In judgment No. 436/2019 filed on 10 January 2019 the Court of Cassation confirmed that, based on the constitutional principle of freedom of private economic initiative (art. 41 of the Constitution), an entrepreneurial decision to eliminate a job position cannot be challenged.
The Court passed the judgment in a case concerning a director of human resources, administration and finance, who was dismissed due to the elimination of her job position, with the related duties concurrently assigned to the managing director. A decision that was justified by the need to cut costs. The appeal was brought on the grounds, inter alia, of the total lack of experience of the managing director – the newly graduated daughter of the Company’s president. Heading towards the adverse ruling of the judges in charge, which, in fact, both dismissed the appeal, the executive appealed to the Court of Cassation, claiming the violation and misapplication of the law.
Despite rejecting all requests to review the trial court decisions, the Court confirmed the appealed judgment was not flawed and highlighted, however, that the company’s decision to implement a cost cutting plan could not be questioned. Thereby confirming some of its previous rulings, even recent (e.g. Court of Cassation, Civil Law Labour Division, No. 12668/2016 and No. 3628/2012), the Court reiterated the legal principle whereby the dismissal of an executive may well be founded on objective reasons linked to the need to re-organise the business, which may not necessarily coincide with the impossibility of continuing the relationship or with a crisis situation that would make the continuation of such relationship particularly burdensome, considering that the principle of fairness and good faith – which represents the basis of measurement of the lawfulness of a dismissal, even of an executive – must be considered in parallel with the freedom of private economic initiative, as set out in art. 41 of the Constitution.
The Court of Cassation concluded that the Court of Appeal had rightly found that, having ascertained that the executive had been replaced by the managing director, and…
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Draft law no. 726 (the “DL”), which introduces significant changes to Italian Legislative Decree no. 231/01 is currently being examined by the Justice Committee of the Italian Senate. In particular, the DL provides that certain categories of organisation must have an organisation and management model (OMM231), and appoint a supervisory body (SB). This includes corporations and consortiums which have, even just in one of the last three financial years, reported (i) total assets on the balance sheet of at least 4,400,000 euros, or (ii) revenue from sales and services of at least 8,800,000 euros. Such entities must also file both the decision by which the SB is appointed and the decision by which the OMM231 is approved with the Chamber of Commerce within 10 days from when they are adopted, respectively. If they fail to comply, obliged companies might be ordered to pay an administrative penalty of 200,000 euros. If the DL is approved at the end of the parliamentary process, then what has until now been a right left to the discretion of individual entrepreneurs will become an obligation. In fact, with this legislative intervention, the system provided for by Italian Legislative Decree 231/01 will be strengthened, and companies that have still not complied with it will become obliged to do so. Consequently, the number of entities required to prepare an OMM231 will inevitably increase.
The Constitutional Court’s ruling starts to take effect in proceedings involving dismissals in the context of progressive-indemnity employment contracts [‘contratti di lavoro a tutele crescenti’ in Italian]. In the wake of Order no. 7016, issued by the Court of Bari on 11 October 2018, which applied the Constitutional Court’s ruling even before the grounds had been published, the Court of Genoa is extending the principle expressed in said ruling to provisions that make explicit reference to Article 3 of Italian Legislative Decree 23/2015 by virtue of a constitutionally oriented interpretation.
In particular, with an order issued on 21 November 2018, the Court of Genoa also deemed the aforementioned principle to be applicable to the contracts governed by Article 9 of Italian Legislative Decree 23/2015, namely employment relationships with companies that do not meet the size criteria referred to in Article 18 of Italian Law no. 300/70.
The regulatory and legislative framework before the Constitutional Court’s intervention
According to the provisions of Legislative Decree 23/2015 (so-called progressive-indemnity contracts), in the case of unlawful dismissal (except in specific circumstances), the judge declares the employment relationship to have been extinguished on the date of dismissal and orders the employer to pay indemnity, not subject to social security contributions, equal to double the amount of the last month’s reference remuneration used for the calculation of severance indemnity, applied to a minimum of four and a maximum of twenty-four months.
For companies with no more than 15 employees, the amount of the indemnity provided for by Article 3, paragraph 1, of Italian Legislative Decree 23/2015, pursuant to Article 9 of said Legislative Decree, is reduced by half and cannot exceed the limit of six months.
In July 2018, Italian Decree-Law 87/2018, converted into Italian Law 96/2018 (the so-called Dignity Decree), changed the minimum and maximum indemnity thresholds, increasing them by half without, however, changing the methods used for calculating the compensation, which continued to be linked to the employee’s length of service at the company (two months’ remuneration for every whole year, reduced to one for small companies).
Constitutional Court Judgment 194/2018
With its Judgment 194, filed on 8 November 2018 and published the following 14 November, the Constitutional Court repealed the progressive indemnity mechanism, removing the parameter of double the amount of the monthly remuneration used for the calculation of severance indemnity for each year of service as the only unit of measurement for compensation for unlawful dismissal.
