In judgment no. 35066 of 14 December 2023, the employment division of the Italian Court of Cassation confirmed that an employee’s conduct outside work can irreparably damage the duty of mutual trust between the parties if it has only the potential objective capacity to impact the relationship and undermines the expectations of the future proper fulfilment of the working obligations, in relation to the specific duties or the specific activity.
The case on which the Court was asked to rule arose from an employee’s dismissal for just cause. The employee was a team leader with coordinating duties, who had, at different times, engaged in abusive and, moreover, violent relationships outside work with two female colleagues, demonstrating to them that he was immune from limits and discipline, also in view of his position. Such conduct, in the view of the employer bank, had been seriously prejudicial to the female colleagues and to the bank itself.
The first instance judges upheld the lawfulness of the dismissal, on the basis that the conduct alleged against the worker qualified as harassment at work and, as such, justified the sanction of dismissal.
The worker has appealed to the Italian Court of Cassation, alleging, among other grounds, misapplication of Article 2105 of the Italian Civil Code, on the basis that his conduct to be taken into consideration should refer only to the private (or rather outside work) context and consequently, on the one hand, is not relevant for disciplinary purposes and, on the other hand, cannot prove a breach of the duty of mutual trust as it cannot be used to call into question the proper performance of the employee’s duties.
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With Order no. 31660 of 14 November 2023, the Italian Court of Cassation ruled on a dismissal for a justified objective reason based on the need to cut costs. In this case, the employer had not demonstrated that the costs savings should be those specifically relating to the dismissed worker’s position rather than other positions that were more “expensive” than the one affected by the dismissal. The Italian Court of Cassation, hearing the case, established that for the purposes of ascertaining the lawfulness of a dismissal because of a general need to cut costs, the reasons why the employer chose a particular worker must be assessed. In this regard it is also necessary to consider other job positions, especially if they are comparable to the one abolished, to verify the existence of the causal link between the alleged organisational reason and the abolition of the job. Following the majority approach, the Court therefore ruled that if the dismissal for a justified objective is imposed to cut costs, the burden is on the employer to indicate the reasons why the particular worker has been chosen. .
In its very recent judgment no. 2274 of 23 January 2024, the Italian Court of Cassation ruled that it is lawful for an employer to give notice of a second dismissal pending a judgment concerning a previous dismissal based on different grounds. However, the second dismissal has no effect if the first dismissal is declared lawful by a final judgment.
An employee, pending proceedings relating to a first dismissal, brought legal proceedings challenging a second disciplinary dismissal imposed on him by his employer.
The proceedings relating to this second dismissal were settled by the so-called ‘summary phase’ of the Fornero Proceedings with the annulment of the dismissal as only one of the alleged facts had been proven.
Both the employee and the employer appealed against the summary phase order.
The two sets of appeal proceedings were not joined and ended with two separate judgments, both declaring the invalidity of the supervening second dismissal. This was because, pending those judgments, the first instance court had held the first dismissal to be lawful and, subsequently, the Court of Appeal, again with reference to the first dismissal, had declared the worker’s appeal inadmissible.
The two judgments delivered in the context of the appeal phase relating to the second dismissal were appealed against by both the employer and the employee.
The Court of Appeal – following the intricate procedural sequence of events summarised above – declared the second dismissal invalid on the basis that there had been a judgment, albeit not final, which had affirmed the lawfulness of the first dismissal.
The employer appealed to the Italian Court of Cassation against the Court of Appeal’s decision.
Pending the appeal to the Italian Court of Cassation proceedings relating to the second dismissal, that court also ruled on the first dismissal, confirming its lawfulness.
In the judgment under discussion, the Italian Court of Cassation judges therefore noted, preliminarily, the loss of interest on the part of the employer in insisting on the annulment of the ruling declaring the invalidity of the second dismissal, because such ineffectiveness was now to be considered confirmed by the final judgment.
It was only to rule on the costs of the proceedings that the Italian Court of Cassation upheld the employer’s appeal on the following grounds.
In the first place, the Court ruled that, in an employment relationship, the employer, if it has already given the employee notice of dismissal, may lawfully give notice of dismissal for a second time, based on a different ground or reason, because the latter is completely autonomous and distinct from the first.
According to the Italian Court of Cassation judges, both acts of withdrawal are in themselves theoretically sufficient to achieve the purpose, since the second dismissal is effective only in the event that the previous dismissal is held to be invalid or ineffective by a final judgment.
It follows that the Court of Appeal should have ruled on the lawfulness or otherwise of the second dismissal, since the judgment relating to the first dismissal had not – at the time – yet been concluded with a final judgment.
The Italian Court of Cassation, accepting the appeal brought by the employer, consequently ordered the employee to pay the legal costs of the proceedings.
