By order no. 87 of 3 January 2024, the Italian Court of Cassation ruled on the applicability of reinstatement where the fact underlying the dismissal ordered for justified objective reasons did not exist.
At the end of the three instances of proceedings, the Italian Court of Cassation upheld the appeal brought by the dismissed employee, quashing the judgment of the Court of Appeal which had only granted the employee compensation amounting to 20 months’ salary.
The case originates from a worker’s dismissal by a cooperative company for a justified objective reason, based on the need for a company reorganisation and the consequent outsourcing of accounting activities (the department to which the worker was assigned).
The first instance Court had upheld the worker’s appeal, declaring the dismissal unlawful.
The Court of Appeal of Catanzaro, in agreement with the first instance Court, rejected the appeal lodged by the employer cooperative, on the ground that the latter had not proved the existence: (i) of the causal link between the reorganisation and the abolition of the job; (ii) the elimination of the department to which the worker had previously been assigned; (iii) the impossibility of the worker’s relocation.
On the basis of these assumptions, the Court of Appeal judges had ordered the employer to pay the worker compensation equal to 20 months’ salary.
The worker then appealed to the Italian Court of Cassation asking for reinstatement under Article 18, paragraph 7, Italian Law no. 300/1970 (so-called Workers’ Charter).
The Court of Cassation, in accepting the appeal filed by the worker, reiterated that the burden of proof regarding the existence of the conditions for dismissal for justified objective reasons is placed on the employer who can also resort to presumptions, with the exception that the burden is on the worker to prove the assignable posts (Italian Court of Cassation 20 October 2017, no. 24882).
With the ruling in question, the Court also addressed the issue of the “manifest” non-existence of the fact justifying, under Article 18, paragraph 7 of the Workers’ Charter, as amended by Italian Law no. 92/2012, the application of the mitigated obligation of reinstatement.
According to the Court, the assessment as to whether the fact is manifestly non-existent must be independent from the character of immediate evidence, “due to the fact that Article 18, paragraph 7, second sentence of Italian Law no. 300/1970, as amended by Article 1, paragraph 42, letter b) of Italian Law no. 92/2012, was declared constitutionally unlawful, for breach of Article 3 of the [Italian] Constitution, limited to the word ‘manifest’”.
The Italian Court of Cassation agreed with the ruling of the Court of Appeal of Catanzaro on the non-existence of the “organisational reorganisation used as the basis of the dismissal” as well as on the absence of proof of the impossibility of fulfilling the repêchage obligation (obligation to relocate). However, the Italian Court of Cassation concluded that, in the present case, the justified objective reason cited at the basis of the dismissal did not exist. The Court of Cassation criticised the compensation order stating that the Court of Appeal had disregarded over-riding legal principles in the light of the latest rulings on the requirement of “manifest” non-existence.
In summary, according to the Italian Court of Cassation, if there is no causal link between the employer’s dismissal and the justified objective reason adduced as its basis, there is a manifest non-existence of the fact that, as such, justifies ordering the employer to reinstate the employee.
In the case of dismissal for objective reasons, the repêchage obligation may be limited by the fact that the dismissed person does not have the professional skills to perform the other job, even if it is of a lower level. However, this must be demonstrated by facts that are objectively established and proven by the employer.
By order no. 31561 of 13 November 2023, the Italian Court of Cassation stated, in line with the principles already established by it on the subject, that in the event of an appeal against dismissal for the abolition of the job position, and where in the period immediately following the dismissal the employer has hired new employees, albeit for the performance of different tasks, the judge is required to assess whether or not the dismissed worker was able to perform the aforementioned tasks, even if of a lower contractual level, for the purpose of possible reassignment to them with a view to preserving employment.
This assessment must be carried out not in the abstract but in practice, taking into account the company’s specific assertions on this point as well as the levels of classification governed by the applicable collective bargaining agreement.
As is well known, repêchage gives rise to the employer’s obligation to assess, before proceeding with a dismissal for justified objective reasons, whether it is possible (within the limits that we will examine below) to employ the worker in other tasks.
This obligation has arisen through case law and seeks to balance the employer’s interest in achieving an efficient organisation with that of the worker in keeping his or her job, to ensure that dismissal constitutes the last resort, also considering the importance attributed to work by our Constitution (Italian Civil Court of Cassation, Employment Division, 3 December 2019, no. 31520; Italian Civil Court of Cassation, Employment Division, 13 June 2012, no. 9656).
