Judgment no. 26170 of 25 September 2025, issued by the Italian Supreme Court – Labor Division – falls within a well-established line of case law concerning co-employment (i.e. “codatorialità”) within corporate groups. With this ruling, the Court reiterates the principles for identifying a single employer within multiple formally distinct companies that are nonetheless linked by an economic and functional connection. The decision clarifies that co-employment does not necessarily require evidence of fraudulent corporate fragmentation and may arise even in the context of “genuine” corporate groups.
The core issue lies in determining whether there is such a degree of integration between the companies’ activities and such promiscuous use of the employee’s work that the employment relationship must be attributed to all entities that effectively exercise employer authority, resulting in joint and several liability (i.e. “responsabilità solidale”) for the obligations arising therefrom.
The dispute originated from a claim brought by an employee who was formally hired by one company but worked as a team leader in the call center of another entity within the same group. Following her dismissal as part of a collective redundancy procedure, the employee filed a claim before the Court of Rome, seeking a declaration of unlawful outsourcing of labor or, alternatively, of an unlawful corporate fragmentation. She sought recognition of an open-ended employment relationship with the company that had benefited from her work (the “substantial employer”).
The Court of Rome initially rejected the claim, upholding an objection based on external res judicata, arising from an earlier decision (not appealed) that had declared the collective dismissal unlawful and ordered her reinstatement with the formal employer.
The Court of Appeal of Rome, while amending the reasoning of the first-instance judgment, dismissed the appeal on the merits. The appellate court found that the employee had not demonstrated the necessary conditions for co-employment, such as a unified corporate interest based on fraudulent intent, pervasive interference eliminating corporate autonomy, or promiscuous use of the workforce. The employee then appealed to the Supreme Court.
The Supreme Court held the second ground of appeal to be well-founded, concerning incorrect application of the legal rules governing corporate groups and the identification of a single employer.
Recalling its established case law, the Court reaffirmed that an economic and functional link between companies – for the purposes of identifying a single employer – exists where specific conditions are met:
a) a unified organisational and productive structure;
b) integration between the activities of the various companies and a corresponding common interest;
c) technical, administrative and financial coordination that identifies a single directing entity guiding the companies’ activities towards a common objective;
d) concurrent use of the employee’s work by multiple companies, meaning that work is performed in an undifferentiated and simultaneous manner for the benefit of several entities.
The Court emphasised that recent case law has removed the requirement of proving fraudulent intent: co-employment may arise even in “genuine” and highly integrated corporate groups. Where promiscuous use of the workforce is established, the companies involved may be considered joint employers of the same employee. This entails the application of the framework of complex subjective obligations, with joint and several liability pursuant to Article 1294 of the Italian Civil Code.
The Supreme Court found that the Court of Appeal had incorrectly classified the facts, failing to adequately assess the indices of integration between the companies and the promiscuous use of the employee’s work – both key elements in establishing co-employment. The judgment was therefore quashed and remanded to the Court of Appeal of Rome, in a different composition, for a new assessment consistent with the principles set out by the Supreme Court.
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In the case of dismissal for objective reasons, the repêchage obligation may be limited by the fact that the dismissed person does not have the professional skills to perform the other job, even if it is of a lower level. However, this must be demonstrated by facts that are objectively established and proven by the employer.
By order no. 31561 of 13 November 2023, the Italian Court of Cassation stated, in line with the principles already established by it on the subject, that in the event of an appeal against dismissal for the abolition of the job position, and where in the period immediately following the dismissal the employer has hired new employees, albeit for the performance of different tasks, the judge is required to assess whether or not the dismissed worker was able to perform the aforementioned tasks, even if of a lower contractual level, for the purpose of possible reassignment to them with a view to preserving employment.
This assessment must be carried out not in the abstract but in practice, taking into account the company’s specific assertions on this point as well as the levels of classification governed by the applicable collective bargaining agreement.
As is well known, repêchage gives rise to the employer’s obligation to assess, before proceeding with a dismissal for justified objective reasons, whether it is possible (within the limits that we will examine below) to employ the worker in other tasks.
This obligation has arisen through case law and seeks to balance the employer’s interest in achieving an efficient organisation with that of the worker in keeping his or her job, to ensure that dismissal constitutes the last resort, also considering the importance attributed to work by our Constitution (Italian Civil Court of Cassation, Employment Division, 3 December 2019, no. 31520; Italian Civil Court of Cassation, Employment Division, 13 June 2012, no. 9656).
