Six years ago, on 7 March 2015, the Jobs Act came into force, providing innovative protection if there is an unlawful dismissal for new employees under permanent contracts. At the time, this measure was considered revolutionary for the principles governing the existing protections. It intended to regulate the consequences of unlawful dismissal automatically and based on a mathematical formula. It was an ambitious project of overcoming the uncertainties of a system that had hinged on the judge’s discretion.
Based on the new rules, the scope of the debated right to reinstatement was redefined for companies with more than 15 employees. This was relegated to a residual hypothesis applicable only to the most severe cases (lack of evidence against the employee, or discriminatory dismissal or otherwise radically null and void). It gave way to compensation protection, from a minimum of four to a maximum of 24 monthly salary, which was rather low for the applicable criteria, especially in the first years of service.
At least in its intentions, the reform should have encouraged new employment and reduced the regulatory obstacles to attracting Italy’s investment.
A few years later, however, it can be said with a degree of certainty that the increasing protection had a short and troubled life.
The real economy, which is the engine of all employment development and growth forms, has not seen the hoped-for trend. It had to face the pandemic, which was unimaginable in 2015, making it impossible to see the expansive impact of increasing protection from an employment point of view over time. Regulatory measures by successive governments and, soon after by the Constitutional Court, were not long in coming, and they distorted the reform’s features, leaving little of what was initially envisaged.
The first blow to the increasing protections system was dealt with by the Dignity Decree (Decree Law no. 87/2018), which, without changing the formula for calculating the compensation due based on two months salary for each year of service, increased the compensation range from six to 36 monthly salary.
With surprising timing, a few days later, the Constitutional Court, no. 194/2018, declared the legislation unconstitutional insofar as it provided for a “rigid and automatic criterion, based on length of service” to identify the compensation due to an employee unjustly dismissed. In the Court’s view, the protection against damages required a quantification based on multiple factors (such as the parties’ behaviour and “conditions”) to be assessed at the judge’s discretion in adequately valuating compensation for the prejudice suffered by the worker.
In the space of a few weeks, the system designed to overcome discretion once again became centred on it.
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The Court of Justice of the European Union (CJEU), with its ruling of 17 March 2021 (case C-652/2019), decided on prejudicial issues raised by the Court of Milan on 5 August 2019 on the legitimacy of the collective dismissal provisions contained in the Jobs Act.
The case regards an employee hired with a fixed term contract before the Jobs Acts became effective, changed to open-ended at the end of March 2015 and then dismissed in 2017 in a collective dismissal procedure.
The employees involved in the procedure in question, including the employee, petitioned the Court of Milan which declared the challenged dismissals as unlawful, due to violation of the selection criteria. The Court granted the worker – unlike her colleagues who had been reinstated because hired with open-ended contract before the enactment of Legislative Decree no. 23/20215 (so-called Jobs Act), i.e. before 7 March 2015 – only the indemnity protection.
The Court, noting the existence of two different disciplinary systems in the event of unlawful collective dismissal resulting from the introduction the seniority-based protection contract, asked the Court of Strasbourg if a similar treatment difference was against European Union Law.
The Court of Justice recognised the conformity of Legislative Decree no. 23/2015 with European Union law, clarifying that a regime that has only one indemnity (and not also reinstatement) is not discriminatory for the worker hired with fixed-term contract before 7 March 2015 and becoming permanent afterwards. This is because the different treatment is justified by the fact that the workers involved in the seniority-based protection obtain, in exchange for a regime with less protection, a form of employment stability.
According to the Court of Strasbourg it is a type of incentive aimed at fostering the conversion of fixed-term contracts into open contracts which constitutes a legitimate objective of social and employment policy, the selection of which is fully within the discretion granted to Member States.
According to the Court of Strasbourg this consideration is in line with a decision made by the Court in 2018, which, involving basically the same issue, had considered it legitimate that the remedial legislation could be differentiated based on the hiring date.
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Art. 1, paragraph 279, of Law 30 December 2020, no. 178, extended until 31 March 2021 the possibility of extending or renewing fixed-term contracts by repealing the strict and controversial obligation to include reasons introduced in the fixed-term contracts’ general regulations by Legislative Decree no. 81/2015 ( Jobs Act), as amended by the Dignity Decree (Decree Law 87/18 as converted by Law 96/18).
