By way of judgment No. 4672 filed on 18 February 2019, the Court of Cassation has once again ruled on the lawfulness of dismissal for elimination of a job position when such position is reinstated a few months after the employer’s termination of the employment relationship.
The case refers to an electronics engineer specialised in measurement systems who was employed as the Compliance manager of the Italian subsidiary of a Japanese multinational, in a “Middle Manager” role as the person in charge of “metrology”. More specifically, the employee was dismissed on justified objective grounds, having her job position been eliminated following the repeal of a provision governing the monitoring activities tasked to her, which were no longer required.
The employee promptly appealed the dismissal, objecting, inter alia, that the company had then reinstated the position just 7 months after the suppression. The trial court judgments both concluded with the rejection of the employee’s claims, holding that the actual elimination of the position and the time elapsed between the elimination and reinstatement of the position represented reasonable grounds to justify an organisational change within the company requiring the reinstatement of the previously eliminated position.
Brought before the Court of Cassation, the employee’s action failed to achieve a different outcome. In its ruling on the only plea of the appeal, whereby the employee claimed that the judges in charge had erred in their assessment of the allocation of the burden of proof and of the related satisfaction criteria (with particular regard to that allocated to the employer), the Court of Cassation found the appellant’s claims to be once again unfounded. On this point, it is interesting to note how emphasis has been placed on the time elapsing between the elimination and the reinstatement of the position previously held by the dismissed employee, with the Court confirming that no errors were made in rulings of the trial courts, which had deemed the time period of seven months to be reasonable (just as the Court of Cassation, in judgment No. 11413 of 11 May 2018, had deemed a period of 8 months to be reasonable) and therefore not capable of affecting or nullifying the validity of the dismissal…
Click here to continue reading the note to the judgment published in Il Quotidiano del Lavoro of Il Sole 24 Ore.
The increase in disputes and the rising financial value of settlements, together with a scenario that has become more unstable and uncertain, could be discouraging employers from recruiting. For Vittorio De Luca, a managing partner at De Luca & Partners, these are some of the effects that could emerge from a recent ruling by the Constitutional Court. In fact, the Court declared part of the progressive entitlement contract to be unconstitutional, where it establishes that, in the event of the unlawful dismissal of an employee hired after 2015, the employer would be ordered to pay compensatory indemnity equivalent to two months’ salary per year of service, within a sliding scale ranging from a minimum of four to a maximum of twenty-four months. “The legislator’s intention was to reduce the amount of discretion and arbitrariness affecting the rulings, leaving judges to simply assess whether the dismissal was unlawful or not”, explains De Luca. However, for this expert, the ruling represents a step in the other direction: “In fact, according to the Court, the judge cannot be stripped of the possibility of establishing the due indemnity, for which the court may consider factors such as the number of employees, the size of the business, and the conduct and conditions of the parties”. For De Luca, however, these criteria are subjective and distort the basis on which the legislator introduced “progressive entitlement” contracts in 2015. Added to this, there is the so-called “Dignity Decree” issued by the new government, which raised the minimum threshold from four to six months’ salary, and the maximum threshold from 24 to 36 months. According to De Luca, this could have a potentially explosive effect, considering that the judge can decide to award indemnity for a value of between 6 and 36 months’ salary despite the number of years the employee has been in service. Thus, “we have returned to an uncertain legislative framework, having eliminated the ability to foresee the cost of dismissals, which could ultimately discourage companies from recruiting”. To conclude, De Luca points out that other foreseeable effects include “an increase in disputes, with workers being more prepared to go to court, and in the financial value of settlements”.
The grounds of judgment no. 194/2018 – lodged on 9 November – were published in the Official Gazette no. 45 last 14 November 2018. In this judgment, the Constitutional Court ruled that Article 3 (1), Legislative Decree no. 23 of 4 March 2015, is constitutionally illegitimate, limitedly to the words “in the amount equal to two monthly pays of the last salary used for the calculation of the severance indemnity pay for each year of employment.”
