Published in the Official Gazette no. 176 of 24 July 2021, Law no. 106 of 23 July 2021, (hereafter the “Conversion Law“), converting Decree-Law no. 73 of 25 May 2021containing “urgent measures related to the COVID-19 emergency, for businesses, work, young people, health and regional services” Support Decree-bis). The measure entered into force the day after its publication in the Gazette, i.e. on 25 July.
Below are the main measures provided for by the “Support Decree-bis” in the employment field, some of which were introduced during its conversion.
Until 30 September 2022, it is possible to:
The conversion law incorporates the provisions of the recent Decree-Law no. 99/2021, and repeals the prohibition of individual dismissals for financial reasons and collective dismissals, merging it into the “Support Decree-bis.”
The prohibition applies:
Exceptions to the prohibition are confirmed for dismissals motivated by a definitive cessation of business, liquidation, bankruptcy, or collective company agreement on redundancies.
In addition to confirming the measures provided for by the “Support Decree-bis” and partially mentioned above, the Conversion Law re-proposes the measures provided for by the repealed Decree-Law no. 99/2021 to ensure continuity of the effects produced by its provisions, and particularly:
The original provision of the Support Decree-bis under which companies with less than 100 employees can sign an expansion contract was confirmed. This tool allows retraining of workers using the redundancy fund and access to favourable early retirement plans for those who are no more than 60 months from age or early retirement.
The introduction of the re-employment contract, i.e. the open-ended employment contract aimed at encouraging the integration of unemployed workers into the labour market, was confirmed. An employment condition to be hired under a re-employment contract is for an individual project to last six months and ensure the worker’s professional skills meet the new work situation. This is subject to the worker’s consent.
At the end of that period, the parties may terminate the contract by giving notice from the same date. If neither party terminates the contract, the relationship continues as an ordinary open-ended employment relationship.
The re-employment contract allows exemption from social security contributions for employers who hire unemployed workers from 1 July to 31 October 2021. In the six months before recruitment, the exemption is granted to employers who have not made individual dismissals for objective justified reasons.
Other related insights:
In its 25 March 2021 ruling, The Court of Rome, declared the termination of employment during the probationary period, null and void because it was contrary to the dismissal prohibition for financial reasons, introduced by art. 46 of Decree Law 18/2020 (“Cure Italy Decree”) and confirmed by the emergency legislation that succeeded the Decree, if based on the need to remove a position considered costly.
In March 2020 a hotel hired an employee and the employment contract included a six-month probationary period. Only ten days after the start of employment, due to the onset of the Covid-19 epidemiological emergency, the hotel was forced to temporarily close to the public. As a result of the closure, the Personnel Department notified employees of the activation of the Redundancy Fund (“FIS“), but then revoked it only for the plaintiff because she did not meet the requirements for such activation (her employment began after 23 March 2020). The employee was placed in remote working mode. Despite the limited operations at the hotel the employee managed to carry out various tasks (conference calls, daily contacts with representatives of the sales department, sharing commercial initiatives etc.).
Subsequently, on 16 April 2020, the hotel informed the employee of its intention to terminate her employment during the probationary period. The employee then appealed to the Court of Rome to have the termination declared null and void as – in her opinion – it was based on an unlawful determining reason.
Before going into the merits of the matter, the Court of Rome referred to certain principles expressed by the Supreme Court regarding termination during the probationary period. The Court of Rome said that according to the Supreme Court (i) during said period “the termination right does not mean (…) that it is at the total discretion of the employer” and (ii) “the possibility to review the exercise of termination by the entrepreneur during the probationary period should be recognised along with the possibility to annul the act which expressed it, whenever the employee considers and knows how to demonstrate the successful completion of the probation and can attribute the dismissal to an unlawful reason“ (see ruling no. 1180/2017).
According to the Court of Rome, the Court of Cassation would deny legal dignity to the exercise of straightforward discretion functionally unrelated to the probation agreement by requiring the worker to prove they have positively passed the probation and that the termination was related to unlawful reasons unrelated to the agreement.
And in this case, the Rome Court judge deemed that the burden of proof regarding the successful completion of the probationary period had been met, given that (i) the employee had listed the duties carried out during that period. She was able to produce suitable documentation to demonstrate that she had performed them in an irreproachable manner and was appreciated by her contact persons. (ii) The respondent company had not contested the performance of those duties.
The Court identified serious, precise and concordant evidence having the value of proof to support the idea that the Company terminated the relationship for overt financial reasons needed to eliminate an expensive position rather than for reasons linked to the probationary performance.
According to the Court, such evidence was found in (i) the initial inclusion of the employee’s position in the number of employees for whom access to the Redundancy Fund (FIS) was requested (as proof of her full integration into the Company’s workforce); (ii) the fact that the employer formally requested the Redundancy Fund (albeit subsequently revoked) at zero hours, thus proving her inability to carry out her operational duties; (iii) the respondent company’s situation of objective, severe financial difficulty, a circumstance to be considered a known fact for hotels during the emergency period.
Once ascertained the successful completion of the probationary period and the real reason for the dismissal, i.e. the need to remove a resource that had become excessively onerous, the judge declared the “absolute nullity of the employer’s termination under the combined provisions of articles 1418 and 1345 of the Civil Code, since the real reason that justified the measure is in violation of art. 46 of Decree Law 18/2020” and as such it is unlawful.
Under Art. 2 of Legislative Decree no. 23/2015, the employer company was ordered to reinstate the employee in service and consequent payment of damages and social security contributions.
