With the recent judgment No. 20284 of 14 July 2023, the Italian Court of Cassation ruled that, even though not specifically provided for in the disciplinary code, breaches by the employee of the fundamental duties underlying the employment relationship are valid grounds for dismissal.
The facts of the case
An employee working as a Level I salesperson was dismissed by the employer company due to his constant failure to meet the production targets periodically set by the company.
The employee challenged the dismissal before the Court, which – by comparing the results achieved by the employee with the targets set by the company schedules – confirmed the unequivocal poor production performance of the worker. Therefore, the Judge hearing the case declared the dismissal to be lawful, classifying it as dismissal for a justified subjective reason.
The worker appealed the ruling before the Rome Court of Appeal, where he argued that the dismissal was unlawful due to the failure to display the disciplinary code in the company.
In this regard, the Court, in upholding the judgment of first instance, held that the failure to display the disciplinary code in the company was irrelevant for the purposes of determining the nature of the dismissal, since the worker was charged with negligent and inexperienced failure to fulfil his obligations under the employment contract, and that the dismissal was based on the worker’s poor production performance resulting from his constant failure to comply with the work schedules previously established.
For the Court, moreover, for the purposes of assessing the seriousness of the misconduct, previous disciplinary records that indicate the worker’s repeated offences must also be taken into account.
The worker therefore challenged the judgment of the Court of Appeal before the Italian Court of Cassation.
The decision of the Italian Court of Cassation
When confronted with the issue, the Italian Court of Cassation confirmed the rulings of the lower courts on the lawfulness of the dismissal.
First of all, the Judges of the Italian Court of Cassation reiterate that the power to terminate the employment contract in the event of significant breach of contractual obligations stems directly from the law (Article 3 of Italian Law No. 604 of 1966) and does not require, in order for it to be lawfully exercised, a detailed provision, in the collective bargaining agreement or in the company disciplinary regulations, of every possible instance of conduct constituting the above requirement. Indeed, it is for the judge to verify, if the lawfulness of the termination is contested, whether the alleged incidents constitute a legal case of non-performance.
For this reason, continues the Court, even if not specifically provided for by the contractual provisions, serious breaches of the fundamental duties associated with the employment relationship constitute grounds for valid notice of withdrawal; in particular, those duties that underpin the existence of the employment relationship, such as the duties imposed by Articles 2104 and 2105 of the Italian Civil Code (obligations of diligence and loyalty) as well as those deriving from company policies.
Therefore, according to the Italian Court of Cassation, with regard to disciplinary sanctions, a distinction must be made between offences relating to the breach of specific rules concerning company organisation and production methods, which can only be recognised insofar as they are expressly provided for, and offences relating to conduct that is manifestly contrary to the duties of workers and the interests of the company, for which specific inclusion in the disciplinary code is not required.
With regard to the disciplinary code, the judges reiterate that it must, in any event, be drafted in such a manner as to make the cases of infringement clear, although by providing an outline and not a detailed description, and to indicate the corresponding penalties, albeit in a general manner and which can be adapted based on the actual and specific non-compliance.
Ultimately, therefore, the aforementioned judgments uphold the lawfulness of the employer’s termination of employment even where the alleged breach of contract does not constitute a case that is expressly set out in the company’s disciplinary code or in the national collective bargaining agreement, but takes place by infringing the duties underlying the employment relationship.
Other related insights:
By Order of 6 April 2023, No 9453, the Italian Court of Cassation ruled on the subject of dismissal for poor performance. The Court clarified that this type of dismissal falls within the scope of dismissals for justified subjective reasons resulting from a significant breach by the worker of his/her contractual obligations. In this context, the employer must provide proof that the failure to achieve a predetermined result – which does not in itself constitute a breach of contract – results from a clear breach of the duty of diligent cooperation owed by the employee which is attributable to him/her.
The facts of the case and the judgment on the merits
On 5 July 2016, a worker in the Development Department of a banking institution was dismissed for just cause on the basis of five disciplinary charges. One of these charges related specifically to poor performance, alleged for the period from November 2015 to April 2016. For this period the bank had compared the small number of visits to branches and customers made by the worker involved in the disciplinary proceedings with the production figures of other colleagues working in the same office and with the same duties, which were found to be significantly higher.