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 “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 the opinion of the Constitutional Court, the calculation of the amount of damages due to unlawfully dismissed workers must, 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 Court of Genoa
With the order issued on 21 November 2018, and by virtue of a constitutionally oriented interpretation of Article 9 of Italian Legislative Decree 23/2015, the Court of Genoa ordered that an unlawfully dismissed employee be paid the maximum possible amount of indemnity, namely six months’ worth. That indemnity was calculated in reference to not just the number of years’ service at the company, but also other criteria such as the moderate size of the company and the high skill level of the worker.
The facts
The Court heard the case of a journalist who was dismissed following a company reorganisation that entailed the elimination of the position that she covered (“external collaborator”) and a redistribution of her duties and responsibilities.
The ruling
Referencing the case-law principle by virtue of which, in cases of dismissal for justified objective reasons based on a need to reorganise the company structure, the judge cannot call into question the choice of management criteria, but can only check the real existence of the reason invoked and its connection to the termination of the worker’s employment relationship (cf., inter alia, Judgments 7474/2012, 15157/2011 and 24235/2010 handed down by the Court of Cassation, employment division), the Court declared the dismissal to be unlawful. This, since “the new editorial plan did not change the situation of the working environment in which the claimant operated at the time of the dismissal”.
In fact, according to the trial judge, the decision to dismiss the claimant was not linked to the new editorial plan or the reasons presented as the grounds for the dismissal. There was therefore a lack of evidence of an effective functional link between the invoked company restructuring and the measure adopted against the worker.
Consequences for the disciplinary framework
Given the unlawfulness of the dismissal – and since the size criteria referred to in Article 18 of Italian Law 300/70 were not met – the trial judge ruled the protection to be afforded to the worker to be that which is provided for by Article 9, paragraph one, of Italian Legislative Decree 23/2015. This, on the assumption that (i) the worker had been hired on 6 December 2016, and therefore after Italian Legislative Decree 23/2015 had entered into force; and (ii) the case in question could not be subject to the rules of the Dignity Decree, since the dismissal had been announced before it entered into force.
Although Article 9 of Italian Legislative Decree 23/2015 has not been brought into question – since it has not been subject to the question of constitutionality – in the Court’s opinion it is inevitable that the effect of the Constitutional Court’s ruling on the application of said Article 9 will be taken into consideration. This, both because this provision directly references Article 3, paragraph one, of Italian Legislative Decree 23/2015 and because the mechanism for calculating the indemnity specified therein is the same, and is based only on the worker’s length of service at the company.
As a consequence, in the Court of Genoa’s opinion – in order to avoid an application in contradiction with Constitutional Court’s judgment no. 194/2018 – one must conclude that the reference to the “amount of the indemnity and the amount provided for by Article 3, paragraph 1, of Italian Legislative Decree 23/2015 must be read in reference to all of the compensation criteria specified in judgment no. 194/2018”.
In application of that constitutionally oriented interpretative solution, not only length of service, but also the size of the company and other contractual aspects, are worthy of consideration. And these other aspects take on particular significance in the case in question because the classification of the worker as an external collaborator affects both the value of the remuneration due to her and her prospects for finding a new job in the journalism sector.
With its order no. 32533, filed 14 December last, the Italian Court of Cassation established that employees, when subject to disciplinary procedures, have the right to access the records concerning them. The Court thus confirmed the full scope of the “right of access”, as governed by Article 7 of the Italian Privacy Code, which was in effect at the time of the events described below, and in accordance with the provisions of Article 15 of EU Regulation 679/2016 (“GDPR”), which is currently applicable.
The facts
The case originated from an appeal submitted by a Bank firstly against the provision issued by the Italian Data Protection Authority [Garante per la protezione dei dati personali] (the “Authority”), and subsequently against the judgment of the Court with territorial jurisdiction, which had upheld the Authority’s position.
In this specific case, following notification that he was being subject to a disciplinary penalty (suspension from service and from the relative financial treatment for one day), an employee of the Bank requested to see the background records that had led to the penalty, which included the assessments made about him.
The requested documents had been provided for in an internal circular dating back to 2009, and specifically the (i) “Notice in the form of a written report sent to “Discipline” by the Central and Local HR Manager”, and (ii) the “Accompanying letter in which the HR Manager makes assessments jointly with the Manager of the local or central office”.
When invited by the Authority to provide a reply to the employee’s requests, the Bank responded that the aforementioned documents
– contained company data “strictly for internal use”, which was also protected by privacy legislation and subject to the right to organize and manage one’s own activity (Article 41 of the Italian Constitution), and
– were “intraprocedural records”, pertaining only to the precise moment at which the employer’s will was formed. According to the Bank, they could not be deemed relevant for the purposes of the worker’s opposing right of defence. This was a right which, in the Bank’s opinion, had already been guaranteed since all of the necessary information had been provided in the letters notifying the employer of the charges against him.
