Although the redundancy fund for the workforce (or a department) takes precedence over sick pay, the protected period continues to apply. This means that the dismissal of an employee who exceeded the protected period in such circumstances is legitimate.
In a 17 July 2021 order, the Court of Foggia ruled on the validity of a dismissal that exceeded the protected period. The Court stated that even if the wage supplement replaced the relevant daily allowance during illness, the employer could not arbitrarily change the reason of the employee’s absence, so the protected period continued to run during a certified illness unless the employee requested a change in the attribution of their absence from work.
In this case, an employee was dismissed for taking 430 days of sick leave instead of the 420 days provided for by the collective agreement applied to the employment relationship. The employee took legal action requesting the dismissal be declared unlawful, arguing that he had been placed, together with the other company employees, under the ordinary redundancy fund for Covid-19, which had legally replaced the sick leave he was taking. To support his claim, the employee refers to Art. 3, paragraph 7, of Legislative Decree no. 148/2015, and INPS Circular no. 197/2015, according to which “the wage subsidy replaces the daily sickness allowance in case of illness, and any contractually provided supplement.” The Court rejected the appeal referring to the arguments expressed by the Court of Pesaro in ruling no. 16/2021 and pointed out that with the above art. 3, paragraph 7, of Legislative Decree no. 148/2015, the legislator intended only to provide for a different attribution of the financial benefit received by the employee when using a period of wage subsidy, which remains, however, the responsibility of INPS (as in the case of illness), without intervening on the absence reason which pertains to the private relationship between employee and employer. Such a different attribution has nothing to do with the protected period and the work suspension. According to the Court, the employer cannot arbitrarily change the employee’s absence reason when they are on sick leave because that would mean giving the employer extra ordinem power, which would be contrary to a constitutionally guaranteed right, such as the right to health.
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Our system’s real problem is an absence of serious active employment policies. De Luca & Partners managing partner Vittorio De Luca, discusses the agreement on the end of the dismissal prohibition and Decree Law 99/2021, just approved by the Draghi government. “An explosion of redundancies is nothing more than the consequence of a ban that has gone on too long. Further generalised extensions would only have made the situation worse. The prohibition has prevented companies from renewing for far too long and paralysed worker redeployments. Finally, they will now restart and move the market and employment again.”
Another hot topic is the reform of social safety nets, which has been announced many times and is increasingly necessary during the post-pandemic period. “The social safety net system, after the 2015 reform, is fragmented and cannot protect the categories affected by the recession and provide financial benefits that represent decisive and lasting support. The pandemic has clearly shown the limits of our social safety net system. It is essential
to proceed with a comprehensive reform quickly.
The government has reached an agreement with the social partners on the dismissal prohibition. “The agreement includes a “commitment” to use all existing social safety nets before resorting to redundancies.
However, it is just a form of moral persuasion. Moreover, this commitment is unmentioned in the new decree text. This is small consolation for those clamouring for a further extension of the dismissal prohibition.”
In its judgment 15465 of 3 June 2021, the Employment Chambers of the Court of Cassation ruled once again on the peculiarities of dismissal for just cause imposed on an employee carrying out other work during sick leave.
In particular, a disciplinary dismissal was ordered against a civil servant who, following a personal accident and producing medical certificates relating to an alleged depressive anxiety syndrome, was granted a period of sick leave during which, however, he was filmed by a detective agency while working for his daughter’s business, thus demonstrating that he had no physical or psychological disorder.
Following the employee’s appeal against his dismissal, it was found out during the first instance proceedings that the work carried out thereby for the other business was not occasional, rather it was ongoing and characterised by an involvement that was no less demanding than that required for the performance of his duties as a white-collar employee for the State Property Agency. On appeal, it was also found out that the medical certificates concerning the existence and nature of the disorders that had affected the employee since his personal accident were not consistent with each other. Therefore, the Court of Appeal held that the employee had no depressive anxiety syndrome and that, even if it existed latently, there was no nexus with his personal accident.
The Court of First Instance and the Territorial Court thus rejected the employee’s appeal, holding that his dismissal was lawful. The employee thus brought an appeal before the Court of Cassation, arguing, firstly, that the judgment on the merits had failed to establish the ‘non-occasional’ nature of his alleged work activity and, secondly, that the applicable collective agreement had been infringed since it provided for suspension from work with no pay, for up to 10 days, where “other activities are carried out during the state of illness or injury that are incompatible with and prejudicial to recovery”.
