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.
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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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With its judgement 254 of 26 November 2020, the Constitutional Court confirmed its loyal collaboration with the Court of Justice of the European Union and declared inadmissible the constitutional legitimacy issues raised by the Naples Court of Appeal on the Jobs Act provisions related to collective dismissals which violated the selection criteria.
The reasoning for the Constitutional Court’s sentence 254/2020 reads as follows, “there is an inseparable link between the role of the Court of Justice of the European Union, called upon to safeguard respect for the law in the interpretation and application of the treaties” and the role of national courts, which must ensure”effective judicial protection in areas governed by EU law” (article 19 of the treaty). In an integrated system of safeguards, loyal and constructive cooperation between the various jurisdictions, each called upon to safeguard fundamental rights in a systemic and unbroken protection manner, plays a crucial role”.
The raised issues of legitimacy and the European Court’s ruling
Before discussing the merits of the Constitutional Court’s ruling, it should be noted that,regarding the infringement of the Charter of Fundamental Rights of the European Union rules, the Naples Court of Appeal had decided to simultaneously propose a preliminary ruling to the Court of Justice of the European Union, in order to clarify “the contents of the Chart of Fundamental Rights”, to then assume “a direct relevance in the ruling of constitutionality” and consistency with constitutional principles.
The Court of Justice ruled first which, with the order of 4 June 2020, confirmed that proposed issues were clearly inadmissible sustaining the absence “of a connection between an act of law of the European Union and the national measure in question”, a connection required by article 51, paragraph 1, of the Charter of Fundamental Rights of the European Union. This does not mean a mere similarity between the issues being examined and an indirect influence that one issue exercises on the other”.
In other words, the Court of Luxembourg did not find any connection between national legislation concerning selection criteria in the field of collective dismissals and an act of law of the European Union and therefore could not assume any position on the alleged infringement of the Charter.
Click here to read the full version in Italian published by Il Quotidiano del Lavoro – Il Sole 24 Ore.
The Constitutional Court, with its ruling no. 254 filed on 26 November 2020, declared inadmissible the constitutional legitimacy issues raised by the Naples Court of Appeal on the Jobs Act provisions concerning collective redundancies which violated the selection criteria. the Board considered the judge’s reasoning on the relevance insufficient and any request for corrective action uncertain.
The Court of Appeal of Naples challenged constitutional legitimacy in relation to art. 1, paragraph 7 of Law 10 December 2014, no.; 183 and articles 1,3 and 10 of Italian Legislative Decree 4 March 2015 no. 23.
According to the Neapolitan Court, the contested provisions unreasonably introduced a differentiated sanctioning system for violation of the selection criteria within the collective dismissal procedure. Reinstatement protection was granted just for employment relationships established on 7 March 2015, while only indemnity protection was granted for later relationships.
According to the judges’ objections, this sanctioning system, was a violation of the principles laid down in articles 3, 4, 24, 35, 38, 41, 111, 10 and 117, paragraph 1, of the Constitution, and conflicted with principles of the Charter of Fundamental Rights of the European Union, better known as the Nice Charter.
Regarding the infringement of the rules of the Nice Charter, a preliminary ruling to the Court of Justice of the European Union was brought simultaneously as an issue of consistency with constitutional principles.
On 4 June 2020, the Strasbourg Court declared the action manifestly inadmissible, finding no connection between the national legislation, i.e. the selection criteria within collective redundancies and an act of Union law. It did not comment on the alleged infringement of the Nice Charter.
The Constitutional Court, in the ruling under analysis, declared the question of constitutional legitimacy inadmissible. This is because the Court of Appeal failed to (i) describe the case and provide information on the reasons for the unlawfulness of the collective dismissal of the case for selection criteria violation – and (ii) attach the elements that would support the appeal acceptance based on a selection criteria violation. This prevented the Court from assessing the relevance of the issues raised.
The Constitutional Court merely reiterated its agreement with the indications of the Court of Justice regarding the EU law scope of application. It stated that there is an inseparable link between the role of the Court of Justice, which is called upon to safeguard “respect for the law in the interpretation and application of the Treaties” and the role of national courts, which must ensure “effective judicial protection in areas governed by EU law.”
In the Board’s view, in an integrated system of safeguards, loyal and constructive cooperation between the various jurisdictions, each called upon to safeguard fundamental rights in a systemic and unbroken protection manner, plays a crucial role.
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With its note no. 160 of 3 June 2020 the National Labour Inspectorate provided some clarifications concerning the amendments made to Decree Law no. 34/2020 (“Relaunch D.L.”)to D.L. no. 18/2020 (“Save Italy D.L.”) already converted by Law no. 27/2020, in order to help in the interpreter in an analysis of the various regulatory provisions that have been issued and overlapped in recent months.
The main indications provided by the Inspectorate regard the ban on dismissals as per art. 46 of the Save Italy Decree Law and the exceptional provisions on fixed-term contracts introduced during the Covid-19 emergency.
Amendments to art. 46 of the Save Italy Decree Law: collective and individual dismissals for justified objective reason
In terms of the first profile, the INL underlined that when the Save Italy decree was converted into law a specific exclusion was introduced by the ban on dismissals for contracts and, specifically, in the case where “the personnel involved in the termination, already employed in the contract, is rehired after take over by a new contractor”. This means – as explained in the note in question – that the ban on collective and individual dismissals for justified objective reason is not valid in cases where the new contractor absorbs the personnel employed in the contract. Instead, if the personnel is not reabsorbed this ban remains valid for the departing contractor.
Again in reference to dismissals, INL stated that the Relaunch Decree extended for five months. starting from 17 March 2020, the terms related to the relative ban: during this time period collective dismissal procedures cannot be started and pending ones, started after 23 February, are suspended for the same period.
Likewise, the ban on dismissals for objective justified reason as per article 7, Law 604/1966 has been extended for the same period, with the specification that dismissals for objective justified reason in progress are suspended.
No clarification was provided regarding the window of time that was created due to the delay in issuing Decree Law 34/2020 (19 May 2020) compared to the expiration of the original ban, 16 May, contained in the Decree Law 34/2020: it may be only subject to legal interpretations, despite the fact that it does not seem possible for the non-retroactivity of the laws to be exceeded.
Lastly, it stated that the Relaunch Decree Law introduced paragraph 1 bis that gives an employer who performed a dismissal for objective justified reason during the period from 23 February to 17 March 2020 the right to revoke the termination at any time as long as request is made at the same time for redundancy fund treatment starting from the date the dismissal became effective. In that case, the employment is considered restored without interruption and without charges or penalties for the employer.
Extension or renewal of fixed-term contracts: exception to art. 21 of Legislative Decree 81/2015
In terms of fixed-term contracts, INL provided explanations concerning the exception to art. 21 of the Legislative Decree 81/2015 introduced by the Relaunch Decree Law, which permits the renewal or extension of fixed-term employment contracts existing on 23 February 2020 until 30 August 2020, including in the absence of the reasons governed by art. 19, paragraph 1, Legislative Degree 81/2015.
With the note in question, INL explained that, for the purposes of “reasonless” extension or renewal as per the provision contained in the Relaunch Decree Law, two conditions must be met:
It is still obviously possible to provide for a “reasonless” extension even after 30 August as long as it does not exceed a period of 12 months.
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