In the context of the Fornero Procedure (Rito Fornero) and with particular reference to the charge of poor performance, the Court of Treviso, while ascertaining that there had been a breach of principle of promptness of the disciplinary notice, confirmed that there had also been poor performance. Therefore, on this basis, the Court limited the worker’s protection to the indemnity for damages under Article 18, paragraph 6 of Italian Law No 300/70, in the amount of 12 months’ salary.
In opposition proceedings under Article 1, paragraph 57 of Italian Law No 92/2012, the Court of Treviso confirmed the existence of poor performance which, overcoming the objection of breach of promptness of the disciplinary notice, was sufficient to justify the termination for poor performance. That being so, that Court – referring to the provisions of the CCNL (Contratto Collettivo Nazionale di Lavoro, national collective bargaining agreement) applied to the employment relationship – converted the dismissal for just cause into a dismissal for justified subjective reason, ordering the employer to repay the indemnity for damages under Article 18, paragraph 6 of Italian Law No 300/70 referred to above, net of the indemnity in lieu of notice.
On appeal, the regional Court of Venice upheld the first instance judgement of the Court of Treviso, considering the breach alleged against the worker to be of considerable significance, also taking into account the lack of objective evidence provided by the worker to justify his reduced activity.
The judgment of the Italian Court of Cassation
The worker appealed to the Italian Court of Cassation against the decision taken by the Venice Court of Appeal, which the bank resisted with a counter-appeal.
With particular reference to the issue of poor performance, the Italian Court of Cassation, on the basis of its own precedents, confirmed that dismissal for poor performance falls within the category of dismissals for justified subjective reasons, in respect of which the employer has the burden of proving not only the failure to achieve the expected result, but also that it is attributable to a culpable and negligent breach of the worker’s obligations arising from the underlying employment relationship.
In this case the Italian Court of Cassation agreed with the finding made by the Court of Treviso, noting that the worker’s performance was inadequate in view of the small number of visits made to customers and taking into account the acquisition of only one customer in the period of time taken into consideration by the employer, which, compared to the production data of the other colleagues, had led the judge of first instance to find poor performance and its seriousness.
On the subject of proof, the Italian Court of Cassation found that the Venice Court had correctly ‘assessed the breach of contract alleged’ against the appellant, ‘once the scenarios alleged by the worker (…) that could have at least partly justified it had been excluded’. Moreover, the Italian Court of Cassation, again referring to its own precedents, specified that, for the assessment of the seriousness of the breach, deviation by the worker from any ‘parameters for ascertaining whether the service was performed with average diligence and professionalism’, taking into account that the activity was performed for ‘an appreciable period of time’, ‘may constitute a signal or indication of inadequate performance’.
In support of this view, the Italian Court of Cassation referred to another of its precedents (Italian Civil Court of Cassation, Employment Division, judgment No 18678 of 4 September 2014) which confirmed the lawfulness of a dismissal for poor performance of a worker who had been found to have committed a ‘clear breach of the diligent cooperation due from him’ and which was attributable to him, ‘as a result of the enormous disproportion between the objectives set by the production programmes for the worker and what was actually achieved in the reference period, taking into account the average activity among the various employees and regardless of the achievement of a minimum production threshold’.
On the other hand, with regard to the short period of time considered for the purpose of assessing the breach of contract, the Italian Court of Cassation rejected the appellant’s arguments, especially in view of the fact that the evidence offered by the employer (i.e., the comparison of the data of the dismissed worker’s activity with those of his colleagues) had revealed ‘a very significant disproportion between the performance of the present appellant and that of several of his colleagues in the same development office; a disproportion which, in turn, can clearly constitute a significant breach of the worker’s contractual obligations’.
The worker’s appeal was therefore dismissed and he was ordered to pay the costs of the proceedings.
Other related insights:
Dismissal for poor performance is unlawful if based on conduct previously raised against the worker
Our partner Alberto De Luca participated in the 31st Annual Meeting and Conference of the Inter-Pacific Bar Association (IPBA). Alberto took part in the panel discussion entitled: ”Lawyer, I want to fire an employee in another country for poor performance. How do I do this and what are the risks?”
The discussion dealt with an Employment law survey report, involving almost 30 countries from around the world, and which focused on alternative dispute resolution (ADR) for employment disputes and on the employment process.
During his talk, Alberto addressed guiding clients through redundancies and employment dispute resolution around the world, considering the options, processes, and potential legal risks associated with a regional or global workforce, giving specific attention to:
More comprehensive information. Reference to collective agreements is insufficient
The legislative decree implementing the European Transparency Directive (no. 2019/1152), which must be transposed by 1 August, guarantees workers detailed knowledge of the employment conditions and minimum guarantees of predictability in the conduct of the relationship. Referring to the sector’s collective agreement, which is the case in most existing employment contracts, will not be enough.