The issue of constitutionality had been raised by Order of 26 July 2017, Court of Rome, III Labour Division, within the context of a dispute started by a woman who had been hired on 11 May 2015 and dismissed 7 months later on grounds of organizational rearrangement, with a brief explanation. Within the aforementioned proceedings, the Company was tried in its absence; at the time of its decision, the Court of Rome remarked that had the petitioner been hired before the entry into force of Legislative Decree 23/2015, she would have qualified for the guarantees under Article 18, Law no. 300/1970, “in the event of lack of objective cause (defined as a lack of justification, clear inexistence of the fact at the basis of the dismissal), which cross-references paragraphs 4 and 5, depending on the severity of the fault” or the guarantee under paragraph 6 “in the event of lack of ground”. The provisions applicable to the case at hand required instead the payment of a compensatory allowance determined only based on the seniority of the worker.
The Court therefore raised the issue of the constitutional legitimacy of Article 1 (7), c) of Law no. 183 of 10 December 2014, and of Articles 2, 3 and 4 of Legislative Decree no. 23 of 4 March 2015, in regard to Articles 3, 4 (1), 35 (1), 76 and 117 (1), of the Constitution – the last two articles in relation to Article 30 of the Charter of Fundamental Rights of the European Union (CFR), the Termination of Employment Convention, 1982 (no. 158) adopted by the International Labor Organization (ILO), and Article 24 of the European Social Charter. Having declared that many other grounds of opposition were inadmissible, and having reviewed previous case-law on the calculation of damage caused by unlawful dismissal, the Constitutional Court remarked, in brief, that the main novelty of the so-called “progressive entitlement employment contract”, i.e., the determination of the indemnity due in the event of unlawful termination of employment only on the basis of seniority, should be considered unconstitutional, as it is opposed to the principles of equality and reasonableness.
More in detail, according to the Constitutional Court, the mechanism for quantifying the compensation due under Italian Legislative Decree 23/2015, even in the wording amended by the Dignity Decree, provides for a “rigid indemnity, since it is not graduated according to any parameters other than length of service, and makes it the same for all workers. The indemnity thus takes on the characteristics of a standardised, lump-sum payment… to compensate the worker’s loss deriving from his/her unjustified dismissal from an open-term job”. In this respect, therefore, this piece of law clashes with the principle of equality, in that it originates an unjustified standardization of different situations, as it sets forth “a homogeneous compensatory reimbursement, irrespective of the peculiarities and diversity of the facts concerned with the termination of employment by the employers, thus disregarding the need to personalize the damage suffered by the worker.”
Furthermore, according to the Court, the indemnification criterion introduced by the Jobs Act, including its formulation modified by the Dignity Decree, stands in contrast to the principle of reasonableness, as a two-month indemnity is not enough to guarantee “adequate remedy of the concrete damage suffered” by the dismissed worker, nor can it be considered adequate to dissuade an employer determined to “unlawfully dismiss a worker.” In the opinion of the Constitutional Court, the calculation of the amount of damages due to unlawfully dismissed workers must, therefore, without prejudice to the limits provided for by law, also take account of other criteria, such as those “which can be systematically inferred from the evolution of the limitational rules on dismissals (number of employees, size of the business, conduct and conditions of the parties)”.
The effect of the judgment at hand was that of completely demeaning the innovative step of the progressive entitlement employment contract introduced by the Renzi government. As an effect of the declared unconstitutionality, the discretion of the judges now has ample room also in relation to the dismissal of workers hired after 7 March 2015 and shall be exercised – as maintained by the Court – “in observance of the limitations” – which, as an effect of the Dignity Decree today are equal to a minimum of 6 monthly pays and maximum of 36 monthly pays – “keeping into account not only seniority, but also the other criteria.”
Even though this is not a so-called “additive” judgment, it is certainly undeniable that the criteria indicated by the Constitutional Court will be the same as those at the basis of the lower-court decisions in quantifying damage.
Therefore, at present, apart from the cases of invalid termination of employment, the discretion of the judges will be the essential element in the calculation of damage payable to the workers in the event of unlawful dismissal, the only difference being that the hiring of a worker after the entry into force of the Jobs Act can even result – in certain cases – in damage equal to 36 monthly pays of the last salary used to calculate the severance indemnity pay; i.e., more than the 24 monthly pays of the last total salary due to a worker hired before 7 March 2015, who qualifies for application of Article 18 of Law no. 300/1970. For the employers who fulfil the size requirement referred to in Article 18 (8), Law no. 300/1970, the risk related to legal proceedings in the event of dismissal, in fact, varies on the basis of, first of all, the date of hiring of the employee and the infringement ascertained in the course of proceedings, and, secondly, of the discretion of the appointed judge.