According to settled case law, the repêchage obligation does not extend to workers classified as executives, as it is incompatible with the executive position which is characterised by voluntary withdrawal of services (see among others, Italian Civil Court of Cassation, Employment Division, 6 December 2022, no. 36955 ; Italian Civil Court of Cassation, Employment Division, 1 February 2013, no. 3175).
Under the previous text of Article 2103 of the Italian Civil Code (which allowed horizontal ius variandi [right of employer to make changes to the contract] for “tasks equivalent to the last ones actually performed”), the extension of the repêchage obligation was initially limited to equivalent tasks only. Subsequently, in the light of some exceptions to the prohibition on demotion provided for in special cases by regulatory provisions (including Article 42 of Italian Legislative Decree of 9 April 2008, no. 81 in the case of the worker judged to be unfit for the specific task), a new line of case-law had developed. Under this new line of case law, the employer, in the absence of equivalent tasks and before proceeding with the dismissal, was required to propose to the worker, to obtain his or her potential consent, his or her assignment to lower level tasks, provided that they fell within the latter’s skill set, since it is not possible to impose the costs associated with vocational training on the employer (see among others, Italian Civil Court of Cassation, Employment Division, 3 December 2019, no. 31520, cit., in relation to a case to which the previous text of Article 2103 of the Italian Civil Code applied; Italian Civil Court of Cassation, Employment Division, 23 October 2013, no. 24037).
In any event, the case law has always been, as it still is, unequivocal in holding that the repêchage obligation refers only to the already existing organisational structure and does not require the employer to create an ad hoc alternative job position.
The new text of Article 2103 of the Italian Civil Code (as amended by Italian Legislative Decree of 15 June 2015, no. 81) allows horizontal ius variandi in tasks attributable to the same level and legal category as the last ones actually performed (paragraph 1). It also allows the assignment of tasks attributable to the lower classification level, provided that they fall within the same legal category, in the event of a change in the company’s organisational structure that affects the worker’s position (paragraph 2).
It is clear that, as evidenced by the case law, “the increased employer obligation due to the impossibility of applying repêchage in relation to inferior tasks brought about by the entry into force of Article 2103 of the Italian Civil Code, cannot, however, be considered absolute”: the obligation should be limited to “unskilled tasks, i.e. those that do not require appropriate training”, as “the obligation to assign to the worker tasks that require appropriate training would in fact mean imposing an additional financial cost on the employer” (Court of Rome, 24 July 2017).
Therefore, not all the lower-level positions in the company organisation chart are relevant, but only those compatible with the worker’s professional skills or those that have actually already been carried out, at the same time or previously (Italian Court of Cassation no. 31521/2019).
In short, the majority case law has avoided attributing to the third paragraph of Article 2103 of the Italian Civil Code, according to which the change of duties is accompanied, where necessary, by the fulfilment of the training obligation, an extensive interpretation of the repêchage obligation to the point of requiring the employer to provide the necessary training so that the worker can be usefully employed in other tasks to avoid dismissal.
On this point, it is worth mentioning a recent decision of the Court of Lecco which partially departed from this approach: the Court held that although there is no general obligation to professionally train the worker, in the event that his or her professional skills have become obsolete due to a company reorganisation, the employer, in accordance with the principle of fairness and good faith, must also assess whether it is impossible, or at least unprofitable, to provide professional retraining before proceeding with the dismissal (Lecco Court, 31 October 2022).
In the context of this legislative and case law development, the burden of proof remains on the employer. The employer must therefore attach all the documentation and factual evidence necessary to corroborate its position and, therefore, to demonstrate that there were no other job positions or that, in the context of an offer of a different position, it was the worker himself or herself who declined the new tasks from the same or different initial legal category.
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Italian Law of 30 December 2023, no. 213, containing the “State budget for the financial year 2024 and multi-year budget for the three-year period 2024-2026”, which came into force on 1 January 2024, introduced some new initiatives aimed at workers and businesses.
We summarise below some of the most significant provisions relating to employment and social security:
Employment
Social security
Six months after the entry into force of the Italian legislative decree on Whistleblowing the dedicated task forceof De Luca & Partners’, a leading law firm in consultancy and assistance in employment law, analyses its actual implementation by Italian companies.
The decree requires employers to implement a system of protection and safeguards for those who report crimes and irregularities within the context of a public or private work relationship.
