In its order no. 20313 of 23 June 2022, the Court of Cassation stated that the compensation due to the worker unlawfully dismissed must be based on the last overall remuneration from the dismissal day until the day of reinstatement. Any amount received by the worker by way of aliunde perceptum or percipiendum (earnings from other work) and within the maximum of 12 months’ salary must be deducted from the compensation, during the dismissal period. The timing of the work carried out by the dismissed employee during the dismissal period is not to be considered.
An employee of an airline company had challenged her dismissal in court on the grounds that it was discriminatory and in breach of the legal provisions on collective redundancies.
The Court of First Instance, after ruling out the discriminatory nature, declared the dismissal unlawful because it failed to follow the selection criteria in the collective dismissal procedure. The company was ordered to reinstate the employee and pay her up to 12 months’ salary compensation, less the aliunde perceptum.
The company challenged the decision of the Court of First Instance on appeal, while the employee lodged a cross-appeal on the grounds that the court of first instance had erroneously quantified the compensation to which she was entitled because of the unlawful dismissal.
The local court (i) confirmed the ruling of the first instance, the exclusion of the dismissal’s discriminatory nature and its illegitimacy for breach of the selection criteria, and (ii) rejected the worker’s cross-appeal about the erroneous compensation.
This resulted in the Company’s appeal in cassation (later abandoned) and the cross-appeal of the employee concerning the calculation of the period in which the aliunde perceptum deduction applied.
The Court of Cassation, declared the trial of the main appeal settled considering the waiver, and declared the request for redefinition of the compensation advanced by the employee well-founded.
The Court of Cassation cited the principle expressed in previous case law according to which the aliunde perceptum and percipiendum entail the corresponding reduction of the compensation for the damage suffered by the worker for the dismissal and defined by art. 18, paragraph 4 of the Workers’ Statute. This reduction must be proportionate to the remuneration received or receivable in the period between the dismissal and reinstatement.
According to the Court of Cassation, from a reading of the above article, it follows that the calculation of the compensation must be carried out for the lost wages and those aliunde received or receivable, and not based on the time referred to the periods of unemployment or employment.
In the Court of Cassation’s opinion, the local court disregarded these principles, considering the sums received by the worker under her new employment to be deductible from the maximum 12-monthly compensation, without first calculating the damage suffered for the loss of wages during her dismissal period. The deduction could have been made only after that calculation.
The Court of Cassation stated that the aliunde sums received or receivable by the worker during the dismissal period must be deducted, by arithmetical calculation, from the loss suffered as a result of the termination. If the result of this calculation is greater than or equal to the amount corresponding to 12 months’ salary, the compensation must be paid in an amount equal to that maximum.
The legislative provision of the maximum of 12 months’ salary does not affect the calculation of the damage suffered by the worker due to the dismissal and is relevant only after the calculation when considering the maximum limit within which the compensation can be recognised.
Other related insights:
The Supreme Court of Cassation, in its Order no. 21172/2021, established that a director’s waiver of remuneration may be expressed by their conclusive conduct that unequivocally reveals their intention to waive the relevant right. However, the waiving act must be inferred not from the mere failure to request compensation, whatever the reasons, but from external circumstances which give a precise negotiating meaning to the conduct.
Facts of the case
In challenging his dismissal, a manager, who was also managing director, claimed his right to receive remuneration for the position held during the relationship.
The Court of Appeal, rejected the manager’s request, because there were elements that led to the presumption that the assignment was free of charge, including (i) the non-payment of a fee for the assignment period, (ii) the absence of any request on his part during that period, and (iii) the statement made by a witness regarding the decision of the Board of Directors, in the presence of the person concerned, not to pay remuneration.
The manager thus appealed to the Court of Cassation, arguing that he had never waived his right to remuneration for the office of managing director.
The Supreme Court of Cassation’s ruling
The Court of Cassation held that the manager’s claim was well-founded. It reiterated the nature of the director’s relationship as an organic identification with the company. Secondly, it affirmed the director could waive the remuneration, even if not done expressly, as long as with a conclusive conduct “that unequivocally reveals his actual and definitive waiving will.”
As for the notion of “conclusive conduct“, the Court of Cassation referred to a general principle according to which ” for silence to have a negotiating value, it is necessary either that the common way of acting or good faith, in the relations established between the parties, impose the burden or duty to speak, or that the silence of one can be understood as adherence to the will of the other, according to a given historical and social moment and considering the quality of the parties and their business relations.”
According to the Court of Cassation, the trial Court erred in considering the inaction of the parties and the alleged decision of the Board of Directors not to specify anything about the director’s remuneration to be significant. This is because the manager’s omissive conduct cannot be seen as a manifestation of will.
The Court of Cassation thus annulled the ruling and referred the parties to a different section of the Court of Appeal.
Other related insights:
Six years ago, on 7 March 2015, the Jobs Act came into force, providing innovative protection if there is an unlawful dismissal for new employees under permanent contracts. At the time, this measure was considered revolutionary for the principles governing the existing protections. It intended to regulate the consequences of unlawful dismissal automatically and based on a mathematical formula. It was an ambitious project of overcoming the uncertainties of a system that had hinged on the judge’s discretion.
Based on the new rules, the scope of the debated right to reinstatement was redefined for companies with more than 15 employees. This was relegated to a residual hypothesis applicable only to the most severe cases (lack of evidence against the employee, or discriminatory dismissal or otherwise radically null and void). It gave way to compensation protection, from a minimum of four to a maximum of 24 monthly salary, which was rather low for the applicable criteria, especially in the first years of service.
At least in its intentions, the reform should have encouraged new employment and reduced the regulatory obstacles to attracting Italy’s investment.
A few years later, however, it can be said with a degree of certainty that the increasing protection had a short and troubled life.
The real economy, which is the engine of all employment development and growth forms, has not seen the hoped-for trend. It had to face the pandemic, which was unimaginable in 2015, making it impossible to see the expansive impact of increasing protection from an employment point of view over time. Regulatory measures by successive governments and, soon after by the Constitutional Court, were not long in coming, and they distorted the reform’s features, leaving little of what was initially envisaged.
The first blow to the increasing protections system was dealt with by the Dignity Decree (Decree Law no. 87/2018), which, without changing the formula for calculating the compensation due based on two months salary for each year of service, increased the compensation range from six to 36 monthly salary.
With surprising timing, a few days later, the Constitutional Court, no. 194/2018, declared the legislation unconstitutional insofar as it provided for a “rigid and automatic criterion, based on length of service” to identify the compensation due to an employee unjustly dismissed. In the Court’s view, the protection against damages required a quantification based on multiple factors (such as the parties’ behaviour and “conditions”) to be assessed at the judge’s discretion in adequately valuating compensation for the prejudice suffered by the worker.
In the space of a few weeks, the system designed to overcome discretion once again became centred on it.
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