Therefore, for example, in the event of unlawful dismissal due to clear inexistence of objective cause for dismissal, for the workers hired before 7 March 2015 – and therefore subjected to the provisions of Article 18, Law no. 300/1970 – the so-called mitigated real guarantees set forth in Article 18 (4), Law no. 300/1970, shall apply. The same type of infringement established in relation to a worker hired after 7 March 2015 will result instead in the payment of an indemnity in the range of minimum 6 and maximum 36 monthly pays, with no room for judgments ruling the mandatory reinstatement of the worker.
On the contrary, the provisions referred to in Legislative Decree no. 23/2015 may be more favourable if the Court establishes that there is a lack of justified objective reason. In this case, in fact, the calculation of damage would be determined at the discretion of the Court seized, however, within very different limitations. In case of workers subjected to Article 18, Law no. 300/1970, damage would be determined in the range of minimum 12 and maximum 24 monthly pays of the total salary based on: (i) the seniority of the worker; (ii) the number of employees; (iii) the size of the economic activity; (iv) behaviour and (v) conditions of the parties. In the event of workers subjected to Legislative Decree no. 23/2015, the damage would be determined – based on the same criteria – in the range of minimum 6 and maximum 36 monthly pays of the last salary used to calculate the severance indemnity pay.
Moreover, it should be remarked that the Constitutional Court solely ruled on the consequences of Article 3 (1), Legislative Decree no. 23/2015, without ruling on the same provision contained in Article 4, Legislative Decree no. 32/2015, which sets forth, in regard to the indemnity due in the event of formal inconsistencies of dismissal: “… one monthly pay… for each year of employment, equal to at least 2 and at the most 12 monthly pays.” Even though this provision has not been accused of being constitutionally illegitimate, it is logical to believe that in a court of law it will be constitutionally construed with ample room for the discretionary power of the judges in the calculation of damage even in the presence of formal inconsistencies.
It is finally blatantly clear that the judgment at hand, consistently with the modification of the Jobs Act introduced by the Dignity Decree, sensibly alters the scenario of the risk related to legal proceedings linked to the unlawful termination of employment, given that, as a matter of fact, the guarantees afforded by Legislative Decree no. 23/2015 can no longer be considered more “convenient – strictly from the employers’ standpoint – than those afforded by Article 18, Law no. 300/1970, as amended by Law no. 92/2012.
The Court of Appeal of Turin, with judgement No.26 filed on 11 January 2019 and published on 4 February, has partially accepted the appeal filed by 5 bike-delivery individuals (the so-called “riders”) of a well-known German food delivery company through a judgement of the Court of Turin (778/2018) that had failed to recognise the employment nature of the work relationships established as well as their classification in the category of “hetero-organised” cooperation according to Article 2 of Legislative Decree No. 81/2015.
Furthermore, it should be reminded just a few months from the date of ruling of the Court of Turin, that case law on the matter had ruled on a similar case, rejecting the appeal of a former rider who claimed to be under an employment relationship with another company operating in the distribution sector (Court of Milan, 10 September 2018 No. 2853).
The rule of the Court of Turin
In first instance, the riders had among other things claimed: (i) payment of the amounts due to them as wages and severance indemnity in force for the fifth level of the National Collective Bargaining Agreement (CCNL) in the Logistics sector or sixth level of the CCNL in the Services sector; (ii) the restoration of the employment relationship and payment of wages accrued from the date of dismissal to that of the actual reinstatement, upon verification of voiding, inefficacy or unlawfulness of the dismissal.
The judgement of the Court of Turin has, essentially, represented the first decision concerning the qualification of the work relationship of the riders in the era of the so-called “gig economy”.
According to the Court, their provision of services could not be categorised as employment relations as per Article 2094 of the Civil Code. This because:
The Court of Turin did not even accept the claim, filed secondarily by the riders and related to the application of Art. 2 of Legislative Decree No. 81/2015, according to which “effective from 1 January 2016 the procedures pertaining to employment relationships apply also to business cooperation relationship that are exclusively personal and continuative and whose implementation methods are organised by the client also in terms of time and place of the workplace”.
