With judgment No 6902 of 8 March 2023 (which follows two further similar rulings: judgments No 5788 and No 5796, both dated 24 February 2023, of the Italian Court of Cassation), the Italian Supreme Court of Cassation ruled that the transferred employee, who sees the employment relationship with the transferor judicially restored, is not entitled to remuneration for the period between the date of transfer of the business branch and that of the publication of the judicial provision declaring the illegitimacy of the aforementioned transfer and can obtain compensation for the damage suffered due to the unjustified refusal of the transferor employer to receive his/her service only starting from the moment in which formal notice was provided to the transferor employer.
The facts of the case and the proceedings in first and second instances
Following the transfer of a business branch – subsequently declared unlawful in the context of separate proceedings – a transferred employee summoned the transferor company before the Court, seeking for the latter to be ordered to pay the damages consisting of the difference between what the employee transferred would have received if the transfer had not been implemented and how much, however, he received from the transferee.
As part of the proceedings, it was ascertained that the transferor company’s formal notice by the transferred employee occurred only after the judgment which had declared, with effect ex tunc, the illegality of the transfer.
The Court of Appeal upheld the employee’s request, ascertaining the right of the transferred employee to compensation for the damage suffered as a result of the invalid transfer, for the period from the date of the transfer and until the formal notice.
The ruling of the Italian Supreme Court
The transferor Company appealed to the Italian Court of Cassation against the judgment rendered by the Italian Territorial Court, challenging the contested judgment for having recognized amounts by way of compensation for damages also for the period prior to the formal offer of work by the transferred employee.
The Italian Court of Cassation – overturning the decision of the Court of Appeal – noted that, in the time span between the transfer to the transferee’s employment and the judicial assessment of the illegitimacy of the transfer, the lack of work performance in favour of the transferor excludes the right to receive remuneration from the transferor.
According to the Judges of the Court of Cassation, for this period, the transferor can only be held liable for compensation for any damages commensurate with the lost wages.
All of this, however, on condition that the transferred employee has previously taken steps to give formal notice to the employer, remaining available to perform his services or by enjoining the employer to receive the service.
And in fact – continues the Court – only from the moment in which the employee has taken steps to give formal notice to the transferor employer, the same will be able to obtain, pursuant to Article 1217 of the Italian Civil Code, compensation for the damage suffered due to the unjustified refusal of the employer to receive it, deducting any aliunde perceptum.
On these assumptions, the Italian Supreme Court therefore upheld the appeal filed by the transferor company, declaring that no compensation for damages was due to the employee for the period between the transfer and the formal notice of the transferor company.
Other related insights:
The Court of Cassation rules on business branch transfers
Contract term ineffectiveness if there is a company transfer
Italian Legislative Decree no. 24 of 10 March 2023 (the ‘Decree’), implementing Directive (EU) 2019/1937 and ‘on the protection of persons who report breaches of Union law and containing provisions concerning the protection of persons who report breaches of national regulatory provisions’ (so-called Whistleblowing Directive),has been published in the Italian Official Gazette no. 63 of 15 March 2023.
The provisions referred to in the Decree apply, among others, to entities in the private sector that in the last year:
Entities in the private sector, having heard the trade unions’ representatives or organisations, must set up and activate internal reporting channels that guarantee the confidentiality of the identity (i) of the reporting person, (ii) of the person concerned or of the person in any case referred to in the report as well as (iii) the content of the report and related documentation.
The management of the internal reporting channels can be entrusted (i) internally, to a person or to an autonomous internal office dedicated to this and made up of personnel specifically trained for the management of the reporting channel or (ii) externally to a third party, also autonomous and with specifically trained personnel. Furthermore, specific procedures for managing the internal reporting channels are envisaged which must be promptly implemented and applied by the employers and the information relating to the channel, the procedures and the conditions for making reports shall be displayed and made easily visible to all recipients.
Any processing of personal data must be carried out in compliance with current legislation on the protection of personal data, today represented by Regulation (EU) 2016/679 (the ‘GDPR’) and by Italian Legislative Decree 196/2003, as amended by Italian Legislative Decree 101/2018 (the ‘Privacy Code’). Employers addressees of the new legislation must therefore adopt all the necessary formalities required by the legislation on the subject of protection and safeguard of personal data processed.
For the violation of the provisions of the Decree, the imposition of administrative sanctions ranging from EUR 10,000 to 50,000 is envisaged:
Penalties ranging from EUR 500 to 2,500 are also envisaged in the cases in which the criminal liability of the whistle-blower for the crimes of defamation or slander is ascertained.
The provisions of the Decree take effect from 15 July 2023 (17 December 2023 for companies with over 249 employees).
Other related insights:
De Luca & Partners signed off on the Italian pages of the Employment & Labour Law guide, 2022 edition published by English publisher Global Legal Insights. The volume gathers information and analysis on employment trends, changes in the legislative framework, relevant rulings, and reforms in progress and under discussion in 18 countries. Aimed at General Counsel, HR professionals, lawyers, advisors and managers who wish to have a series of useful global snapshots on relevant labour law issues, the Employment & Labour Law guide is now online.
Request the pdf of the Italy chapter by filling out the form below.
Alberto De Luca contributed to the drafting of the chapter dedicated to Italy in the “Labour & Employment” guide published by Lexology, illustrating the main legislative and jurisprudential news in a labour law manner and providing his point of view.
Click here to read more.
Also this year, De Luca & Partners participated in the drafting of the 8th edition of the Employment & Labour Law volume, which is part of the Global Legal Insights collection.
The eighth edition of the Employment & Labour Law guide, updated to 2020 and extended to 28 countries around the world, was made available a few days ago. The book, published in English by Global Legal Group publisher, is a summary of the trends in the labour market, legislative changes, recent court judgments, employers’ decisions in terms of dismissals and redundancies and ongoing and upcoming reforms in the various jurisdictions.
Request the pdf of the chapter Italy by filling out the form below.
