The Court of Cassation, with judgement No. 3186 of 4 February 2019, stated that dismissal based on a future corporate transfer (through merger) with consequent unification of departments, cannot be considered lawful, with the employee involved subject to the protections established by Article 18, paragraph 4, of the Law No. 300/1970 (the so-called attenuated reinstatement). This is because the case in question must be regarded as the equivalent of “clear non-existence” of the fact on which the dismissal was based.
The facts
A female employee, with an appeal filed under No. Law 92/2012, brought her case to court against her employer in order to obtain a ruling voiding, stating as ineffective or declaring as unlawful her dismissal. Specifically, she argued of having received respectively: (i) on 16 October 2014, a merely informative notification concerning the termination of her employment following the transfer of her tasks to the registered office of another company as a consequence of the merger by incorporation between the latter and her employer company; (ii) on 6 November, the letter of dismissal due to removal of her job position. Nevertheless, the employee pointed out that the merger by incorporation took place only on 24 November 2014, thus after her dismissal.
The employee also invoked the application of Article 2112, paragraph 4, of the Italian Civil Code, according to which a corporate transfer (equal to a merger) could not in itself constitute grounds for dismissal.
The Court ruled the dismissal void, ordering the reinstatement of the employee and the payment to her of the damage indemnity. In the Court’s opinion, in fact, dismissal was in conflict with Article 2112, paragraph 4, of the Italian Civil Code, since it had to be exclusively due to a corporate merger and in any case ordered in violation of the procedure set out in Law No. 223/1991.
At time of claim, the Court sided with the company, considering as proven the corporate crisis that had led to the removal of the job position in question, regardless of the merger and, therefore, excluding a violation of Article 2112 of the Italian Civil Code and the applicability of Law No. 223/1911.
The employee appealed against the first instance judgement. The local Court of Appeal in charge, overturning the judgment, declared the dismissal unlawful, thus issuing an order for reinstatement and an order for the company to pay a compensation equal to 12 months’ salary calculated on the basis of the total de facto remuneration pursuant to Article 18(1) of Law No. 300/1970, in addition to ancillary charges.
The company appealed to the Court of Cassation against the second instance judgement.
The ruling of the Court
The Court of Cassation confirmed the dismissal was unlawful since it did not appear that a loss of job position took place at the time of its notification, but at most a forthcoming transfer of tasks to another company.
In support of its opinion, the Court of Cassation made reference to a previous judgement according to which ”in the event of a corporate transfer, the transferor retains the power of withdrawal granted by the general regulations so that the transfer, although it may not be the only reason of justification, cannot prevent dismissal on justified objective grounds provided that can be identified in the corporate structure assessed independently and not in connection with the transfer or in the purpose of facilitating it”. (Court of Cassation, Civil Division No. 11410/18 and Court of Cassation, Civil Division No. 15495/18).
The Court of Cassation, however, upheld the company’s objection that the dismissal caused by the corporate transfer does not in itself void the dismissal with the consequent inapplicability of the protections provided for in Art. 18 of Law No. 300/1970.
According to the Court of Cassation, in fact, “Article 2112 of the Italian Civil Code only establishes that a corporate transfer does not in itself represent grounds for dismissal, and does not generally prohibit it, much less under penalty of voidance”. Therefore, in its opinion, the dismissal cannot be protected by the regime referred to in paragraph 1 of Article 18 of the Workers’ Statute. A paragraph that calls for reinstatement in the event of discriminatory dismissal or dismissal for unlawful reasons or “in the other cases of voidance provided for by law”. This is specifically because Art. 2112 of the Italian Civil Code de quo calls for its voiding the effects for lack of a justified reason.
Consequently, in its opinion, the case under review must be considered under the scenario of “clear absence of the fact” on which the dismissal for justified objective reasons was based, as per the second sentence of Article 18, paragraph 7 of the Law No. 300/1970. This was because it was proven that, at the time of dismissal, the reasons for it did not exist, since they were simply linked to a future grouping of tasks which would, moreover, achieved through a future corporate merger. A merger that in turn did not constitute in itself justified grounds for dismissal pursuant to and by effect of Article 2112, paragraph 4, of the Italian Civil Code.
According to the Court of Cassation, the judgment under appeal should have fallen under the protection provided for in paragraph 4 of Article 18 of Law No. 300/1970 with voiding of the dismissal and order to reinstate the employee and to pay full remuneration calculated effective from the date of dismissal until the date of reinstatement, deducting any aliunde perceptum o percipiendum, in any case not exceeding 12 months’ salary of the actual remuneration, in addition to the payment of social security contributions as established by the aforementioned Article 4.