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By Order no. 35527 of 19 December 2023, the Italian Court of Cassation ruled on the dismissal of a working mother ordered as a result of the cessation of the employer’s business activity following a declaration of bankruptcy, holding it to be void and ordering the employer to reinstate the employee and pay financial compensation.
In this case, the worker was dismissed by the receiver, shortly after returning from the period of compulsory maternity leave and before her child turned one year old, due to the declaration of bankruptcy of the Cooperative, her employer.
The worker challenged the dismissal before the Court of Arezzo claiming that the dismissal was void as notice was given within a year of her son’s birth. The Court accepted the worker’s claim, declared the dismissal null and void and ordered the receiver to reinstate the employee and to pay her compensation commensurate with her final salary.
The receiver appealed the decision to the Florence Court of Appeal, which confirmed the first instance judgment.
The Italian Court of Cassation, hearing the case, examined the concept of “cessation of business activity” provided for by Article 54, paragraph 3, letter b) of Italian Legislative Decree no. 151/2001 as one of the exceptions from the general prohibition on the dismissal of working mothers within a year of the birth of their child.
In particular, the Court examined the scenario in which the interim continuation of the business activity is not ordered with the bankruptcy ruling, nor subsequently authorised by the bankruptcy judge, in a context in which, after the bankruptcy, “it had been demonstrated that the liquidation activities had not begun and that, instead, protective activities were underway for the purpose of transfer to third parties (which is why a selection process of personnel to be retained in service was being carried out)”.
The Court noted that, from a comparison of the bankruptcy legislation and Article 54, the judgment declaring bankruptcy implies the formal cessation of the business activity (except for any authorised interim continuation), while the concept of cessation underlying Article 54 has a different scope.
In the Court’s opinion the exception to the prohibition on dismissal in the event of “cessation of the business activity” operates only in those cases in which there is no possibility, for whatever reason, of the continuation of the business. The Court noted that this is based on the over-riding protection of the rights of the mother-worker with respect to financial rights, which are safeguarded by the equal treatment of creditors principle in bankruptcy proceedings.
In recalling previous rulings on the topic, the Court, with the judgment in question, clarified that the exception provided for by Article 54 is subject to “precise and circumscribed limits” and that “because the termination of the relationship is an extraordinary or necessary event”, the exception cannot be interpreted expansively (Italian Court of Cassation no. 13861/2021). Therefore, the Court concluded, the exception to the prohibition on dismissal operates when the following two conditions are met: (i) the employer is a company and (ii) there is cessation of the business activity, with the burden of proof falling on the employer.
In the present case, in light of the fact that the business activity of the bankrupt Cooperative could not be said to have ceased, the worker’s dismissal was not considered to comply with the legal principles mentioned above and, for this reason, was therefore considered unlawful.
With Order no. 31660 of 14 November 2023, the Italian Court of Cassation ruled that, when dismissal for justified objective reason (giustificato motivo oggettivo, ‘GMO’) is to reduce costs, the burden is on the employer to indicate the reasons why the particular worker has been chosen.
The employee appealed the dismissal for abolition of his job position before the Court. The reason given by the employer was based on the need to reduce costs, as part of a policy to remedy the budget deficit.
The Italian Court of Appeal, rejecting the complaint filed by the worker against the judgment handed down by the first-instance judge, ruled that, “having established the budget deficit, the dismissal of the worker was necessarily linked to the need to achieve savings in a particular area of work”.
In relation to the worker’s submissions which related to the fact that another, more costly job had not been eliminated, the Territorial Court stated that these were “unchallengeable employer decisions”.
The Court of Appeal’s decision was appealed by the worker on multiple grounds.
The Italian Court of Cassation – accepting the appeal filed by the worker – ruled that, in the context of a dismissal for justified objective reason, the actual existence and extent of the organisational and/or business reason linked to a cost reduction policy must be assessed.
This assessment cannot be separated from the assessment of the necessary causal link between the objective reason given and the abolition of the job position.
This is because, where a general need to proceed with a cost-reduction policy has been argued, it becomes necessary to analyse (and the burden is on the employer to provide the relevant proof) the reasons why a particular worker has been chosen.
This analysis – in the opinion of judges of the Italian Court of Cassation – should not be considered to be undue interference in the discretion of employers’ choices, because the non-existence of the economic reason raised affects the very lawfulness of the dismissal “not because it is a review of the reason underlying the justified objective reason, but because it gives rise to a factual assessment of the lack of truthfulness or the pretextual nature of the reason given by the employer”.
Since no such analysis was found in the contested judgment on the merits, the Italian Court of Cassation then upheld the employee’s appeal and set aside the judgment of the Court of Appeal by referring the case back to the Court of Appeal.
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