismissal procedure started by a company for structural purposes following the need for a renewal of the company strategies aimed at remaining competitive on the market. Even if the communication regarding start of the procedure referred exclusively to restructuring needs of the entire company complex, the company limited application of the selection criteria to employees of certain offices.
Faced with an employee’s challenge of the dismissal, the judges of Naples, in the first and second instance, called the dismissal unlawful due to violation of the selection criteria, with consequent sentencing the employer to reinstate the employee and payment in his favour of a medio tempore remuneration matured, with the limit of 12 months in application of art. 18, paragraph 4 of the Workers’ Statute.
Objecting to the Territorial Court ruling, the company appealed to the Court of Cassation alleging, on one side, violation of articles 4 and 5 of Law 223/1991 with reference to the declared unlawfulness of the limit of the range of dismissals to certain units or departments and, on the other hand, the violation of art. 18 of the Workers’ Statute.for having been sentenced to reinstatement of the employee.
With in-depth reasoning, the Court rejected the appeal submitted by the company, stating that the limitation of the employees to dismiss, to be valid, presumes that the employer, in the communication as per art. 4, paragraph 3, of law 223/1991, indicates both the reasons based on which the dismissals are limited in a certain unit or specific sector, and the reasons for which it does not believe to get around the dismissals with the transfer to nearby production units.
The general rule, according to which the workers to dismiss must be identified in the company complex, does not hinder, per se, limiting the range of the involved workers to a certain sector or department. To this end, the Court explained, it is nonetheless necessary that (i) the technical-production requirements be accurately indicated in the communication to start a collective dismissal procedure and (ii) the employer provides proof of the reasons that justify performing the selection within the confines of a narrower area.
The specification in the communication required by art. 4 and aimed so that (i) trade unions are able to verify that there is an adequate causal nexus in the reasons that determine the surplus of personnel and employees being dismissed and (ii) limitation of the range of workers, the dismissal measure was aimed at, is the result of effective organisational needs and reason for the reduction of personnel, adequately described in the same communication and in relation to which there must be consistent compliance.
Furthermore, the Court of Cassation, explained that in the selection of subjects to involve in a collective dismissal – for the purposes of excluding from the comparison workers with equivalent professional capacity assigned to production units not closed and located in the nation – the circumstance that to keep a worker on the job of the closed office it would be necessary to transfer him to another office with higher costs for the company, has no relevance.
To this end the Court found that article 5 of Law 223/1991 in establishing the parameter for identifying the workers to dismiss, reference is not made to occurrence of additional costs nor territorial location of offices.
Lastly, with reference to the consequences connected with the declared unlawfulness, the Supreme Court, referring to previous case law, reiterated how, in the case in hand, there was not a mere procedural violation related to the incomplete communication required by law. According to the Court in this case there was a substantial violation, represented by application of selection criteria to a range of employees to dismiss unlawfully limited compared to the entire company complex, with consequent application of the protection envisaged by article 18, paragraph 4 of the Workers’ Statute.
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The Supreme Court of Cassation, in its Order no. 17051, published on 16 June 2021, stated that if a dismissal is declared unlawful, the aliunde perceptum resulting from a work compatible with that carried out in favour of the employer ordered to reinstate the employee should not be deducted from the appropriate compensation.
Facts of the case
The case is based on a local court’s ruling, upheld by the Court of Appeal, regarding the legitimacy of a dismissal, a reinstatement order to the employer and compensation payment.
The second instance ruling was overturned by the Court of Cassation concerning the employer’s objection to the aliunde perceptum and referred the case back to the Court of Appeal.
In the Judicial review, the Court of Appeal considered that the documents produced by the employer were insufficient to prove that the employee had worked as an employee of another company after his dismissal.
Following an order to produce suitable documentation under Art. 210 of the Civil Procedure Code, it appeared that the employee had carried out a self-employed activity before his dismissal.
From this assumption, the Court of Appeal deduced that the extra work and the work carried out for the employer were compatible with each other, thus rejecting the employer’s objection regarding the aliunde perceptum.
The employer appealed to the Court of Cassation, complaining that the Court of Appeal’s decision was based on a new circumstance (i.e., carrying out additional work prior to the dismissal) and claiming the violation of the rules on presumptive reasoning.
The Supreme Court of Cassation’s ruling
Leaving aside the purely procedural aspects dealt with by the Court of Cassation, it confirmed the decision of the Court of Appeal concerning the non-deductibility of the aliunde perceptum in this case.
The Supreme Court, citing similar cases, stated: “In terms of individual dismissal, the compensation for employment or self-employment – which the employee receives during the period between their dismissal and the annulment ruling (the intermediate period) – does not involve the corresponding reduction of damages for unlawful dismissal, if that work is compatible with the simultaneous continuation of the work which was suspended following dismissal. In this case, the work was carried out alongside the work which was suspended prior to dismissal.”
In this case, the Court of Cassation did not find any fault with the presumptive reasoning followed by the Court of Appeal in reaching its decision. This is because “in evidence by presumption, under Articles 2727 and 2729 of the Civil Code, it is not necessary for there to be a link of absolute and exclusive causal necessity between the known fact and the unknown fact. It is sufficient that the unknown fact can be unequivocally inferred from the known fact, according to a judgement of probability based on id quod plerumque accidit.”
The Court of Cassation explained that, with adequate and logical reasoning, the local Court pointed out that the self-employed service provided by the employee dated back to when he was already working for the employer who had dismissed him and it was simultaneous.
According to the Court of Cassation, it follows that, since the two activities carried out were compatible, the remuneration for the extra-work should not have been considered for any aliunde perceptum relevant to the compensation aspects of the unlawful dismissal.
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The Court of Cassation, in its ruling of 6 May 2021, no. 12040, declared that it was legitimate to limit the scope of a collective dismissal procedure to the production units undergoing reorganisation instead of covering the entire company workforce.
In December 2016, a company initiated a collective dismissal procedure, limiting the downsizing project to only two production units and, without involving the entire workforce in applying the criteria for selecting the workers to be dismissed.
In the notice initiating the procedure, it was explained that the choice was due first to the geographical distance of the production units from the other company sites. This made it uneconomic for the company’s organisational needs to make a collective transfer of employees instead of redundancies. The second reason for this choice was the non-fungibility of the tasks carried out by employees working in the two units concerned compared with those working in other sites.
Some of the dismissed workers appealed to the judicial authority to extend the workers affected by the dismissal to the entire workforce. After the local Court of Appeal found the notice of procedure opening met the requirements laid down by Art. 4, third paragraph, of Law no. 223/1991 – the workers appealed to the Court of Cassation.
The Court of Cassation, agreeing with the local court’s arguments, reiterated that (i) the business cessation is an entrepreneurial choice and an unquestionable exercise of freedom of enterprise guaranteed by Article 41 of the Constitution and (iii) the procedure for collective dismissal has the sole function of allowing union supervision on the effectiveness of this choice. The judicial review does not concern the reasons for the personnel reduction, but only the operation procedural correctness.
The Court of Cassation tackles the central issue of the case, concluding with its well-established orientation according to which the limitation is legitimate if the restructuring project refers to one or more production units, provided that the technical-production and organisational reasons for the restriction are clearly stated in the procedure opening notice, for the possible fungibility of the tasks carried out by the employees of the offices involved. They must be consistent with the reasons underlying the personnel reduction. In the Court’s opinion, the non-fungibility of the tasks was identified in the uniqueness of each production site, the orders, which would have made the transfer from one site to another impracticable.
With this ruling, the Court of Cassation essentially accepts the use of technical, organisational and production requirements as the sole criterion for choosing the staff to be laid off in a collective dismissal procedure. It is understood that such needs must be explained in the procedure opening notice and must be consistent with the reasons given for the personnel reduction.
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The Court of Justice of the European Union (CJEU), with its ruling of 17 March 2021 (case C-652/2019), decided on prejudicial issues raised by the Court of Milan on 5 August 2019 on the legitimacy of the collective dismissal provisions contained in the Jobs Act.
The case regards an employee hired with a fixed term contract before the Jobs Acts became effective, changed to open-ended at the end of March 2015 and then dismissed in 2017 in a collective dismissal procedure.
The employees involved in the procedure in question, including the employee, petitioned the Court of Milan which declared the challenged dismissals as unlawful, due to violation of the selection criteria. The Court granted the worker – unlike her colleagues who had been reinstated because hired with open-ended contract before the enactment of Legislative Decree no. 23/20215 (so-called Jobs Act), i.e. before 7 March 2015 – only the indemnity protection.
The Court, noting the existence of two different disciplinary systems in the event of unlawful collective dismissal resulting from the introduction the seniority-based protection contract, asked the Court of Strasbourg if a similar treatment difference was against European Union Law.
The Court of Justice recognised the conformity of Legislative Decree no. 23/2015 with European Union law, clarifying that a regime that has only one indemnity (and not also reinstatement) is not discriminatory for the worker hired with fixed-term contract before 7 March 2015 and becoming permanent afterwards. This is because the different treatment is justified by the fact that the workers involved in the seniority-based protection obtain, in exchange for a regime with less protection, a form of employment stability.
According to the Court of Strasbourg it is a type of incentive aimed at fostering the conversion of fixed-term contracts into open contracts which constitutes a legitimate objective of social and employment policy, the selection of which is fully within the discretion granted to Member States.
According to the Court of Strasbourg this consideration is in line with a decision made by the Court in 2018, which, involving basically the same issue, had considered it legitimate that the remedial legislation could be differentiated based on the hiring date.
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