Conclusions
The judgment in question shows that the transferor company may dismiss an employee on justified objective grounds only if the corporate transfer takes place at a time prior to that of the dismissal itself. Lacking that, the risk is to incur the consequences referred to in Article 18, paragraph 4, of the Workers’ Statute (the so-called attenuated reinstatement).
Other News:
On 19 January, the Official Gazette published the “Regulation amending the Presidential Decree No. 178/2010 on the matter of the Do Not Call Registry concerning the use of snail mail” (Presidential Decree No. 149 dated 8 November 2018, hereinafter the “Regulation” or the “Presidential Decree”). The Do Not Call Registry (that is the registry where those who do not wish to receive “direct marking communications” hereinafter the “Registry”), in operation since 2010 regarding telephone marketing is now extended to marketing performed via snail mail. In order not to be “solicited” even by unwanted printed marketing material, one will have to register to the registry. If one does not register, the addresses listed in “public telephone number lists” may be used – and therefore also for promotional purposes – even without the explicit consent of the subject. All of the above is effective from 6 May 2019. In fact, the Regulation, in effect from 3 February, allows 90 days before becoming fully operational (the 90th day is Saturday, 4 May, therefore the actual date will be moved to Monday 6). Even the Italian Data Protection Authority recommended that in the final version of the Presidential Decree a transition period be taken into account. This, both to allow to the “subscribers/parties interested to the processing of data” to get informed and to register to the Registry before being “bothered” and to implement and finalise the Registry. In order to find out in details the operating and registration procedures (for example, it will not be possible to register to the Registry via fax, but it will be possible only via web, e-mail or phone), it will be necessary to browse the Registry website in the next few months. Moreover, the “effective period” of the consultation within which the marketing operator will have the possibility to use the address of interest found in the “subscribers list” is extended: compared to the previous 15 days, now the Registry consultation by the operator will be 30 days. Therefore, for companies that wish to operate in the marketing sector, it is important to consult the Registry. Moreover, the provision concerning the information notice towards the contacted subject has been integrated and amended. For example, the subject shall be informed regarding the source of data used as well as the instructions necessary to register to the Registry and this shall be done inside the marketing promotional material itself or in the invoicing documents. If failing to meet the requirements of the aforementioned “prior consultation obligation” the fine established will be charged up to a maximum of 20 million euros or 4% of the global yearly turnover. Information and awareness campaigns will be performed in the next few months to let people know about the news introduced by the legislation described above.
The Italian Government with Legislative Decree No. 63/2018 (the “Decree“) implemented the EU Directive No. 2016/943 (the “Directive“) on the protection of the so-called “undisclosed know-how” and business information (trade secrets) against their unlawful acquisition, use and disclosure.
The Directive
The Directive falls in an economic-production context such as the current one, continuously more prone to the stealing of trade secrets and offences of various kinds, with losses often significant, typically estimated in the range of 10 to 30 billion euros per year in each of the various Member States.
The reason behind the Directive is specifically that of providing greater and more effective protection – by implementing effective, proportionate and dissuasive criminal, administrative and penalty measures – to “undisclosed know-how” and to business information (trade secrets) against their unlawful acquisition, use and disclosure.
In this context, the Directive, in its Article 2 provides a definition of “trade secret”, meaning information that is (i) secret (therefore they must not be generally known or easily accessible to persons who normally deal with this type of information), (ii) have commercial value given that they are secret and (iii) that have been subject – by the entity exercising control over them – to steps, as the case may be, that are reasonable in order to keep them secret.
The novelties introduced by the Decree
The Decree made some significant changes to the Italian Industrial Property Code (the “CPI”; Articles 1, 2, 98, 99, 121ter, 124, 126 and 132) and to the Criminal Code (Articles 388 and 623).
While the first two articles of the CPI only deal with wording – “confidential corporate information” becomes “trade secrets” – the most important changes are to be found, above all, in Art. 99.
If, in fact, Article 98 has been amended in a non-substantial manner – having in fact included the definition in Article 2 of the Directive as set out above – it is Article 99 that significantly extends the protection against certain phenomena defined as “negligent disclosure”.
The article in question, in fact, defines as unlawful the conduct – in addition to that of the subject stealing trade secrets – of any third party who uses such information; this, if said party is aware or, depending on the circumstances, should have been aware of the illegal origins of such information.
Furthermore, in the first paragraph of Article 99, it is established that the legitimate holder of trade secrets (the company) has the right to prohibit third parties from acquiring, disclosing or using them in an abusive manner, unless they were obtained independently from the third party. It is then established that the rights and actions deriving from the unlawful conduct described above have a time frame of five years.
The Decree also introduced into the CPI Art. 121 ter, which grants new and more restrictive “secreting powers” to judges. In particular, the courts may prohibit a wide range of subjects (consultants, defence counsels, representatives of the parties to the proceedings as well as witnesses and administrative staff) from using or disclosing trade secrets that are the subject of the proceedings and deemed to be confidential, by taking any measures they may deem appropriate to this end. This secrecy remains effective even after the end of the proceedings, except in the case of a final judgment which proves that the secrets in question did not meet the requirements of Article 98 of the CPI (and Article 2 of the Directive) or if the secrets become generally known and easily accessible.
Moreover, on the CPI, Article 124 establishes more clearly the parameters of the “indemnity protection”. “Guidelines” are established to support the judge in defining the measures to be adopted – clarification of no minor importance – even in light of the complexity of the “secrecy measures” adopted by the legitimate holder in order to protect its trade secrets.
Lastly, of lesser importance, are the amendments made to Art. 126, with reference to the methods of publication of the judgement, as well as to Art. 132, concerning precautionary protection measures and the relationship between them and the applicable judgment.
Concerning the changes made to the Criminal Code, apart from the amendments – less significant – to Article 388 concerning the intentional non-implementation of a court order, the most interesting news apply to Article 623.
Also in this case, in accordance with the provisions of Art. 99 of the CPI, not only the trade secrets thief, but also any person who, having acquired said secrets unlawfully uses them to its own benefit or that of others, becomes criminally liable for the disclosure of scientific or trade secrets. Furthermore, committing said offences through the use of IT tools is qualified as an aggravating circumstance.
Conclusions
In light of the above, personnel management (as user and holder of specific information) and the security/secrecy measures that a company can (and must) put in place to protect its assets, becomes paramount.
Therefore, it is of fundamental importance to govern and classify corporate documents appropriately, since not all documents or information can be considered secrets by default (keeping in mind the “measures” mentioned multiple times above). It is becoming increasingly important to organise one’s own structure in an effective and proactive way, paying particular attention to “logical and physical” measures (furthermore referred to in EU Regulation 2016/679, “General Data Protection Regulation“) and perhaps specifying the “level of secrecy” of each document circulating in the workplace. It will no longer be sufficient, in the course of legal proceedings, to state in general terms that firewall or anti-virus software had been adopted, it will be necessary to prove that all appropriate protective measures were taken.
Finally, with specific reference to IT tools – which are becoming increasingly important – it is truly essential to have valid and effective regulations on their use, so as to be perfectly compliant with the General Data Protection Regulation and with Article 4 of the Workers’ Statute regarding remote monitoring of the work activity.
On 12 August 2018, the conversion law No. 96/2018 of Decree Law No. 87/2018 (the so-called Dignity Decree) came into force, which, among other things, reintroduced the crime of fraudulent staff-leasing with Article 38 bis of Legislative Decree No. 81/2015.
Said offence – already provided for by the Biagi Law No. 276/2003 and then abrogated by the Jobs Act – occurs in all those cases in which “the provision of staff leasing is carried out with the specific goal of circumventing mandatory rules of law or collective bargaining agreement applied to the employee”.
The offence in question is punishable both for the client company and for the staff leasing agency with criminal penalties and a fine of 20 euros for each worker involved and for each day of staff leasing implemented.
In any case, the application of Article 18 of Legislative Decree No. 276/2003 remains unaffected, which punishes only the client company with an administrative fine of 50 euros for each worker employed and for each day of employment. The above fine cannot, in any case, be less than EUR 5,000 nor more than EUR 50,000..
That said, the National Labour Inspectorate (“INL”), with circular No. 3 dated 11 February 2019, reviewed the various cases in which fraudulent staff leasing may occur.
Unlawful Contract
The fraudulent staff leasing offence may take place, first of all, through the unlawful use of contract negotiations.
An unlawful contract occurs when the contract is entered into in the absence of the requirements established by Article 1655 of the Italian Civil Code, in order to circumvent mandatory legal or contractual provisions (see circular of the Ministry of Labour 5/2011).
In the event of such an offence, labour inspectors must adopt compulsory requirements against:
In addition, a formal notice with warning of inspection may be issued against the fraudulent client-user for the amounts accrued by the employees working under the contract for unpaid wage differences.
Other scenarios
According to INL, the offence of fraudulent staff leasing may also occur beyond the case of unlawful contracts. In particular, it may occur:
By way of example, INL identified as fraudulent staff leasing the case in which an employer dismisses one of its employees to reuse him/her through a staff-leasing agency, in breach of the law or collective agreement.
Penalties
In the event of unlawful contract and posting, as established in Article 38 bis of Legislative Decree No. 81/2015, the administrative penalty set out in Article 18 of Legislative Decree No. 276/2003 will apply and the inspectors will have to:
INL specifies that the administrative penalty referred to in Art. 18 is not subject to the warning procedure.
Where the inspectors identify a fraudulent purpose, it will also be possible to apply a warning of formal inspection.
If the fraudulent intent is identified in the case of staff leasing in compliance with the regulatory provisions, only the penalty referred to in Article 38 bis of Legislative Decree No. 81/2015 will apply, with the consequent adoption of the mandatory requirements and the warning notice of inspection against the client company.
Finally, even in the case of fake transnational posting, the penalty set out in Art. 38 bis of Legislative Decree No. 81/2015 will apply, insofar as the posting, as sometimes happens, is meant to circumvent the internal regulations and/or the collective agreement applied by the Italian client.
In particular, in order to constitute a breach of Article 38 bis, it is not sufficient to ascertain that the conduct led to the elusive application of the foreign social security system, but it is also necessary to ascertain the violation of the obligations of the employment terms set forth in Article 4 of Legislative Decree No. 136/2016.
Intertemporal regime
Legal literature and case-law agree in considering fraudulent staff leasing a permanent offence, considering that the behaviour is characterised by the intention to by-pass contractual or mandatory regulations and that it occurs when there is a perceivable level of continued unlawful actions.
According to the National Labour Inspectorate (INL), the permanent nature of the offence means that the breaking of the law lasts for the entire duration of fraudulent staff leasing, giving that it occurs at the time of termination of the illegal conduct.
Consequently, according to the principles set out in Article 1 of the Criminal Code (“no-one shall be punished for an act that is not expressly defined as a criminal offence by the law, nor with penalties which are not established by it”) and 2 (“no-one shall be punished for an act that, according to the law in force at the time in which it was committed, it did not constitute a criminal offence”) as well as per case-law trends, it must be deemed that, in the case of fraudulent staff leasing that started prior to 12 August 2018 and continued after that date, the offence referred to in Article 38 bis of Legislative Decree No. 81/2015 can only occur effective from 12 August 2018, with the consequent assessment of the related penalty only for the days following said date.
For the period prior to 12 August 2018, the exclusive application of the penalties set forth in Art. 18 of Legislative Decree No. 276/2003 remains in force.
The allocation of the burden of proof in appeals against verbal dismissal is once again in the spotlight. In fact, in judgment 3822 of 8 February 2019, the Court of Cassation reiterated, thus confirming its stance on the matter, that the burden is always on the employee to provide evidence (not always straightforward) of a verbal dismissal challenged, thus to eliminate the risk of the termination of the relationship being ascribed to other manifestations of intentions (resignations or consensual termination of the employment relationship due to conclusive facts).
Therefore, proof of the mere interruption of the employee’s professional services does not, per se, constitute sufficient evidence of the event underlying the claim.
The case in question arises from an appeal brought against the termination of an employment relationship, which the employee claims was due to verbal dismissal, while the employer affirms, conversely, that it was due to the employee resigning.
The court of first instance initially upheld the employee’s appeal, with the decision being confirmed by the Court of Appeal, on the grounds that, since the termination of the relationship was self-evident and undisputed, the employee had effectively satisfied the burden of proof with regards to his removal from the position, also considering that the employer had not provided evidence of the resignation challenged.
Called to express its opinion on the matter, the Court of Cassation found a shortcoming in the arguments of the judges in charge, who had considered the intervening termination of the relationship proven by the employee, and accepted by the parties, to be sufficient grounds to uphold the claim, despite each of the parties affirming that such termination was the result of the will of the other party.
While acknowledging the existence of a more protectionist orientation that sees the worker burdened, in cases of verbal dismissal, only with the requirement to prove the intervening termination of the relationship (Court of Cassation, 10651/2005, 7614/2005, 5918/2005, 22852/2004, 2414/2004), the Court aligned its decision with a more recent approach, but less protective of workers’ rights (31501/2018), whereby, in cases of alleged verbal dismissal, the burden is on the employee to provide evidence of his/her “removal” from the position by the employer – a concept that is more specific than the mere “termination of the employment relationship” and that implies an act on part of the employer, intentionally aimed at removing the employee. This is because the definitive ending of the professional services provided in the context of an employment relationship does not, per se, constitute sufficient evidence of dismissal, since such circumstance may have multiple meanings insofar as it may be the effect of different manifestations of intentions (dismissal, resignation or consensual termination).
The Court concluded with remitting the appealed decision back to the lower court, stating that, if the evidence of the cause of the termination of the relationship was uncertain, the burden of proof requirements set out in article 2697 of the civil code would apply (whereby «a person wishing to assert a right in court shall provide evidence of the circumstances the claim is founded on»); therefore, an employee who has not provided evidence of the circumstances underlying his claim will…
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