According to settled case law, the repêchage obligation does not extend to workers classified as executives, as it is incompatible with the executive position which is characterised by voluntary withdrawal of services (see among others, Italian Civil Court of Cassation, Employment Division, 6 December 2022, no. 36955 ; Italian Civil Court of Cassation, Employment Division, 1 February 2013, no. 3175).
Under the previous text of Article 2103 of the Italian Civil Code (which allowed horizontal ius variandi [right of employer to make changes to the contract] for “tasks equivalent to the last ones actually performed”), the extension of the repêchage obligation was initially limited to equivalent tasks only. Subsequently, in the light of some exceptions to the prohibition on demotion provided for in special cases by regulatory provisions (including Article 42 of Italian Legislative Decree of 9 April 2008, no. 81 in the case of the worker judged to be unfit for the specific task), a new line of case-law had developed. Under this new line of case law, the employer, in the absence of equivalent tasks and before proceeding with the dismissal, was required to propose to the worker, to obtain his or her potential consent, his or her assignment to lower level tasks, provided that they fell within the latter’s skill set, since it is not possible to impose the costs associated with vocational training on the employer (see among others, Italian Civil Court of Cassation, Employment Division, 3 December 2019, no. 31520, cit., in relation to a case to which the previous text of Article 2103 of the Italian Civil Code applied; Italian Civil Court of Cassation, Employment Division, 23 October 2013, no. 24037).
In any event, the case law has always been, as it still is, unequivocal in holding that the repêchage obligation refers only to the already existing organisational structure and does not require the employer to create an ad hoc alternative job position.
The new text of Article 2103 of the Italian Civil Code (as amended by Italian Legislative Decree of 15 June 2015, no. 81) allows horizontal ius variandi in tasks attributable to the same level and legal category as the last ones actually performed (paragraph 1). It also allows the assignment of tasks attributable to the lower classification level, provided that they fall within the same legal category, in the event of a change in the company’s organisational structure that affects the worker’s position (paragraph 2).
It is clear that, as evidenced by the case law, “the increased employer obligation due to the impossibility of applying repêchage in relation to inferior tasks brought about by the entry into force of Article 2103 of the Italian Civil Code, cannot, however, be considered absolute”: the obligation should be limited to “unskilled tasks, i.e. those that do not require appropriate training”, as “the obligation to assign to the worker tasks that require appropriate training would in fact mean imposing an additional financial cost on the employer” (Court of Rome, 24 July 2017).
Therefore, not all the lower-level positions in the company organisation chart are relevant, but only those compatible with the worker’s professional skills or those that have actually already been carried out, at the same time or previously (Italian Court of Cassation no. 31521/2019).
In short, the majority case law has avoided attributing to the third paragraph of Article 2103 of the Italian Civil Code, according to which the change of duties is accompanied, where necessary, by the fulfilment of the training obligation, an extensive interpretation of the repêchage obligation to the point of requiring the employer to provide the necessary training so that the worker can be usefully employed in other tasks to avoid dismissal.
On this point, it is worth mentioning a recent decision of the Court of Lecco which partially departed from this approach: the Court held that although there is no general obligation to professionally train the worker, in the event that his or her professional skills have become obsolete due to a company reorganisation, the employer, in accordance with the principle of fairness and good faith, must also assess whether it is impossible, or at least unprofitable, to provide professional retraining before proceeding with the dismissal (Lecco Court, 31 October 2022).
In the context of this legislative and case law development, the burden of proof remains on the employer. The employer must therefore attach all the documentation and factual evidence necessary to corroborate its position and, therefore, to demonstrate that there were no other job positions or that, in the context of an offer of a different position, it was the worker himself or herself who declined the new tasks from the same or different initial legal category.
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In judgment no. 35066 of 14 December 2023, the employment division of the Italian Court of Cassation confirmed that an employee’s conduct outside work can irreparably damage the duty of mutual trust between the parties if it has only the potential objective capacity to impact the relationship and undermines the expectations of the future proper fulfilment of the working obligations, in relation to the specific duties or the specific activity.