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The Court of Cassation, in ruling no. 12932/2021, reiterated that the waiver of notice period by the employee and the related substitute allowance, formalised by a settlement agreement made after the notice of dismissal, does not affect the obligation to pay social security contributions to INPS.
In this case, a bank, after having dismissed approximately 90 executives, signed a settlement agreement with them in which it was agreed to change the dismissal title from dismissal to consensual termination, with a simultaneous waiver by the executives of their notice period and related substitute allowance. Despite the agreement reached between the parties, the social security institution took legal action against the company claiming payment of social security contributions on the notice period substitute allowance.
The local Court of Appeal, reforming the decision of the first instance, upheld INPS’s claims, noting that the employment relationship was terminated with effect from the receipt of the letter of dismissal in which, instead of serving the notice period, the executives were paid the notice period substitute allowance. The substitute allowance constituted an element of remuneration that had already become part of the executives’ assets, and as such was subject to an obligation to pay contributions.
On this point, the Court of Appeal considered it irrelevant that a settlement agreement had been reached between the parties whereby each executive, a few weeks after the notice of dismissal, had waived the notice period and related substitute allowance.
Objecting to the court’s ruling, the losing company appealed to the Court of Cassation.
The Court of Cassation reiterated, as a preliminary point, that the obligation to pay contributions:
According to the Court of Cassation, the fact that the notice period substitute allowance is subject to social security contributions follows from its nature as remuneration. Therefore, “it is at the moment in which the dismissal becomes effective that the employee’s right to the notice period substitute allowance arises and the consequent obligation to pay contributions: if the dismissed employee waives their right to the indemnity, such waiver cannot have any effect on the public obligation, which pre-exists at the time of the waiver and is regardless to it because the abdication comes from a party (the employee) other than the owner (INPS).”
In the Court of Cassation’s opinion, once the dismissal has been announced, the notice period substitute allowance – which falls within “everything that the worker is entitled to receive,” because of its intrinsic retributive value, is part of the autonomous and distinct insurance relationship which is completely irrespective of the disbursement and, to the defensive argument, if it is part of the worker’s assets.”
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According to the Court of Cassation, the employer and employee’s settlement agreement change the termination title from dismissal to consensual termination while waiving the notice period and the substitute allowance takes place after the employment termination. The obligation to pay contributions has already arisen in the insurance relationship, and the employer remains liable to pay INPS the contribution on the notice period substitute allowance.
Other related insights:
In cases of dismissal for justified objective reason, the Judge’s verification of the “manifest lack of the fact“ requirement underlying the dismissal, from which the possibility of employee reinstatement derives, must cover the technical, production and organisational needs stated by the Company, and the possibility of relocating the employee elsewhere within the company organisation.
In its order dated 4 May 2021, the Court of Rome concluded that, even if the objective reason for dismissal due to production reasons was under the employer’s free assessment, and the Judge unable to assess the company management criteria, it is up to the same Judge to check the effectiveness and non-speciousness of the company reorganisation.
The case before the Court concerned the dismissal for justified objective reason of an employee of a company specialising in physiotherapy services. The dismissal was due to financial reasons based on the reduction in turnover recorded by the employer company in the previous three years. In the letter of dismissal, the Company stated the need to carry out “a cost reduction through a company reorganisation which included the tasks carried out [by the employee], and that these would be carried out personally by the director and included in the new information and electronic systems”. The Company dismissed the employee as there was no possibility of assigning her to equivalent positions, as stated by the Company.
The employee challenged the dismissal because it was not based on an effective company reorganisation and that the Company had not complied with the repêchage obligation. She requested the assessment of the lack of the fact underlying the dismissal under art. 18 paragraphs 4 and 7 of the Workers’ Statute, punishable by reinstatement in the workplace plus 12 months’ salary as damages.
The Court held that the dismissal was unlawful. It referred to case law in which the objective reason for dismissal can be identified by a different distribution of tasks among employees for the more cost-effective and efficient management of the Company. This would mean the employee who performed the task exclusively was redundant (Court of Cassation ruling no. 19185/2016 and Court of Cassation ruling no. 29238/2017). The Court stated that it is not sufficient that the tasks formerly carried out by the dismissed employee are assigned to colleagues. The reorganisation must be the source of the dismissal rather than being an effect.
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