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The ruling in question reminds us that, while the employer can terminate the relationship during the probationary period without justified reason, it is a well-established principle that the termination right does not mean that it is at the employer’s discretion. This discretion must be circumscribed within the scope of the function for which the probationary agreement is intended. Termination may be considered null and void if the employee can prove that the probation has been completed and that the real reason is to be found in an unlawful determining reason unrelated to the probation conduct (in this case, contrary to the dismissal prohibition for financial reasons introduced by Art. 46 of the “Cure Italy” Decree). Consequently, the employer was ordered to reinstate the employee and pay compensation for damages and social security and welfare contributions.
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The Court of Rome, in its ruling no. 3605 of 19 April, 2021, ruled on the application of the dismissal prohibition, provided for by art. 46 of the “Cure Italy” decree and confirmed by the emergency measures that followed, to executives. Contrary to the conclusions reached on 26 February, the Court ruled that “the literal wording of the regulation, together with the philosophy that supports it, did not allow executives to be included in the prohibition.”
To deal with a crisis, worsened by the consequences of the pandemic, a company, with a notice dated 29 April 2020, dismissed its Chief Operating Officer due to the position removal and redistribution of the functions assigned to him among other company managers.
The executive challenged the termination by objecting to its nullity due to violation of art. 46 of Decree Law 18/2020 (“Cure Italy Decree”) on the assumption that the prohibition of individual dismissal introduced by the emergency legislation should apply to executives and the dismissal illegitimacy.
In rejecting the appeal brought by the executive, the Court of Rome preliminarily noted that art. 46 of the “Cure Italy” Decree – and the subsequent emergency measures that extended the dismissal prohibition – expressly excluded the possibility of ordering dismissals for justified objective reasons under art. 3 of Italian Law no. 604/66)
However, based on the literal content of the regulation and the assumption that art. 3 of Law 604/66 does not apply to executives, based on the express provisions of the legislation (art. 10 L. 604/66) and by constant case-law orientation, the Court ruled out that executives can be included in the dismissal prohibition.
The Court found the “clear and evident symmetry” between the dismissal prohibition and the use of social shock absorbers, which has allowed companies to reduce labour costs in a generalised manner to cope with losses. This symmetry is confirmed by the possibility for employers to revoke dismissals already announced before the prohibition, introduced by art. 46 of the “Cure Italy” Decree in paragraph 1-bis. This applies if a request to access the redundancy fund was made simultaneously.
According to the Court, the combination “dismissal prohibition” and “use of social shock absorbers” cannot be applied to executives, as they cannot benefit from social shock absorbers while in office. An interpretation that would allow the inclusion of executives in the dismissal prohibition would be unconstitutional. It would leave the employer responsible for the costs of the managerial employment relationship even in the presence of a justified termination.
The Court held that it could not come to a different conclusion, not even because of the order from the same Court dated 26 February 2021. Under this order the prohibition would apply to executives because “according to a ‘constitutionally oriented interpretation’ the exclusion of executives from the prohibition is unclear, given the regulation is supposed to prevent general dismissal without any distinction.”
With this ruling, the Court disagreed with the reasoning contained in the 26 February order. Under this order, it would be unreasonable not to include executives in the prohibition because they are protected by the rules of collective dismissal. With this ruling, the Court declared the cases were different. This justifies a difference in approach and it cannot be a valid reason to apply the dismissal prohibition to the individual executive.
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The logical-juridical process that led the Court to exclude the extension of the dismissal prohibition to management personnel can be shared since it follows legal provisions and the entire emergency regulatory system’s reason.
However, the case law on the interpretation of the same regulatory source provided diametrically opposed solutions, resulting in uncertainty for companies about the outcomes and costs of any dismissal of senior figures.
Other related insights:
The Court of Ravenna, in its ruling of 7 January 2021, ordered that a worker’s dismissal for sudden physical unfitness for the role falls within the cases of dismissal for objective justified reason prohibited by the Covid-19 emergency regulations.
A worker challenged his dismissal for objective justified reason in court. The dismissal was notified to him on 30 April 2020 following a sudden physical unfitness for the role, confirmed by the company physician a few days earlier.
In its defence, the employer argued that the physical unfitness in question was not covered by the emergency legislation, which only prohibits dismissals of a financial nature in the strict sense.
In upholding the action brought by the worker, the Court found that dismissal for sudden physical unfitness for the role fell within the category of dismissals based on objective grounds.
The Court ruled that this case falls within the dismissal prohibition imposed by the legislator to deal with the Covid-19 pandemic. This is because this type of dismissal was covered by the same reasons of economic and social protection that underlie other dismissals that the emergency legislation
sought to prevent.
According to the Court, dismissal must be regarded as a last resort for a worker who is unfit for the job and for whom dismissal cannot be avoided by adopting organisational measures to enable them to continue working, by transferring them to lower duties, if necessary.
In the Court’s view, the respondent company could have carried out such an assessment after the economic downturn caused by the lockdown.
According to a well-established case law, workers who have cannot perform their duties as a result of an accident or illness cannot be dismissed for justified objective reasons if they can be transferred to equivalent or lower duties. In that case, the employer must employ the worker in a different task within the company, according to its organisational structure. Basically, the employer, although not obliged to change its organisational structure, must assign the disabled person tasks compatible with the nature and degree of their impairments and find the job most suited to their health conditions within the company organisation.