This important exception, which provides newfound flexibility in the use of fixed-term contracts, was first introduced by the Relaunch Decree until 31 August 2020, extended until 31 December 2020 and further extended until next spring by the Budget Law. This “favourable” extension or renewal is allowed only once and for a maximum of 12 months, within the maximum duration limit of fixed-term employment contracts of 24 months.
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With its judgement 254 of 26 November 2020, the Constitutional Court confirmed its loyal collaboration with the Court of Justice of the European Union and declared inadmissible the constitutional legitimacy issues raised by the Naples Court of Appeal on the Jobs Act provisions related to collective dismissals which violated the selection criteria.
The reasoning for the Constitutional Court’s sentence 254/2020 reads as follows, “there is an inseparable link between the role of the Court of Justice of the European Union, called upon to safeguard respect for the law in the interpretation and application of the treaties” and the role of national courts, which must ensure”effective judicial protection in areas governed by EU law” (article 19 of the treaty). In an integrated system of safeguards, loyal and constructive cooperation between the various jurisdictions, each called upon to safeguard fundamental rights in a systemic and unbroken protection manner, plays a crucial role”.
The raised issues of legitimacy and the European Court’s ruling
Before discussing the merits of the Constitutional Court’s ruling, it should be noted that,regarding the infringement of the Charter of Fundamental Rights of the European Union rules, the Naples Court of Appeal had decided to simultaneously propose a preliminary ruling to the Court of Justice of the European Union, in order to clarify “the contents of the Chart of Fundamental Rights”, to then assume “a direct relevance in the ruling of constitutionality” and consistency with constitutional principles.
The Court of Justice ruled first which, with the order of 4 June 2020, confirmed that proposed issues were clearly inadmissible sustaining the absence “of a connection between an act of law of the European Union and the national measure in question”, a connection required by article 51, paragraph 1, of the Charter of Fundamental Rights of the European Union. This does not mean a mere similarity between the issues being examined and an indirect influence that one issue exercises on the other”.
In other words, the Court of Luxembourg did not find any connection between national legislation concerning selection criteria in the field of collective dismissals and an act of law of the European Union and therefore could not assume any position on the alleged infringement of the Charter.
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The Constitutional Court, with its ruling no. 254 filed on 26 November 2020, declared inadmissible the constitutional legitimacy issues raised by the Naples Court of Appeal on the Jobs Act provisions concerning collective redundancies which violated the selection criteria. the Board considered the judge’s reasoning on the relevance insufficient and any request for corrective action uncertain.
The Court of Appeal of Naples challenged constitutional legitimacy in relation to art. 1, paragraph 7 of Law 10 December 2014, no.; 183 and articles 1,3 and 10 of Italian Legislative Decree 4 March 2015 no. 23.
According to the Neapolitan Court, the contested provisions unreasonably introduced a differentiated sanctioning system for violation of the selection criteria within the collective dismissal procedure. Reinstatement protection was granted just for employment relationships established on 7 March 2015, while only indemnity protection was granted for later relationships.
According to the judges’ objections, this sanctioning system, was a violation of the principles laid down in articles 3, 4, 24, 35, 38, 41, 111, 10 and 117, paragraph 1, of the Constitution, and conflicted with principles of the Charter of Fundamental Rights of the European Union, better known as the Nice Charter.
Regarding the infringement of the rules of the Nice Charter, a preliminary ruling to the Court of Justice of the European Union was brought simultaneously as an issue of consistency with constitutional principles.
On 4 June 2020, the Strasbourg Court declared the action manifestly inadmissible, finding no connection between the national legislation, i.e. the selection criteria within collective redundancies and an act of Union law. It did not comment on the alleged infringement of the Nice Charter.
The Constitutional Court, in the ruling under analysis, declared the question of constitutional legitimacy inadmissible. This is because the Court of Appeal failed to (i) describe the case and provide information on the reasons for the unlawfulness of the collective dismissal of the case for selection criteria violation – and (ii) attach the elements that would support the appeal acceptance based on a selection criteria violation. This prevented the Court from assessing the relevance of the issues raised.
The Constitutional Court merely reiterated its agreement with the indications of the Court of Justice regarding the EU law scope of application. It stated that there is an inseparable link between the role of the Court of Justice, which is called upon to safeguard “respect for the law in the interpretation and application of the Treaties” and the role of national courts, which must ensure “effective judicial protection in areas governed by EU law.”
In the Board’s view, in an integrated system of safeguards, loyal and constructive cooperation between the various jurisdictions, each called upon to safeguard fundamental rights in a systemic and unbroken protection manner, plays a crucial role.
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