On 16 September was published in the Official Gazette the Decree-Law no. 131/2024 (i.e. “Decreto Salva Infrazioni”) – in force since 17 September – which also intervened on the regulation of fixed-term contracts through which the European Union requested Italy to align Italian legislation with EU Directive 1999/70/EC on fixed-term work.
The “Salva Infrazioni” decree amended Article 28, paragraphs 2 and 3 of Legislative Decree No. 81/2015 (i.e. “Jobs Act”), introducing significant changes regarding the compensation indemnity for damages in case of fixed-term contracts declared unlawful.
Pre-existing regulation:
The maximum limit of the indemnity is reduced to 6 months’ salary in the case of collective agreements that provide for procedures to stabilize fixed-term workers.
Amendments introduced by Decree-Law No. 131/2024:
“By including the role of workers’ safety representative (i.e. “RLS”) in the area of protected subjects such as trade unionists as representatives of collective interests, the expression of solidarity with other workers with general trade union political significance is included in the constitutionally protected right to criticize and the right to express opinions”.
This has been ruled by the Court of Cassation, order no. 23850/2024. In other words, within the scope of the right to criticize and express the collective interests of which he/she is the bearer, the employee who also performs the role of workers’ safety representative must be granted the same protection as that provided for trade unionists. This means that the “RLS” can use harsher language in the exercise of his/her activities as a representative of the workers, because he/she is on an equal footing with the employer.
Of course, this shall always take place within the limits of formal correctness and the protection of the human person, so much so that “only when these limits are exceeded by attributing to the employer company or its managers openly dishonorable qualities and unproven denigrating references, can the employee’s conduct be legitimately sanctioned by disciplinary measures”.
Other related insights:
The Court of Appeal of Milan, in its judgment no. 470/2024, again addressed the issue of whether the income from the sale of stock options may be included in the remuneration for the purposes of calculating notice and severance pay. The Court ruled that, in the present case, the income from the stock options was of a continuous and not occasional nature and therefore was an essential part of the remuneration. The Court thus overturned the decision no. 246 of 7 May 2024 issued by the same body, triggering a discussion on the issue.
The dispute originated from an appeal by an executive dismissed for just cause. The dispute concerned, inter alia, the inclusion in the calculation of the remuneration of the amounts resulting from the exercise of stock options which the manager claimed to be part of the remuneration due to their regular and non-occasional nature, as they had a predetermined frequency, forming part of three-year or four-year plans. The Court of first instance rejected the latter argument, excluding such income from remuneration on the grounds that there was a company regulation that excluded it from the calculation of the global remuneration.
However, the Court of Appeal decided to adopt a different perspective, referring both to Article 2099 (paragraph 3) of the Civil Code, which states that «the employee may also be remunerated in whole or in part by profit-sharing or product-sharing, by commission or by benefits in kind», and Article 2120 of the Civil Code, which states that «unless otherwise provided for by NCBAs», the remuneration relevant to the calculation of severance pay «shall include all sums, including the equivalent of benefits in kind, paid in connection with the employment relationship on a non-occasional basis, with the exception of those paid by way of reimbursement of expenses».
The Milan Court therefore ruled that stock options constituted a form of remuneration by way of profit-sharing provided for by Article 2099 of the Civil Code and also stated that, pursuant to Article 51 of the Italian Income Tax Code (i.e. “TUIR”), «all sums and values in general, (…) even if they do not come directly from the employer», as could be the case with a payment made by another group company, are considered to be the employee’s income. Continue reading the full version published on Norme e Tributi Plus Lavoro del Il Sole 24 Ore.
With order no. 17450 of 25 June 2024, the Italian Court of Cassation – confirming its previous position – ruled that in the event that an employment relationship which is only ‘formally’ one of self-employment is found to be a subordinate employment relationship the indemnity regime typical of fixed-term contracts does not apply, but instead the compensatory regime applies, starting from the formal notice.
A journalist, who had entered into multiple fixed-term self-employment contracts with the company over a period of almost 12 years, brought an action before the courts to obtain a finding of the existence of a permanent employment relationship, and to order the employer to pay full compensation for damages, equal to the wages accrued from the formal notice following the expiry of the last self-employment contract and until effective reemployment.
The Italian Court of Appeal partially upheld the said claim, finding, on the one hand, the subordinate nature of the employment relationship between the parties, but rejecting, on the other, the claim for compensation in the terms requested by the worker.
With regard to the latter aspect, the Italian Court of Appeal specified that, even with reference to fixed-term employment contracts that are only formally autonomous, the compensation regime typical of fixed-term contracts applies, i.e., the all-inclusive indemnity to the extent of between a minimum of 2.5 and a maximum of 12 monthly instalments.
The worker referred the proceedings to the Italian Court of Cassation, with a cross-claim by the company. The Italian Court of Cassation found preliminarily that, in relation to a permanent employment relationship, the compensation regime relating to fixed-term contracts does not apply.
According to the Italian Court of Cassation Judges the legislation relating to fixed-term contracts (providing for an amount varying from 2.5 to 12 monthly instalments) applies in the event of a declaration of unlawfulness of the term set out in the employment contract, which did not cover the present case.
The Judges held that, if a self-employment contract is reclassified – which presupposes a thorough judicial investigation conducted on the basis of indicators that reveal the parties’ rights, obligations and powers – the worker is entitled to full compensation for the damage, equal to the remuneration accrued from the formal notice until reemployment.
In the light of the foregoing, the Italian Supreme Court upheld the worker’s ground of appeal, quashing the contested judgment and referring it for a second review by the Court of Appeal.
Other related insights:
Dismissal for a justifiable objective reason is unlawful if the employer does not prove that it has offered the worker lower-level positions, even on a fixed term basis.
Before proceeding with a dismissal for a justified objective reason, the employer must demonstrate that he/she has explored all possible solutions to relocate the worker within the company.
This principle was affirmed by the Italian Court of Cassation, with order no. 18904 of 10 July 2024, thereby reinforcing employers’ repêchage obligations.
Consequently, the Court concluded that dismissal is unlawful where alternative employment positions exist at the time of termination, even in lower or fixed-term jobs, and the employer has not offered these jobs to the employee.
The Court reiterated that the burden of proving that relocation is impossible falls entirely on the employer.
Companies must therefore manage human resources carefully, documenting any attempt at relocation, to avoid a dismissal being held to be unlawful.
Other related insights:
