Whistleblowers liable for similar actions
The legislation that protects an employee who reports unlawful conduct which he/she has become aware of due to his/her duties is ‘aimed at preventing unfavourable consequences for the fact in itself of having reported unlawful conduct, but certainly does not create exemptions with respect to the offences that that person had allegedly committed independently or in concert’. This was affirmed by the Court of Cassation with order No 9148 of 31 March 2023. The case originates from a disciplinary suspension imposed on a nurse working at a public sector hospital, who had worked for a private body for eight years without authorisation from her employer. In the judgment in second instance the Court of Appeal of Rome confirmed the ruling of the Court of first instance and rejected the appeal against the sanction under Article 54-bis of Italian Legislative Decree No 165/2001 – i.e. the protection envisaged in the event of reporting of offences of which the employee became aware due to the duties performed (the employee had, in fact, reported similar behaviour of other colleagues to the employer). The Court of Appeal noted the fact that the employee, having in turn conducted herself in the same way, certainly could not benefit from the protections invoked. The employee lodged an appeal against this decision before the Court of Cassation, in which the Health Authority filed a counter-appeal. In her sole ground of appeal, the appellant alleged breach and erroneous application of Italian Legislative Decree No 165 of 2001, Article 54-bis, on the basis that a whistleblower would only be liable when the report would constitute slander or defamation. The Court of Cassation – in confirming the assessment of the appeal judges – clarified that the function of the aforementioned Article 54-bis is to prevent the employee who makes a report from being sanctioned, dismissed or otherwise subjected to discriminatory measures for reasons connected, even indirectly, to the report.
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By Order No 8375 of 23 March 2023, the Italian Court of Cassation confirmed that footage from video surveillance systems installed for security purposes may be used to prove an employee’s disciplinary breach.
The facts of the case
The case arose from a disciplinary sanction of suspension from duty and pay for ten days imposed on a vocational teacher for forcibly grabbing a student by the shirt and, after releasing his grip, causing him to fall to the ground. The teacher, moreover, ‘while the pupil […] communicated to his mother what had happened […]’ addressed the latter ‘in an ill-mannered way using decidedly heated tones’.
The event was filmed by means of the video surveillance system installed by the Authority – the educator’s employer – at the Authority’s premises, and the recordings used to make the disciplinary complaint. The teacher, having received the disciplinary measure, in requesting its annulment challenged, among other things, the use of the video surveillance system footage for disciplinary purposes.
In the proceedings on the merits, the Court of Appeal rejected the request to annul the sanction and, upholding the appeal lodged by the teacher, reformed the first instance judgment by redetermining the sanction as a fine of three hours.
The teacher appealed to the Italian Court of Cassation, which the Authority resisted with a counter-appeal.
The decision of the Italian Court of Cassation
The Italian Court of Cassation – in upholding the assessment of the judges of the Court of Appeal – affirmed the lawfulness of the use of video surveillance system footage for the purpose of making a complaint based on an employee’s disciplinary breach.
In the present case, the video surveillance system had been installed in compliance with the guarantees provided for by the applicable legislation:
• the cameras had been installed for safety at work requirements, also in the light of the fact – as noted by the Italian Court of Cassation – that they were directed towards spaces that were ‘also accessible to non-employee personnel and not intended to accommodate workstations’;
• a trade union agreement had been signed as provided for in Article 4 of the Workers’ Charter.
In addition to this, matters such as the proportionality of the penalty imposed in relation to the wrongful act committed, as well as the fact that the worker had been allowed to exercise his right of defence, had also been examined.
In the context of all these assessments, the use of the video surveillance system footage was therefore an additional element that was considered lawful.
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Video Surveillance: the new FAQ of the Data Protection Supervisory Authority
By Order No 8375 of 23 March 2023, the Italian Court of Cassation confirmed that footage from video surveillance systems installed for security purposes may be used to prove an employee’s disciplinary breach.
The facts of the case and the first and second instance proceedings
The case arose from a disciplinary sanction of suspension from duty and pay for ten days imposed on a vocational teacher for forcibly grabbing a student by the shirt and, after releasing his grip, causing him to fall to the ground.
The teacher, moreover, ‘while the pupil […] communicated to his mother what had happened […]’ addressed the latter ‘in an ill-mannered way using decidedly heated tones’.
The event was filmed by means of the video surveillance system installed by the Authority – the educator’s employer – at the Authority’s premises, and the recordings used to make the disciplinary complaint.
The teacher, having received the disciplinary measure, in requesting its annulment challenged, among other things, the use of the video surveillance system footage for disciplinary purposes.
In the proceedings on the merits, the Court of Appeal rejected the request to annul the sanction and, upholding the appeal lodged by the teacher, reformed the first instance judgment by redetermining the sanction as a fine of three hours.
The teacher appealed before the Italian Court of Cassation and the Authority filed a counter-appeal.
The decision of the Italian Supreme Court
The Italian Court of Cassation – in confirming the ruling on the merits – affirmed the lawfulness of the use of video surveillance system footage for the purpose of making a complaint based on an employee’s disciplinary breach.
Noting the lack of defects in (i) the explanation of the factual and legal reasons on which the decision on the merits was based or (ii) the explanation of the logical / legal path followed by the Court of Appeal, the Court of Cassation confirmed the correctness of the assessment by the second instance judges in assessing the video surveillance system footage on the basis of the ‘argument for the usability [of the footage], in conjunction with the other investigative elements considered’.
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The applicability of an exemption regime requires the taxpayer to provide rigorous proof of fulfilment of all factual prerequisites giving rise to compensatory damages.
The Court of Cassation, Tax Division, by Order No 8615 of 27 March 2023 returned to examine the complex subject of the taxation regime applicable to the compensation due in connection with demotion suffered by the worker.
The case on which the Court was called upon to rule related to a dispute between the Italian Revenue Agency (Agenzia delle Entrate) and a worker who, in the context of a legal proceedings for demotion, reached an out-of-court settlement with her employer who paid her a sum by way of ‘compensation for moral, professional and biological damage’.
Since there was no distinction between the compensatory headings, the Italian Revenue Agency deducted Italian Personal Income Tax (Imposta sul reddito delle persone fisiche, ‘IRPEF’) from the amount received by the worker, who, therefore, brought proceedings seeking its reimbursement. The Provincial Tax Commission rejected the worker’s application. In contrast, the Regional Territorial Court reversed the decision, upholding the application against the Italian Revenue Agency, and declaring that the exemption regime applied to the sums under discussion.
On the subject of taxation of employment income or similar, the Italian Income Tax Consolidation Act No 917/1986 (Testo unico delle imposte sui redditi, ‘TUIR’) identifies the category of replacement income for employment income. Article Section 6, paragraph 2 of TUIR provides that thefollowing constitute income, of the same category as that replaced and/or lost, regardless of the reason for the payment: (i) income earned as replacement income, including as a result of the assignment of the related receivables; (ii) indemnities received, including in the form of insurance, as compensation for damages consisting in the loss of income, excluding those resulting from permanent disability or death.
The rationale behindthe legislation is that only the payments, emoluments or compensation that have resulted in the enrichment of the subject should be considered taxable.
For this purpose, a distinction is made between (i) loss of profit, i.e. the loss of income that is recognised as belonging to the same category as lost or replacement income (under Article 6, paragraph 2 of TUIR); (ii) consequential damages, i.e. the restoration of assets, namely compensation intended to cover the financial loss and not to replace lost income.
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The Court of Cassation, in its recent Order No 3361 of 3 February 2023, reiterated its consistent approach concerning the allocation of the burden of proof in anti-discrimination judgments, specifying that the allocation criteria do not follow the ordinary criteria of Article 2729 of the Italian Civil Code, but rather the special ones that establish a concession in favour of the applicant.
