By order no. 25055 of 22 August 2022, the Italian Court of Cassation has affirmed that in case of transfer of a business – or parts thereof – concerning companies that are in a crisis, or which have been subjected to special administration, when the activity continues or, however, is not terminated, an agreement reached with the Trade Unions may derogate from Art. 2112 of the Italian Civil Code on working conditions. Employment contracts are in any event transferred to the assignee. The Court has confirmed a principle previously expressed by the European Court of Justice: the agreement permits to modify, even for the worse, the salary and other rights and duties previously accrued to each employee, but it cannot derogate from the automatic transfer of workers to the acquiring company.
The Court of Cassation, in its ruling of 20 May 2021, no. 13787 established that if a company transfer is declared illegitimate, liability for any resulting employee demotion falls on the transferee who used the service and not the transferor.
This case follows a judicial application for investigations into a demotion by an employee who had been transferred together with a business branch and who, since March 2004, had become an employee of the transferee company.
The court of first instance upheld the employee’s claim and ordered the transferor and the transferee jointly to pay damages. This decision was then confirmed in the appeal and challenged in the Court of Cassation by the transferor company.
According to the transferor company – having ascertained that (i) the demotion lasted from April 2002 until October 2010 and (ii) from March 2004, the employee was employed exclusively by the transferee company – the joint and liability for the entire period was flawed. It argued that the demotion liability fell on the company using the services, and who had the power to assign the duties.
In upholding the company’s appeal, the Court of Cassation ruled that if a business transfer is judicially invalid, the employment relationship continues with the transferor, and a new and different relationship is established with the former, and no longer, transferee, under whose the employee materially continued to work.
According to the Court of Cassation, “in addition to the dormant employment relationship with the original transferor company (…), there is a service materially provided for the party with whom the employee, unlawfully transferred with the business branch transfer, has established a de facto employment relationship. This service produces legal effects and obligations for the party who uses the work within its business organisation, including that which derives from art. 2103 of the Italian Civil Code, so that any violation of this rule cannot be attributed to the transferor who does not use the work.”
The Court of Cassation overturned the part of the Court of Appeal’s ruling, which ordered the two companies to jointly pay compensation for the damages arising from the demotion suffered while the employee worked for the transferee company.
The Court of Cassation, in ruling no. 7221 of 15 March 2021, confirmed the legal principle according to which the Company’s supplementary contract, and the right recognised to the employee by company practice, does not survive the change in collective bargaining following the company transfer.
A worker employed by a company moved to another company through a contract assignment and a business transfer to a new employer (the transferee Company).
The first two companies had awarded their employees, on their 30th year of service, a gold watch which, however, was not paid by the transferee Company to the employee in question.
The employee took legal action to request payment of € 2,500 (equal to the purchase value of the gold watch) plus revaluation and interest of € 1,272.75, plus legal revaluation for the severance indemnity fund (to include the sums paid for seniority bonuses, compensation for holidays falling on Sundays, individual leave not taken and overtime).
The Court upheld the employee’s appeal and ordered the transferee company to pay the amount requested. The latter Company appealed against the Court of first instance ruling.
The Court, which dealt only with the payment order, rejected the appeal and confirmed that the transferee Company had maintained the Company’s practice of handing out watches to employees on reaching their 30th year of service.
According to the Court, although this practice (since it is an independent source of the individual contract and not a supplementary and more favourable clause) is not kept during the company transfer, as a result of the replacement of the collective bargaining agreement applied by the transferee (even if more unfavourable), the transferee company recognised it under a supplementary company agreement.
The Transferee Company appealed to the Supreme Court, claiming that the local Court’s interpretation of the supplementary agreement was incorrect.
The Court of Cassation reiterated the legal principle according to which, if there is a company transfer, the transferee supplementary bargaining applies and not that of the transferor company. The right under company practice (which is comparable to the supplementary contract in terms of effectiveness in individual relationships, as a source of a unilateral collective obligation for the employer, replacing the contractual and collective clauses in force) does not survive the change in collective bargaining following the company transfer (even if the bargaining applied by the transferee company is more unfavourable), so that it is no longer applicable at the transferee company which has its own supplementary bargaining.
Secondly, the Court reiterates the general principle according to which the conflict between collective agreements, such as the company contract, must be resolved based on the effective will of the parties operating in the area closest to the regulated interests, to be deduced through the coordination of the various collective bargaining provisions, having equal dignity and binding force. Regional agreements may follow the autonomous negotiation principle under art. 1322 of the Civil Code, extend the effectiveness of national agreements and derogate from them including in pejus, without prejudice to safeguarding rights that have already been definitively acquired by workers. Such rights may not be treated less favourably under subsequent legislation at the same or different levels.
In the Court of Cassation’s opinion, the employee accrued the right to the monetary equivalent of the watch as a seniority and loyalty bonus as a result of the transferring Company’s existing practice and the (subsequent) company supplementary bargaining, which had to be acknowledged as a recognition of the pre-existing company practice.
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