According to analysis by the De Luca & Partners task force, Italian companies are still far from compliant with the provisions which, from 17 December 2023, also affect smaller organisations with between 50 and 249 employees.
The task force noted that it is primarily in the field of dedicated company procedures – such as the identification of breaches that can become the subject of a report or the recipients of the reports themselves – that companies show general non-compliance.
“Looking at companies’ behaviour to date, we notice a general tendency to underestimate the complexity of the activities to be carried out to comply with the provisions of the Whistleblowing Decree”, underlines Vittorio De Luca, Managing Partner of De Luca & Partners. “Just to mention the main areas, all aspects of the process must be detailed in specific company procedures. Companies are delaying the careful consideration necessary to assess through which system, including computerised systems, they should make reports, in full compliance with current privacy legislation. Not only that, but it is also necessary to ensure that the disciplinary code adopted is adequate to avoid invalidating any disciplinary measures taken. And this is all in the context of regulatory framework that contains two significant risks for the failure to adopt an appropriate report management process: a fine of up to EUR 50,000, and the loss of the exemptions provided for in Italian Legislative Decree no. 231/01”, adds Vittorio De Luca.
The task force launched by De Luca & Partners includes the Firm’s Compliance team and offers all aspects of legal support required by companies to adopt the procedures necessary to guarantee compliance with all aspects of the legislation.
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In order no. 29337 of 23 October 2023, the Italian Court of Cassation ruled that dismissal for objective reason in the event of refusal to work part time (or vice versa full time) is not in itself unlawful, but involves a redetermination of the justified objective reason and the burden of proof placed on the employer.
The case arose from the dismissal for redundancy of an employee who had refused the company’s offer to change her employment relationship from part time to full time.
The employee challenged the dismissal on the basis that it was not grounded on a justified objective reason and was retaliatory. The Court rejected the worker’s application, holding that the company’s reasons for the dismissal were proven.
The second instance judges, repealing the first instance ruling, accepted the appeal filed by the employee, noting, in summary, that under Article 8, paragraph 1 of Italian Legislative Decree no. 81 of 2015, “a worker’s refusal to change their full-time employment relationship into a part-time relationship, or vice versa, does not constitute a justified reason for dismissal”. The judges based their decision on the findings that the prospect of a company reorganisation by hiring a new full-time accountant to cope with an increase in work activity was to be considered specious and that, in any case, the impossibility of the company distributing an overall set of clients between the two accountants or the difficulty of finding a part-time resource in the short term had not been proved, nor had the actual inevitability of employee’s dismissal as a necessary consequence of the alleged reorganisation.
The Court of Appeal also ruled that the dismissal, in addition to being unlawful, was also retaliatory, as it was directly linked to the employee’s refusal to change the relationship from part time to full time.
Consequently, on appeal, the dismissal was declared null and void, and the company was ordered to reinstate the employee and to pay an indemnity commensurate with the last salary used as a reference for the calculation of the severance indemnity from the dismissal to the actual reinstatement, as well as the payment of social security and welfare contributions.
The company appealed against this judgment to the Italian Court of Cassation.
The Italian Court of Cassation – in repealing the ruling on the merits – specified that, in the case in question, for the purposes of justified objective reason (giustificato motivo oggettivo, ‘GMO’), the employer must prove the following:
The refusal to change the part-time employment relationship, as stated, becomes, therefore, as specified by the Court, “a component of the greater burden of proof on the employer, which includes the financial reasons which make it impossible to continue to use part-time work, and the refused full time offer”.
On the basis of these principles, the Italian Court of Cassation has, therefore, specified that it is necessary to prove not only the validity of the reasons given for the change of working hours, but also the impossibility of the employee working at a different time, as a component/constituent element of the justified objective reason, without prejudice to the fact that the appropriateness and expediency of the business decision cannot be challenged, in accordance with the provisions of Article 41 of the Italian Constitution.
The Italian Court of Cassation also ruled that, for a retaliatory dismissal, for the dismissal to be declared null and void, it is necessary that the employer’s retaliatory intent was the exclusive determining factor, also taking into consideration other relevant facts for the purposes of establishing just cause or a justified reason for termination, with the burden of proof falling on the employee.
As the decision of the lower court was not consistent with these principles, the judges of the Italian Court of Cassation accepted the appeal brought by the company, referring the case to the lower court sitting in a different composition.
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