With the recent judgment No. 20284 of 14 July 2023, the Italian Court of Cassation ruled that, even though not specifically provided for in the disciplinary code, breaches by the employee of the fundamental duties underlying the employment relationship are valid grounds for dismissal.
The facts of the case
An employee working as a Level I salesperson was dismissed by the employer company due to his constant failure to meet the production targets periodically set by the company.
The employee challenged the dismissal before the Court, which – by comparing the results achieved by the employee with the targets set by the company schedules – confirmed the unequivocal poor production performance of the worker. Therefore, the Judge hearing the case declared the dismissal to be lawful, classifying it as dismissal for a justified subjective reason.
The worker appealed the ruling before the Rome Court of Appeal, where he argued that the dismissal was unlawful due to the failure to display the disciplinary code in the company.
In this regard, the Court, in upholding the judgment of first instance, held that the failure to display the disciplinary code in the company was irrelevant for the purposes of determining the nature of the dismissal, since the worker was charged with negligent and inexperienced failure to fulfil his obligations under the employment contract, and that the dismissal was based on the worker’s poor production performance resulting from his constant failure to comply with the work schedules previously established.
For the Court, moreover, for the purposes of assessing the seriousness of the misconduct, previous disciplinary records that indicate the worker’s repeated offences must also be taken into account.
The worker therefore challenged the judgment of the Court of Appeal before the Italian Court of Cassation.
The decision of the Italian Court of Cassation
When confronted with the issue, the Italian Court of Cassation confirmed the rulings of the lower courts on the lawfulness of the dismissal.
First of all, the Judges of the Italian Court of Cassation reiterate that the power to terminate the employment contract in the event of significant breach of contractual obligations stems directly from the law (Article 3 of Italian Law No. 604 of 1966) and does not require, in order for it to be lawfully exercised, a detailed provision, in the collective bargaining agreement or in the company disciplinary regulations, of every possible instance of conduct constituting the above requirement. Indeed, it is for the judge to verify, if the lawfulness of the termination is contested, whether the alleged incidents constitute a legal case of non-performance.
For this reason, continues the Court, even if not specifically provided for by the contractual provisions, serious breaches of the fundamental duties associated with the employment relationship constitute grounds for valid notice of withdrawal; in particular, those duties that underpin the existence of the employment relationship, such as the duties imposed by Articles 2104 and 2105 of the Italian Civil Code (obligations of diligence and loyalty) as well as those deriving from company policies.
Therefore, according to the Italian Court of Cassation, with regard to disciplinary sanctions, a distinction must be made between offences relating to the breach of specific rules concerning company organisation and production methods, which can only be recognised insofar as they are expressly provided for, and offences relating to conduct that is manifestly contrary to the duties of workers and the interests of the company, for which specific inclusion in the disciplinary code is not required.
With regard to the disciplinary code, the judges reiterate that it must, in any event, be drafted in such a manner as to make the cases of infringement clear, although by providing an outline and not a detailed description, and to indicate the corresponding penalties, albeit in a general manner and which can be adapted based on the actual and specific non-compliance.
Ultimately, therefore, the aforementioned judgments uphold the lawfulness of the employer’s termination of employment even where the alleged breach of contract does not constitute a case that is expressly set out in the company’s disciplinary code or in the national collective bargaining agreement, but takes place by infringing the duties underlying the employment relationship.
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Failure to comply with the time limits laid down in the Italian national collective bargaining agreement for the notice of the letter of dismissal constitutes a procedural breach resulting in the application of the indemnification penalty under Article 18(6).
The Italian Court of Cassation, with the recent judgment No. 10802 of 21 April 2023, once again ruled on the timeliness of the notice of dismissal, and analysed, on the one hand, the prerequisites for the application of the principle of the separation between the time when the intention to dismiss is expressed and the time when the effects are produced and, on the other hand, the consequences of the penalties associated with the failure to comply with the time limits for the conclusion of the disciplinary proceedings provided for by the national collective bargaining agreement.
The timeliness of the notice of the dismissal
As is known, the law does not specify a precise time limit within which the employer, at the end of the disciplinary procedure, must inform the employee of the termination.
And in fact, Article 7 of the Italian Workers’ Statute does not indicate a ‘final’ time limit within which the penalty must be adopted, but lays down the fundamental principles of disciplinary proceedings, such as the public disclosure of disciplinary rules and the employee’s right to defence himself/herself.
Case law has repeatedly stated that the notice of disciplinary dismissal – as, more generally, the imposition of disciplinary sanctions – must be of a ‘timeliness’ nature, as must the notification of the charge (among others: Court of Cassation No. 17058 of 2003).
Failure to meet this requirement is in fact suggestive of the employer’s willingness to accept any justifications of the employee, against whom the charge has been brought, or in any case to assess the employee’s conduct as not being of such a serious nature as to warrant dismissal: an excessive delay would, in fact, be contrary to the basis of the reasoning adopted (i.e., as expressly provided by Article 2119 of the Italian Civil Code, ‘a ground that does not enable the relationship to continue, even temporarily’).
