The Court of Cassation, in ruling no. 12932/2021, reiterated that the waiver of notice period by the employee and the related substitute allowance, formalised by a settlement agreement made after the notice of dismissal, does not affect the obligation to pay social security contributions to INPS.
In this case, a bank, after having dismissed approximately 90 executives, signed a settlement agreement with them in which it was agreed to change the dismissal title from dismissal to consensual termination, with a simultaneous waiver by the executives of their notice period and related substitute allowance. Despite the agreement reached between the parties, the social security institution took legal action against the company claiming payment of social security contributions on the notice period substitute allowance.
The local Court of Appeal, reforming the decision of the first instance, upheld INPS’s claims, noting that the employment relationship was terminated with effect from the receipt of the letter of dismissal in which, instead of serving the notice period, the executives were paid the notice period substitute allowance. The substitute allowance constituted an element of remuneration that had already become part of the executives’ assets, and as such was subject to an obligation to pay contributions.
On this point, the Court of Appeal considered it irrelevant that a settlement agreement had been reached between the parties whereby each executive, a few weeks after the notice of dismissal, had waived the notice period and related substitute allowance.
Objecting to the court’s ruling, the losing company appealed to the Court of Cassation.
The Court of Cassation reiterated, as a preliminary point, that the obligation to pay contributions:
According to the Court of Cassation, the fact that the notice period substitute allowance is subject to social security contributions follows from its nature as remuneration. Therefore, “it is at the moment in which the dismissal becomes effective that the employee’s right to the notice period substitute allowance arises and the consequent obligation to pay contributions: if the dismissed employee waives their right to the indemnity, such waiver cannot have any effect on the public obligation, which pre-exists at the time of the waiver and is regardless to it because the abdication comes from a party (the employee) other than the owner (INPS).”
In the Court of Cassation’s opinion, once the dismissal has been announced, the notice period substitute allowance – which falls within “everything that the worker is entitled to receive,” because of its intrinsic retributive value, is part of the autonomous and distinct insurance relationship which is completely irrespective of the disbursement and, to the defensive argument, if it is part of the worker’s assets.”
According to the Court of Cassation, the employer and employee’s settlement agreement change the termination title from dismissal to consensual termination while waiving the notice period and the substitute allowance takes place after the employment termination. The obligation to pay contributions has already arisen in the insurance relationship, and the employer remains liable to pay INPS the contribution on the notice period substitute allowance.
Other related insights:
The Court of Cassation, in order No. 9268 of 3 April 2019, has affirmed that the dismissal for justified objective reasons of a pregnant employee during the notice period is lawful but unenforceable, as occurs in the case of termination during sick leave or absence for injuries.
In overturning the first instance ruling, the territorially competent Court of Appeal rejected a worker’s application to overturn her dismissal for justified objective reasons pursuant to art. 54 of Legislative Decree 151/2001. In detail, the Court of Appeal held that the dismissal had been formally notified on the date the letter of dismissal was received, regardless of the fact that related effects would arise at the end of the notice period.
In fact, the trial court, having inferred the actual start date of the pregnancy from the medical records submitted and from the expert witness report acquired in the first instance proceeding, found that the pregnancy started after the date of dismissal.
The worker challenged the decision before the Court of Cassation, objecting, among other things, that the onset of pregnancy during the notice period triggered the applicability of the safeguards set out in Legislative Decree 151/2001. This is so because the employment relationship continues during the notice period, with the associated rights and obligations, unless the worker accepts to terminate the relationship immediately or earlier.
The Court of Cassation confirmed the decision of the Court of Appeal, rejecting the worker’s application.
The ruling of the Court
The Court of Cassation reviewing the case highlighted that, according to established case law, a dismissal is a unilateral act that becomes effective from the moment the employer’s intentions are manifested and made known to the worker. This is so notwithstanding the fact that effects of the dismissal – typically, the termination of the employment relationship – may be deferred to a later date.
Consequently, the assessment of the conditions legitimating the right of termination must be conducted “with reference to the moment the unilateral act was formally notified and not with reference, in the case of dismissal with notice, to the successive end date of the notice period”.
According to the Court of Cassation, this was the principle on which the lower courts had based their decision. In fact, the lower courts had excluded the invalidity of the dismissal pursuant to art. 54 of Legislative Decree 151/2019 on the grounds that the dismissal had been communicated and formally notified to the worker when she was not pregnant.
For the Court of Cassation, the Court of Appeal had also rightly made reference to art. 54, paragraph 5, of Legislative Decree 151/2001, which considers null and void a notice of dismissal given “from the start of the pregnancy to the end of the maternity leave and until the child is one year old” and not when the related effects arise.
Therefore, a pregnancy arising during the notice period does not affect the validity of the dismissal notified to the worker at an earlier date. The Supreme Court did highlight that a pregnancy is an event that may satisfy the requirements, pursuant to art. 2110 of the civil code, to suspend the notice period.
However, in the case at hand, the worker’s claim was founded solely on the invalidity of the dismissal and not also on unenforceability ensuing from the suspension of the notice period, with the case thus rejected.