The Court upheld the Authority’s Provision and rejected the Bank’s appeal, deeming that
(i) the principles governing defence in disciplinary procedures and in court had absolutely not been respected, and
(ii) the Bank could have simply removed any passages of the requested documentation that were not relevant for the purposes of the worker’s requests if they were prejudicial to any right to confidentiality established in favour of third parties.
In essence, the Court declared that the employer’s decision to keep some aspects of its own organizational decisions private was unlawful: “the party cannot be entitled to decide, at its own discretion, what can or cannot be made available, since such a situation would also allow the appellant company to control all decisions concerning the counterparty’s ability to establish a defence”.
The Bank filed an appeal against the Court’s ruling at the Court of Cassation, requesting that the dispute be dealt with at a public hearing, given the significance of the issue.
The ruling of the Court
The ruling of the Court focused on three main points, as outlined below.
In this regard, the Supreme Court of Cassation made the same assessments as the trial judge, as mentioned above, deeming that – following the balancing of opposing interests – the worker’s right of access prevails over the confidentiality requirements asserted by the Bank.
In the Court’s opinion, the Bank could have allowed access to the documents containing assessments about the employee while also protecting the third parties, by redacting information that could be prejudicial to them, for example.
Moreover, in upholding the ruling handed down by the trial judge, the Court of Cassation specified that the right of access cannot be understood – in a restrictive sense – as the mere right to know any new information in addition to that which has already become known to the interested party: the scope of the right in question is much broader.
According to the Court, the purpose of the right of access is – in protection of the interested party’s dignity and privacy – to guarantee that he can verify ratione temporis whether his personal data (i) has been entered, (ii) remains on record, or (iii) has been removed, regardless of whether or not the interested party has become aware of such information by other means and on different occasions (see the reference to the aforementioned letters notifying the employee of the charges). Therefore, the right to this verification must be guaranteed through the interested party having access to his own personal data at all times during the employment relationship.
Finally, the Court of Cassation confirmed and reiterated the orientation that it had established previously, aimed at guaranteeing the right of access to documentation concerning matters connected to the employment relationship. This is applicable both to cases in which that documentation is required by law and to cases in which the documentation is provided for by the business organization, through internal circulars, for example (cf. Court of Cassation Judgment no. 9961 of 2007, inter alia), as in the case at hand.
Conclusions
In essence, the Court of Cassation deems that the legislative and regulatory provisions on the “right of access” do not suggest any specific limitation with regard to the specific purposes for which it may or may not be exercised. Therefore, the right in question can be duly exercised by the employee for the purposes of his own defence.
With its order no. 505 of 11 January 2019, the Italian Court of Cassation established the principle that workers have the right to be remunerated for the time it takes them to put on work clothes at the business premises, only if it is demonstrated that workers are obliged to use company dressing rooms and have to arrive at the workplace early to perform that operation.
The facts
Some employees in service at a company trading in the shipbuilding sector had filed action with the Court with territorial jurisdiction in order to obtain a ruling against said company ordering it to remunerate them for the time that it took them to put on and take off their work overalls and shower, equal to 30 minutes per day.
First the Court with territorial jurisdiction, and then the Court of Appeal, rejected the claim brought by the workers on the basis of the fact that they had failed to assert in court:
• the existence of the employer’s power – or indirect power – to oblige workers to perform the additional activity;
• that they were obliged to arrive at the workplace early and to use the company dressing rooms, since they were also free to perform those preparatory activities at their own homes;
• that, due to the nature of the work overalls, shoes and safety devices, the use of those items of clothing outside of the workplace was not appropriate or adequate, according to social norms.
In light of the above, therefore, neither the witness testimonies nor the cross-examination – which was, moreover, deferred to individuals without the power to exercise the right in question – were admissible, since they were deemed irrelevant given that they related to checks performed after the employees had changed into their work clothes.
The workers filed an appeal against the Court of Appeal’s ruling at the Court of Cassation, based on two grounds, which the employer company opposed with its own defence arguments in a counter-appeal.
The ruling of the Court
The Court of Cassation upheld the decision on the merits on the assumption that the principle applied was consistent with that which had been established by consolidated case law, namely that “in employment relationships, the time it takes to put on the company uniform is only included within working hours if it is subject to the employer’s power to oblige employees to do so, which can derive either from explicit company rules or, implicitly, from the nature of the clothing or the function that it must fulfil, so as to establish an obligation to put on the uniform at the workplace” (cf. Court of Cassation, employment division, judgment no. 7738/2018).
According to the Supreme Court of Cassation, it follows that the evidence provided related to circumstances that were irrelevant to the decision, because they were not representative of the ‘hetero-direction’, and that it had therefore been correctly rejected by the trial Judge.
Conclusions
In essence, from the judgment in question one can deduce that the so-called ‘overalls time’ must be remunerated, as it falls within effective working hours, in cases in which the affected workers are obliged by their employer to use the company’s dressing rooms and have to arrive at the workplace early.
However, ‘overalls time’ must not be remunerated where employees are given the opportunity to choose when and where (including at home) to put on the uniform.