The burden of proof in discrimination matters
Under Article 25, paragraph 2-bis of Italian Legislative Decree No 198/2006 (Equal Opportunities Code) any treatment which, by reason of the state of pregnancy, maternity or paternity, including adoption, or by reason of the ownership and exercise of the corresponding rights, places the worker in at least one of the following conditions, constitutes discrimination:
With reference to the allocation of the burden of proof, Article 40 provides that where the applicant provides factual evidence, including statistical data on recruitment, remuneration schemes, assignment of tasks and qualifications, transfers, career advancement and dismissals, capable of establishing, in precise and consistent terms, a presumption of acts, agreements or conduct which are discriminatory on grounds of sex, the burden of proof as to the non-existence of the discrimination lies with the defendant.
The Court of Cassation interpreted this provision to mean that it ‘does not reverse the burden of proof, but only mitigates the ordinary evidentiary regime in favour of the applicant, providing that the employer, in line with the provisions of Article 19 of Directive No 2006/54/EC (as interpreted by the EU Court of Justice 21 July 2011, C-104/10), bears the burden of proving the non-existence of discrimination, but on condition that the applicant has previously provided the court with facts, also inferred from statistical data, capable of establishing, in precise and consistent terms, even if not serious, the presumption of the existence of acts, agreements or conduct which are discriminatory on grounds of sex’ (Court of Cassation No 25543/2018).
Consequently, the Court of Cassation stated, ‘the burden is on the worker to allege and demonstrate the risk factor and the treatment he assumes to be less favourable than that reserved for persons in similar conditions, while at the same time deducing a significant correlation between these aspects, while the employer must deduce and prove unequivocal circumstances, capable of excluding, for the sake of clarity, seriousness and consistency of meaning, the discriminatory nature of the termination’ (Court of Cassation No 23338/2018).
It follows, on a practical level, that in anti-discrimination proceedings, the employee who invokes the unlawfulness of the conduct is required to prove – also by means of presumptive evidence – that the treatment is less favourable than that received by colleagues in similar conditions. The employer, on the other hand, in order to exclude her, will have to demonstrate that the decision would have been made with the same parameters also in respect of any worker without the risk factor who would have been in the same position (on the same basis, among many see: Court of Cassation, judgment No 1/2020).
Moreover, the need to make corrections to the normal criteria of the burden of proof in cases of discrimination – which makes it undoubtedly difficult for the worker to offer valid evidence in support of his or her allegations – had already been noted by the Community rules, to the extent that they offer all the individual Member States the freedom to provide for a less burdensome system of allocation of the burden of proof, expressly providing that ‘Member States shall take such measures as are necessary, in accordance with their national judicial systems, to ensure that, when persons who consider themselves wronged because the principle of equal treatment has not been applied to them establish, before a court or other competent authority, facts from which it may be presumed that there has been direct or indirect discrimination, it shall be for the respondent to prove that there has been no breach of that principle… [This Directive] shall not prevent Member States from introducing rules of evidence which are more favourable to plaintiffs’. (Directive No 2006/54/CE).
The facts of the case and the outcome of the proceedings of first and second instance
The case originates from the appeal under Article 38 of Italian Legislative Decree No 198/2006, brought by a female apprentice to obtain a finding of and redress for the allegedly discriminatory conduct of the employer in relation to the withdrawal of the professional apprenticeship contract. The worker complained, in fact, that out of approximately two hundred apprentices hired on a permanent basis, the applicant’s non-recruitment was related to her two pregnancies during her apprenticeship.
The court of first instance upheld the worker’s appeal against the decree rejecting her application issued at the end of the interim stage. The court ordered the company to cease the discriminatory conduct and to remove its effects, reinstating the employee in the job previously occupied, with the reconstruction of her career in legal and financial terms, as if the dismissal had never occurred.
The Court of Appeal reversed the first instance ruling, stating that the evidence put forward by the worker in support of the discriminatory nature of the employer’s conduct lacked the precision and consistency required to establish a presumption of discrimination that could only be overcome in the presence of negative evidence offered by the employer.
The territorial court observed that ‘the dismissal is a neutral act in itself, lacking consistency, even more so in the specific case where the notice of dismissal was communicated approximately 17 months after the second maternity leave; similarly, the extension of the training contract for a period corresponding to that of the absences due to pregnancy, maternity and illness, constituted a neutral factor inspired by the principle, for the protection of both parties to the contract, of guaranteeing the effectiveness of the training’.
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