The comparison between redundant employees can be limited only to employees of a unit or sector, subject to their ability, due to previous employment in other company departments, to perform the jobs of other colleagues – Employees bear the burden proof of showing that the various duties are interchangeable.
The Italian Court of Cassation, in order No 9128 of 31 March 2023, established that, in relation to collective redundancies due to staff reductions, where the restructuring of the company affects a specific production unit or sector, the comparison between redundant workers can be limited only to employees of that unit or sector, subject to their ability, due to previous employment in other company departments, to perform the jobs of other colleagues. Employees bear the burden proof of showing that the various duties are interchangeable.
In this context, the Court of Cassation continues, the burden falls on the employer to prove the circumstances justifying the narrower scope of the decision that was made, in addition to showing that the chosen workers are not interchangeable with the employees assigned to other departments or offices.
The ruling of the Court of Cassation originates from the dismissal of an employee following a collective dismissal procedure, which was held to be lawful at first instance by the Court of Cassino.
Repealing the first instance judgment, the Court of Appeal of Rome accepted the appeal presented by the employee. The Court of Appeal ascertained that, during the aforementioned collective dismissal procedure, the employer company had breached the selection criteria under Article 5, Italian Law No 223/1991 for not having considered, in deciding which employees to be dismissed, the employee’s previous professional experience in other departments not involved in the corporate reorganisation.
Based on the findings of fact and law, the Court of Appeal of Rome, with judgment No 2287 of 28 October 2020, accepted the employee’s complaint. The Court ordered the employer to reinstate the employee and pay compensation equal to the overall actual remuneration from the day of the dismissal until that of reinstatement, for a period not exceeding 12 months.
The employer company filed an appeal against the decision taken by the Court of Appeal of Rome, which the employee resisted with a counter-appeal.
Specifically, the company alleged, among other things, the breach and misapplication of Articles 4 and 5 of Italian Law No 223/1991 and the rule on the distribution of the burden of proof under Article 2697 of the Italian Civil Code and Article 115 of the Italian Code of Civil Procedure. The company argued that the Court of Appeal of Rome had erred in upholding the unlawfulness of the dismissal on the grounds that the employer had limited its consideration of the employee’s job to a single business unit, also given the lack of evidence on the employee’s actual duties in other departments.
Nevertheless, the Court of Cassation held the company’s complaints to be unfounded. The Court highlighted how the Court of Appeal of Rome had complied with a principle widely established in case law (Court of Cassation, Employment Division, judgments No 18190/2016 and No 2284/2018) according to which, in the event of collective dismissal that concerns a specific production unit or sector, the comparison of the employees to be made redundant can be limited to the personnel assigned to that unit or sector. This is, however, on condition that the employees of the department to be abolished, due to their career history, are not capable of performing the jobs of colleagues in departments or sectors of the company not involved in the reorganisation.
In terms of proof, the Court of Cassation judges reaffirmed the principle, already expressed in previous Court of Cassation case law (Court of Cassation, Employment Division, judgments No 8474/2005, No 13783/2006, No 33889/2022, No 203/2015, No 19105/2017 and No 15953/2021), according to which the burden proof of proving the interchangeable nature of the various duties is on the employees, while the burden is on the employer to prove
a) the circumstances that justify the narrower business context in which to make the choice of the employees to be dismissed and
b) that the employees did not carry out duties that were interchangeable with those of colleagues from other departments.
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Whistleblowers liable for similar actions
The legislation that protects an employee who reports unlawful conduct which he/she has become aware of due to his/her duties is ‘aimed at preventing unfavourable consequences for the fact in itself of having reported unlawful conduct, but certainly does not create exemptions with respect to the offences that that person had allegedly committed independently or in concert’. This was affirmed by the Court of Cassation with order No 9148 of 31 March 2023. The case originates from a disciplinary suspension imposed on a nurse working at a public sector hospital, who had worked for a private body for eight years without authorisation from her employer. In the judgment in second instance the Court of Appeal of Rome confirmed the ruling of the Court of first instance and rejected the appeal against the sanction under Article 54-bis of Italian Legislative Decree No 165/2001 – i.e. the protection envisaged in the event of reporting of offences of which the employee became aware due to the duties performed (the employee had, in fact, reported similar behaviour of other colleagues to the employer). The Court of Appeal noted the fact that the employee, having in turn conducted herself in the same way, certainly could not benefit from the protections invoked. The employee lodged an appeal against this decision before the Court of Cassation, in which the Health Authority filed a counter-appeal. In her sole ground of appeal, the appellant alleged breach and erroneous application of Italian Legislative Decree No 165 of 2001, Article 54-bis, on the basis that a whistleblower would only be liable when the report would constitute slander or defamation. The Court of Cassation – in confirming the assessment of the appeal judges – clarified that the function of the aforementioned Article 54-bis is to prevent the employee who makes a report from being sanctioned, dismissed or otherwise subjected to discriminatory measures for reasons connected, even indirectly, to the report.
The full version can be accessed at Italia Oggi.
By Order No 8375 of 23 March 2023, the Italian Court of Cassation confirmed that footage from video surveillance systems installed for security purposes may be used to prove an employee’s disciplinary breach.
The facts of the case
The case arose from a disciplinary sanction of suspension from duty and pay for ten days imposed on a vocational teacher for forcibly grabbing a student by the shirt and, after releasing his grip, causing him to fall to the ground. The teacher, moreover, ‘while the pupil […] communicated to his mother what had happened […]’ addressed the latter ‘in an ill-mannered way using decidedly heated tones’.