The ‘timeliness’ nature can then be translated, more precisely, into a specific procedural guarantee provided for by the national collective bargaining agreement, capable of specifying further procedural elements including, for example, the introduction of a mandatory time limit for exercising disciplinary power (Italian Court of Cassation No. 9767 of 2011), i.e. a maximum spatium deliberandi [time period for deciding] established in a very precise measure aimed at shielding the (less precise) rule of the timeliness for the adoption of the disciplinary measure.
Take, for example, Article 240 of the National Collective Bargaining Agreement for Commerce, according to which ‘any disciplinary measure adopted shall be notified to the worker by means of a registered letter with return receipt or other suitable means for certifying the date of receipt, within 15 days from the expiry of the time limit given to the worker to submit his/her counter-arguments’, or the National Collective Bargaining Agreement for the Metalworking Industry, according to which ‘the dispute must be made in writing and disciplinary measures cannot be imposed before 5 days have elapsed, during which the worker can submit his/her justifications. If the measure is not imposed within 6 days following the expiry of the time-limit for justifications, these will be deemed to be accepted’(Article 8, section IV, National Collective Bargaining Agreement for the Metalworking Industry).
In interpreting clauses similar to those indicated above, the case law of the Italian Court of Cassation has pointed out, in a number of rulings, that ‘where the collective bargaining agreement imposes on the employer the duty to adopt the disciplinary penalty, under penalty of forfeiture, within a given time limit from the date of receipt of the justifications provided by the worker, such time limit must be deemed to have been complied with solely on the ground that the employer promptly expressed the intention to impose the penalty, and it is of no relevance that such a declaration is brought to the knowledge of the employee following the expiry of that time limit” (Court of Cassation 4.10.2010 judgment No. 20566 and, in the same sense, Court of Cassation 2.3.2011 judgment No. 5093; Court of Cassation 10.9.2012 judgment No. 15102; Court of Cassation 20.3.2015 judgment No. 5714).
It has been observed, in fact, that the principle of the separation between the time in which the intention to withdraw is expressed and the time in which the effects referable to that intention are produced, affirmed by the Joint Chambers in judgment No. 8830 of 14 April 2010, must be applied whenever, as part of the disciplinary procedure, the time in which the intention is expressed does not coincide with the time in which the addressee becomes aware of it, because otherwise the yardstick of reasonableness and formal and substantive equality between the persons involved would be undermined.
On the basis of the so-called ‘principle of separation’, the employer therefore bears the burden of performing the activity necessary to start the notification procedure (i.e. by sending the registered letter or other suitable means), provided ‘that it is ‘entrusted to a service capable of ensuring adequate reliability free from its interference, by reason of a fair and reasonable balancing of the interests involved’ (Italian Court of Cassation judgment No. 18823 of 2018).
Untimely dismissal: consequences of penalties
On the principle of timeliness in disciplinary proceedings and on the issue of the consequent penalties under the regime of Italian Law No. 92 of 2012, the Joint Chambers of the Italian Court of Cassation intervened which, with judgment No. 30985 of 2017, drew a conceptual distinction between the ‘breach of the rules regulating the manner in which the entire procedural process is carried out at its various stages’ and ‘the breach of the general principle of substantive nature of the timeliness of the dispute when the dispute becomes that of considerable and unjustified delay’.
The Italian Court of Cassation emphasised that in the first case, ‘mere compliance with procedural rules, albeit essential, is relevant’, whereas in the second case, ‘more important requirements’ are taken into consideration, such as that of ‘guaranteeing the employee an effective defence’, to ‘protect (the employee’s) lawful expectation – in relation to the optional nature of the exercise of disciplinary power, in the performance of which the employer must behave in accordance with the standards of good faith – on the lack of disciplinary implications of the offence’ and to ‘remove him/her from the risk of an arbitrary postponement of the start of the disciplinary procedure’.
With regard to the consequent penalties, judgment No. 30985 of 2017 established that in disciplinary dismissal, where the law or the rules of the national collective bargaining agreement provide for time limits for the notification of the grounds for dismissal – which is governed ‘ratione temporis’ by Article 18 of the Italian Workers’ Statute, as amended by Italian Law No. 92 of 2012 -, failure to comply with these time limits constitutes a procedural breach and entails the application of the indemnity penalty provided for in Article 18(6) of said Workers’ Statute, i.e. the so-called weak indemnity protection between a minimum of 6 and a maximum of 12 months’ salary. On the other hand, it held the strong indemnity protection of Article 18(5) to be applicable in the event of a finding of ‘significant and unjustified delay in the notification of the charge underlying the withdrawal measure’ (see, in the same sense, Italian Court of Cassation judgment No. 12231 of 2018).
In the case law precedents of the Italian Court of Cassation, breach of procedural rules has been recognised, for example, where ‘the disciplinary notice, aimed at dismissal, does not contain a sufficient and specific description of the worker’s conduct’ (Court of Cassationjudgment No. 16896 of 2016), as well as in the event of ‘breach of the employer’s obligation to first hear the employee’s defence’ (Court of Cassation judgment No. 7392 of 2022), deeming the protection provided for in Article 18(6) is applicable in such cases.