The case on which the Court was asked to rule arose from an employee’s dismissal for just cause. The employee was a team leader with coordinating duties, who had, at different times, engaged in abusive and, moreover, violent relationships outside work with two female colleagues, demonstrating to them that he was immune from limits and discipline, also in view of his position. Such conduct, in the view of the employer bank, had been seriously prejudicial to the female colleagues and to the bank itself.
The first instance judges upheld the lawfulness of the dismissal, on the basis that the conduct alleged against the worker qualified as harassment at work and, as such, justified the sanction of dismissal.
The worker has appealed to the Italian Court of Cassation, alleging, among other grounds, misapplication of Article 2105 of the Italian Civil Code, on the basis that his conduct to be taken into consideration should refer only to the private (or rather outside work) context and consequently, on the one hand, is not relevant for disciplinary purposes and, on the other hand, cannot prove a breach of the duty of mutual trust as it cannot be used to call into question the proper performance of the employee’s duties.
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With Order no. 31660 of 14 November 2023, the Italian Court of Cassation ruled on a dismissal for a justified objective reason based on the need to cut costs. In this case, the employer had not demonstrated that the costs savings should be those specifically relating to the dismissed worker’s position rather than other positions that were more “expensive” than the one affected by the dismissal. The Italian Court of Cassation, hearing the case, established that for the purposes of ascertaining the lawfulness of a dismissal because of a general need to cut costs, the reasons why the employer chose a particular worker must be assessed. In this regard it is also necessary to consider other job positions, especially if they are comparable to the one abolished, to verify the existence of the causal link between the alleged organisational reason and the abolition of the job. Following the majority approach, the Court therefore ruled that if the dismissal for a justified objective is imposed to cut costs, the burden is on the employer to indicate the reasons why the particular worker has been chosen. .
In its very recent judgment no. 2274 of 23 January 2024, the Italian Court of Cassation ruled that it is lawful for an employer to give notice of a second dismissal pending a judgment concerning a previous dismissal based on different grounds. However, the second dismissal has no effect if the first dismissal is declared lawful by a final judgment.
An employee, pending proceedings relating to a first dismissal, brought legal proceedings challenging a second disciplinary dismissal imposed on him by his employer.
The proceedings relating to this second dismissal were settled by the so-called ‘summary phase’ of the Fornero Proceedings with the annulment of the dismissal as only one of the alleged facts had been proven.
Both the employee and the employer appealed against the summary phase order.
The two sets of appeal proceedings were not joined and ended with two separate judgments, both declaring the invalidity of the supervening second dismissal. This was because, pending those judgments, the first instance court had held the first dismissal to be lawful and, subsequently, the Court of Appeal, again with reference to the first dismissal, had declared the worker’s appeal inadmissible.
The two judgments delivered in the context of the appeal phase relating to the second dismissal were appealed against by both the employer and the employee.
The Court of Appeal – following the intricate procedural sequence of events summarised above – declared the second dismissal invalid on the basis that there had been a judgment, albeit not final, which had affirmed the lawfulness of the first dismissal.
The employer appealed to the Italian Court of Cassation against the Court of Appeal’s decision.
Pending the appeal to the Italian Court of Cassation proceedings relating to the second dismissal, that court also ruled on the first dismissal, confirming its lawfulness.
In the judgment under discussion, the Italian Court of Cassation judges therefore noted, preliminarily, the loss of interest on the part of the employer in insisting on the annulment of the ruling declaring the invalidity of the second dismissal, because such ineffectiveness was now to be considered confirmed by the final judgment.
It was only to rule on the costs of the proceedings that the Italian Court of Cassation upheld the employer’s appeal on the following grounds.
In the first place, the Court ruled that, in an employment relationship, the employer, if it has already given the employee notice of dismissal, may lawfully give notice of dismissal for a second time, based on a different ground or reason, because the latter is completely autonomous and distinct from the first.
According to the Italian Court of Cassation judges, both acts of withdrawal are in themselves theoretically sufficient to achieve the purpose, since the second dismissal is effective only in the event that the previous dismissal is held to be invalid or ineffective by a final judgment.
It follows that the Court of Appeal should have ruled on the lawfulness or otherwise of the second dismissal, since the judgment relating to the first dismissal had not – at the time – yet been concluded with a final judgment.
The Italian Court of Cassation, accepting the appeal brought by the employer, consequently ordered the employee to pay the legal costs of the proceedings.
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