The event was filmed by means of the video surveillance system installed by the Authority – the educator’s employer – at the Authority’s premises, and the recordings used to make the disciplinary complaint. The teacher, having received the disciplinary measure, in requesting its annulment challenged, among other things, the use of the video surveillance system footage for disciplinary purposes.
In the proceedings on the merits, the Court of Appeal rejected the request to annul the sanction and, upholding the appeal lodged by the teacher, reformed the first instance judgment by redetermining the sanction as a fine of three hours.
The teacher appealed to the Italian Court of Cassation, which the Authority resisted with a counter-appeal.
The decision of the Italian Court of Cassation
The Italian Court of Cassation – in upholding the assessment of the judges of the Court of Appeal – affirmed the lawfulness of the use of video surveillance system footage for the purpose of making a complaint based on an employee’s disciplinary breach.
In the present case, the video surveillance system had been installed in compliance with the guarantees provided for by the applicable legislation:
• the cameras had been installed for safety at work requirements, also in the light of the fact – as noted by the Italian Court of Cassation – that they were directed towards spaces that were ‘also accessible to non-employee personnel and not intended to accommodate workstations’;
• a trade union agreement had been signed as provided for in Article 4 of the Workers’ Charter.
In addition to this, matters such as the proportionality of the penalty imposed in relation to the wrongful act committed, as well as the fact that the worker had been allowed to exercise his right of defence, had also been examined.
In the context of all these assessments, the use of the video surveillance system footage was therefore an additional element that was considered lawful.
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By Order No 8375 of 23 March 2023, the Italian Court of Cassation confirmed that footage from video surveillance systems installed for security purposes may be used to prove an employee’s disciplinary breach.
The facts of the case and the first and second instance proceedings
The case arose from a disciplinary sanction of suspension from duty and pay for ten days imposed on a vocational teacher for forcibly grabbing a student by the shirt and, after releasing his grip, causing him to fall to the ground.
The teacher, moreover, ‘while the pupil […] communicated to his mother what had happened […]’ addressed the latter ‘in an ill-mannered way using decidedly heated tones’.
The event was filmed by means of the video surveillance system installed by the Authority – the educator’s employer – at the Authority’s premises, and the recordings used to make the disciplinary complaint.
The teacher, having received the disciplinary measure, in requesting its annulment challenged, among other things, the use of the video surveillance system footage for disciplinary purposes.
In the proceedings on the merits, the Court of Appeal rejected the request to annul the sanction and, upholding the appeal lodged by the teacher, reformed the first instance judgment by redetermining the sanction as a fine of three hours.
The teacher appealed before the Italian Court of Cassation and the Authority filed a counter-appeal.
The decision of the Italian Supreme Court
The Italian Court of Cassation – in confirming the ruling on the merits – affirmed the lawfulness of the use of video surveillance system footage for the purpose of making a complaint based on an employee’s disciplinary breach.
Noting the lack of defects in (i) the explanation of the factual and legal reasons on which the decision on the merits was based or (ii) the explanation of the logical / legal path followed by the Court of Appeal, the Court of Cassation confirmed the correctness of the assessment by the second instance judges in assessing the video surveillance system footage on the basis of the ‘argument for the usability [of the footage], in conjunction with the other investigative elements considered’.
The full version can be accessed at MAG de Legalcommunity
The applicability of an exemption regime requires the taxpayer to provide rigorous proof of fulfilment of all factual prerequisites giving rise to compensatory damages.
The Court of Cassation, Tax Division, by Order No 8615 of 27 March 2023 returned to examine the complex subject of the taxation regime applicable to the compensation due in connection with demotion suffered by the worker.
The case on which the Court was called upon to rule related to a dispute between the Italian Revenue Agency (Agenzia delle Entrate) and a worker who, in the context of a legal proceedings for demotion, reached an out-of-court settlement with her employer who paid her a sum by way of ‘compensation for moral, professional and biological damage’.
Since there was no distinction between the compensatory headings, the Italian Revenue Agency deducted Italian Personal Income Tax (Imposta sul reddito delle persone fisiche, ‘IRPEF’) from the amount received by the worker, who, therefore, brought proceedings seeking its reimbursement. The Provincial Tax Commission rejected the worker’s application. In contrast, the Regional Territorial Court reversed the decision, upholding the application against the Italian Revenue Agency, and declaring that the exemption regime applied to the sums under discussion.
On the subject of taxation of employment income or similar, the Italian Income Tax Consolidation Act No 917/1986 (Testo unico delle imposte sui redditi, ‘TUIR’) identifies the category of replacement income for employment income. Article Section 6, paragraph 2 of TUIR provides that thefollowing constitute income, of the same category as that replaced and/or lost, regardless of the reason for the payment: (i) income earned as replacement income, including as a result of the assignment of the related receivables; (ii) indemnities received, including in the form of insurance, as compensation for damages consisting in the loss of income, excluding those resulting from permanent disability or death.
The rationale behindthe legislation is that only the payments, emoluments or compensation that have resulted in the enrichment of the subject should be considered taxable.
For this purpose, a distinction is made between (i) loss of profit, i.e. the loss of income that is recognised as belonging to the same category as lost or replacement income (under Article 6, paragraph 2 of TUIR); (ii) consequential damages, i.e. the restoration of assets, namely compensation intended to cover the financial loss and not to replace lost income.
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