On the other hand, it was held that ‘the fundamental failure to challenge the infringement leads to the entire procedure being non-existent, and not only to the failure to comply with the its governing rules, with the consequent application of the reintegration protection provided for by Italian Law No. 300 of 1970, paragraph 4 of Article 18, as amended by Italian Law No. 92 of 2012, referred to in paragraph 6 of the aforesaid article as regards the case of absolute lack of justification for the dismissal measure, a disciplinary dismissal adopted without any challenge to the charge should be considered as such” (Court of Cassation judgment No. 25745 of 2016; Court of Cassation judgment No. 4879 of 2020).
Continue reading the full version published on Modulo 24 Contenzioso Lavoro of Il Sole 24 Ore.
By order No. 12241 of 9th May, the Labour Division of the Court of Cassation decided on the validity of disciplinary termination of an employee of an IT company who had refused to further study certain operating systems and to update the programmes used by a client. In the case at hand, the judge of the merits had found that the worker had refused to take the training as directed by his immediate supervisor, although the participation in the professional development courses would not have caused him to bear any expenses, use leave days or sacrifice his free time. The passivity and non-cooperation of the employee was also ascertained, in that he had refused to update operating systems at a client’s premises. On these grounds, the Court of Cassation held that the company had lawfully communicated the disciplinary dismissal with prior notice; in the Court’s view, the worker’s behaviour amounted to serious insubordination, as it was in clear contrast with the duty of diligence, to be understood, in the case at hand, as also referred to the professional development required for employee profitability.
Our partner Alberto De Luca participated in the 31st Annual Meeting and Conference of the Inter-Pacific Bar Association (IPBA). Alberto took part in the panel discussion entitled: ”Lawyer, I want to fire an employee in another country for poor performance. How do I do this and what are the risks?”
The discussion dealt with an Employment law survey report, involving almost 30 countries from around the world, and which focused on alternative dispute resolution (ADR) for employment disputes and on the employment process.
During his talk, Alberto addressed guiding clients through redundancies and employment dispute resolution around the world, considering the options, processes, and potential legal risks associated with a regional or global workforce, giving specific attention to:
In its recent judgment No 5288 of 20 February 2023, the Italian Court of Cassation ruled that, with reference to the national collective bargaining agreement for employees in the tertiary sector (hereinafter the ‘CCNL’), the job retention period of 180 days, to be calculated in a calendar year starting from the first episode of illness, must be considered to refer to both the protected period relating to a single long-term sick leave and the protected period relating to several days of sick leave (i.e. by aggregation, ‘sommatoria’).
The Court of Appeal of Catanzaro upheld the appeal of an employee dismissed for exceeding the protected period and, partially reversing the first instance judgment, held the dismissal to be unlawful. The Court of Appeal ordered the employer company to reinstate the employee and to pay compensation for damages under Article 18 of the Workers’ Charter.
The regional Court reached its decision stating that ‘based on the provisions of Articles 175 and 177 of the tertiary CCNL read in conjunction […] if a period of sickness is followed in the same year by an interruption, a new protected period of 180 days starts to run’. The Court of Appeal, therefore, having ascertained that the employee had not had 180 consecutive days of sick leave in the course of the calendar year, held that there had been no exceedance of the protected period which had been the basis of the dismissal by the employer.
The Company filed an appeal before the Italian Court of cassation against the Court of Appeal’s judgment. The two grounds of appeal related to the breach and false application of Article 175 of the Italian CCNL, arguing that this provision contemplated an ‘aggregated’ protected period – which, in the present case, was to be considered exceeded by the employee – and not a ‘single’ protected period as ruled by the regional Court.
The Italian Court of Cassation, in order No 23155 of 2020, rejected the appeal brought by the Company, stating that ‘if the injury is followed by a period of absence due to sickness, as was unquestionably the case in this instance, even if there is no interruption, a separate period of 180 days begins to run from the time of the onset of the sickness, and only at the expiry of this period can there be dismissal for exceeding the protection period’.
The Company, alleging a factual error in the ruling made by the Italian Court of Cassation, appealed for the revocation of the relevant judgment, arguing that the ruling was based was on an erroneous basis. The Court documents showed, in fact, that the absences, for two distinct periods of 109 and 124 days respectively, were due exclusively to sickness and not also to injury as indicated by the Italian Supreme Court.
The Italian Court of Cassation, in accepting the appeal for revocation brought by the Company, preliminarily noted that the interpretation adopted by the appeal judges did not correspond to the literal content of Article 175 of the Italian CCNL, where the contractual provision provides for a protected period for the role ‘of a maximum period of 180 days in a calendar year’, without referring to the consecutive or interrupted nature of the absences.
The Italian Supreme Court also ruled that the solution proposed by the Court of Appeal was untenable on the basis of a general interpretation of the rules, since it did not take into account the difference, which the Italian CCNL does, between absences caused by a single sickness and the scenario in which there are different causative factors of absence (i.e. sickness and accident) that bring into operation two independent protection periods.
Therefore, according to the Supreme Court Judges, the term of 180 days, calculated backwards from the last period of sickness within the calendar year of 365 days, must also apply to the protection period for several sicknesses and not only to the protection period for a single sickness.
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