The Italian Court of Cassation, called upon to rule on the possibility of applying the joint and several liability provisions of Article 29 of Legislative Decree 276/2003 to service contracts other than those formally governed by Article 1655 of the Italian Civil Code (“contratti di appalto” in Italian parlance), with its recent judgment no. 26881 of October 16, 2024, has stated an important legal principle that extends beyond the issue of joint and several liability and impacts the entire legislative framework concerning fictitious labor outsourcing.
The judges of legitimacy, after reaffirming the background behind the joint and several liability stated in Article 29—that is, to avoid the risk of situations where workers suffer adverse consequences due to outsourcing practices—highlighted that, in the case of an atypical mixed-purpose agreement commonly used in large-scale retail, it is not a question of the precise classification of the contract, but rather “the need to determine whether a mechanism of outsourcing and detachment between the ownership of the employment relationship and the utilization of the labor activity was established, which could justify applying the guarantee provided by Article 29″.
Upon closer examination, however, the impact of this ruling seems to extend beyond the mere issue of joint and several liability because, regardless of the contract’s classification, it leads to the conclusion that the outsourcing arrangement and the resulting detachment between the formal holder of the employment relationship and the actual user of the labor are sufficient to justify not only the application of Article 29 but also of the entire regulatory framework designed to protect employees who are unlawfully used.
If as observed by the Court, the purpose of the analysis is to determine which party bears the “business risk“, it cannot overlook the other criteria outlined in the first paragraph of Article 29 of Legislative Decree 276/2003 to assess the lawfulness of a contract:
The three requirements mentioned are indeed the distinguishing features of a lawfulness contract as opposed to unlawful supply of labour. Although the Italian Court of Cassation, in this decision, focused on the business risk criterion, it is clear that assessing the lawfulness of the contract must also consider the organization of resources and personnel.
This holds true regardless of the legal classification of the contract governing the relationship between the parties, in any case where there is a separation between employer and user. Naturally, this does not apply if the labor supplier is an agency expressly authorized by the Ministry of Labor.
Furthermore, this interpretation should not be surprising if we consider that labor law as a whole generally prioritizes substance over form.
Consequently, any outsourcing arrangement lacking the required criteria risks being non-compliant with the law and may therefore be reclassified as irregular or fraudulent labor supply.
The ruling underscores the importance for companies to exercise caution with regard to these types of arrangements in light of increased judicial scrutiny, including in criminal matters, as evidenced by recent investigations into the fashion and logistics sectors and also by the italian legislator, who, with Decree Law 19/2024, has toughened the penalties for illicit or fraudulent labor supply, increasing the fines applicable in the event of violations and introducing imprisonment of 1 to 3 months depending on the severity of the violation.
In cases where the contract is deemed unlawful, the contracting company may face a range of adverse consequences, including the right of the supplied workers to demand the establishment of an employment relationship with the actual user from the beginning of the supply and to claim any unpaid wage and contribution differences that may have accrued.
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The Supreme Court, by its decision no. 24473 of 12 October 2024, ruled that individual abstentions
from work could not be qualified as a strike. The decision came after the rejection of the appeal
filed by some employees against a disciplinary sanction imposed by a highway company following
two days of unjustified absence. The Court of Appeal had upheld the lawfulness of the sanction on
the grounds that the workers’ absence had not been supported by a trade union declaration, which
is a necessary condition for the abstention to be classified as a strike. In particular, the Court of
First Instance had pointed out that in the absence of a formal notification from a trade union
announcing the starting time of the strike and in the absence of collective deliberation, the
workers’ behaviour had to be considered as an individual decision.
The workers challenged the decision, arguing that the right to strike could be exercised without a
trade union declaration. However, the Supreme Court stated that although the right to strike is an
individual right, it is essential that it is collectively agreed in the event of a conflict situation
involving the protection of a collective interest. Consequently, the Supreme Court rejected the
appeal and declared the sanction lawlful.
With Order No. 27610 of October 24, 2024, the Italian Supreme Court ruled that a dismissal for cause was lawful in the case of an employee accused of repeatedly abusing work breaks by spending excessive time at a bar with colleagues.
The legal proceedings originated from the dismissal of an employee for cause following repeated unexcused absences. An investigative agency documented three instances where the employee spent over 30 minutes engaging in conversations with colleagues near a bar during work breaks.
Initially, the Court of First Instance acknowledged the facts but deemed the dismissal disproportionate, awarding compensatory damages instead. However, the Court of Appeal in Catanzaro reversed this decision, affirming the dismissal’s legitimacy. The appellate court highlighted that the employee’s extended absences were not mere physiological necessities but constituted improper use of work time.
The court also emphasized the heightened severity of these breaches due to the employee’s senior role, which involved significant responsibilities and coordination of workers in a critical sector—waste collection. These actions, the court noted, could undermine public perception and trust in the service. Furthermore, it ruled that the behavior had potential criminal implications or could deceive the employer, harming both the company’s assets and its external reputation.
The Supreme Court upheld the employer’s right to protect its reputation, particularly in public-facing sectors like waste management, where public trust directly affects service effectiveness. It reaffirmed the importance of the company’s image as a key asset.
The court also clarified the limits of using private investigators, prohibiting indiscriminate monitoring of job performance. However, it acknowledged the employer’s right to engage investigators when there is suspicion or evidence of unlawful activities by an employee.
Finally, the court broadened the concept of “company assets” to include not only tangible assets but also the company’s external image.
Read the full article on Norme e Tributi Plus Lavoro del Il Sole 24 Ore.
In the absence of a provision on the minimum duration of the contractual probationary period, the employer is entitled to dismiss an executive for failing to pass the probationary period even after only a few weeks, despite the fact that the parties had agreed on a duration of six months. This principle was established by the labor judge of the Court of Arezzo in his ruling of 7 October 2024.
In the present case, an executive had been hired with an open-ended contract in order to manage a business area, with a probationary period of six months. However, after only seven weeks of work, the company dismissed him, claiming a lack of consistency between the manager’s professional qualities and the specific business needs.
The executive challenged the lawfulness of the dismissal, arguing that the short duration of the probationary period was not sufficient for a proper evaluation of his skills. He also pointed out that, considering the time that had passed, it was not possible to make a full analysis of his abilities and of his potential contribution to the company. On the other hand, the company justified its decision by referring to the disagreements it had had with the sales manager and the manager’s commercial approach, which was considered to be “not very effective”.
The judge found the company’s decision reasonable, stating that the time elapsed was sufficient to assess the manager’s professional qualities. Furthermore, the judge ruled that it was up to the executive to prove that the few weeks of work were not sufficient to consider the probationary period completed, stating that the burden of proving the inadequacy of the duration was on the employee.
The decision under review highlights how the short duration of the probationary period does not, by itself, constitute a valid ground for challenging the lawfulness of the dismissal. Indeed, the employee must provide concrete evidence in support of his position, and the mere duration of the probationary period is not sufficient to prove the groundlessness of the dismissal.
Other related insights:
Vittorio De Luca, interviewed by Giorgio Pogliotti from Il Sole 24 Ore, discussed the issue of dismissal in cases of inflated expense reimbursements.
Special attention was given to the actions and processes companies should adopt in order to effectively sanction or dismiss employees who might take advantage of expense reimbursements to unjustly supplement their salaries
Here is the full video of the interview: il Sole 24 Ore