In the opinion of the Court, said regulation is applicable only in those cases in which the worker is subjected to the organisational and directive power of the employer, since to this end it is not sufficient that said power is exercised exclusively for the time and place of the workplace.
The ruling of the Court of Appeal of Turin
The Court of Appeal of Turin, in light of the investigations carried out during the ruling of first instance deemed that:
According to the Court of Appeal, cooperation as per the aforementioned article represent a third type of relationship “that falls between an employment relationship as defined by Article 2094 of the Civil Code and cooperation as established by Article 409 No. 3 of the Code of Civil Procedure, clearly to ensure greater protection to the new types of work, which as a consequence of the evolution and related increasingly fast introduction of recent technologies are taking place” (the so called “hetero-organised” cooperation).
The “hetero-organised” cooperations, in fact, while without implementing a hierarchy power (typical of employment) are characterised by the effective functional integration of the worker in the production-related organisation of the client. Specifically said organisation represents the element that goes beyond mere coordination as per Article 409 of the Code of Civil Procedure where the worker, while coordinating himself/herself with the client, organises independently his/her work activity.
In light of the above, the Court of Appeal deemed that the work provided by riders falls into the “hetero-organised” cooperations as per Article 2 of Legislative Decree No. 81/2015. This because: (i) the riders worked on the basis of “shifts” established by the client; (ii) the starting areas were defined by the client that notified to the riders the addresses where they would have had to perform the delivery; (iii) the delivery time were pre-established (30 minutes from time of pick up of the food); (iv) the riders had carried out their work for the client on a continuous basis.
From the aforementioned classification it results, according to the Court of Appeal, the extension to riders of the protections established for employment relationships (in particular regarding those concerning safety and hygiene, direct and deferred compensation, limits of time, vacation and social security contributions). In other words, the relationship while remaining independent technically is subject to the rules of the employment relationships.
Consequently, the Court of Appeal:
The Court of Appeal, however, did not extend to the riders the dismissal regulations keeping into account, on the one hand, the lack of recognition of the employment work and on the other end, of the fact that the cooperation between riders and company was not subject to any interruption given the cooperation relationships stopped as part of their natural expiration.
Other News:
https://www.delucapartners.it/news/2018/una-prima-forma-di-contrattazione-collettiva-per-i-riders/
The Court of Cassation, with judgement No. 1499 dated 21 January 2019, confirmed the principle of law according to which, concerning dismissal due to justified objective grounds, it must be deemed proven that an attempt has been made to repêchage by the employer who, as an alternative to dismissal, offered to the redundant employees the chance to change their work hours.
The facts
A female worker, employed by a company operating in the insurance and tourism services sector and employed at the reception counter and ticketing area, was dismissed on justified objective grounds because of the closing of the area where she was employed. As an alternative to the dismissal, the Company had proposed transforming the employment relationship from full time to part time, which, however, the employee refused.
The worker then filed a lawsuit to the competent local Employment Court to claim that her dismissal had been unlawful with all the legal consequences that would result from it. As a basis for her claim, the worker stated that the offer to change work hours could not constitute a valid attempt at repêchage, since the company hired a new full-time employee one year after her dismissal, and had also entrusted said new hire with tasks that she had previously carried out.
The Court accepted the worker’s application but its ruling was overturned by the Court of Appeal of Ancona selected by the company.
The Court of Appeal, in particular, declared lawful the dismissal on the grounds that:
The employee thus appealed to the Court of Cassation against the judgment issued by the Court of Appeal.
The ruling of the Court
The Court of Cassation upheld the decision of the Appeal Court by considering that the proposal to convert the employment relationship from full-time to part-time was sufficient to prove that the employer had attempted the repêchage.
The Court of Cassation also pointed out that it was not possible to consider the recruitment of a new resource valid either, since that recruitment had taken place as a result of the termination of another employment relationship, which was ended after the termination of the appellant’s employment relationship.
Conclusions
From the judgment in question, it follows that an attempt to repêchage by the employer must be regarded as proven when as an alternative to dismissal the employer offers to the redundant employee the chance to change work hours.