These disclosing obligations must be fulfilled in writing by the employer, before the commencement of work, either directly in the employment contract or by providing a copy of the relationship establishment notification. Certain information may be provided within seven days or the month following the commencement of work.
Any change to the employment contact that occurs after employment must be notified in writing to the employee by the first day on which the change takes effect.
The new disclosure requirements will apply to newly hired employees and co-workers, and existing employees, if requested.
Workers complaining about violation of rights under the implementing decree and Legislative Decree 152/1997, without prejudice to the right to take legal action, can: attempt at conciliation at the National Labour Inspectorate local offices; conciliation and arbitration boards; arbitration chambers set up at the certification bodies under Article 76 of Legislative Decree 276 of 2003.
The draft decree emphasises the prohibition of retaliatory dismissal by the employer due to the worker’s legitimate complaints about the fulfilment of disclosure obligations.
If the worker appeals to the Employment Tribunal claiming to have suffered a dismissal or prejudicial treatment as retaliation following the exercise of the rights under the decree, the burden of proving that the dismissal or other measures were taken for reasons other than retaliation will fall on the employer.
Continue reading the full version published on Il Quotidiano del Lavoro of Il Sole 24 Ore.
In ruling no. 315 of 12 April 2022, the Court of Appeal of Bologna stated that in the subordinate employment relationship, the time required to wear the company uniform is part of working time only if it is subject to the employer’s control. This may derive either from the “explicit” company regulations or, implicitly, from the nature of the garments or their function, such as to determine an obligation to wear the uniform in the workplace. This offers the opportunity to look at recent Court of Cassation case law, particularly the hetero-direction indexes
Before examining the ruling of the Court of Appeal of Bologna 12 April 2022, no. 315 and its placement in the reference case law, it is helpful to look at the reference legislation.
Regulatory reference
Under Art. 66/2003 in art. 1, paragraph 2, letter a, the term working hours means “any period during which the employee is at the employer’s disposal and performing their work or duties.” Working hours include not just the employee’s performance but operations that are part of it and must be performed by the employee in the manner established by the employer.
It is established in case law that hetero-direction may be inferred from other indexes, such as explicit company regulations or the clothing’s nature and function when it is different from that used or usable in everyday life (Court of Cassation, Labour Section, Order, 20/06/2019, no. 16604; Court of Cassation labour section Ruling 26/01/2016, no. 1352).
Under explicit company regulations, hetero-direction may arise from the company’s obligation to wear the uniform in the workplace and to leave it on company premises.
In some cases, hetero-direction may be inferred from the garments’ nature and function. For example, the uniforms of nurses working inside health care facilities are under employee and public hygiene and safety requirements and must be worn and disposed of at the workplace before the shift’s start and end without being taken outside. This is imposed by unavoidable employer requirements (and public health protection), and must be paid work time since the employee does not have the option of wearing the uniform at home (Court of Cassation Order of 1 July 2019, no. 17635).
Similarly, the canteen caretaker must wear the uniform in company changing rooms that are spatially contiguous to the canteen for health reasons, although the contractual regulations do not calculate the changing as being part of working hours
The garment’s nature may constitute a subsidiary index for establishing hetero-direction. The key criterion is the employee’s submission to a contractual provision (National collective Labour Agreement or supplementary company contract) or company provision (such as, company regulations or a service order) for uniform time and place.
Facts of the case and first instance ruling
Several employees of a company operating in the chemical sector brought an action before the local Court to obtain an order to pay them remuneration for the time (20 minutes a day), spent changing and showering .
The Court upheld the appeal based on the following arguments: “hetero-direction may derive from explicit company regulations, but may be implicit due to the clothing nature when it is different from that used or usable according to ordinary social criteria.” The Court cited an Order of the Court of Cassation that referred to the case of nurses (Court of Cassation, Labour Section, Order of 07/05/2020, no. 8627).
Based on this assumption, the Court held that “the hetero-direction for changing can derive from specific or implicit instructions inferred from the situations in which work takes place and its features. This is regardless of whether the clothing can be considered PPE or clothing used for hygiene reasons.”
According to the Court, “The evidence univocally lead to the conclusion that in the operating departments the worker gets dirty and the type of work makes this inevitable. Arriving from home and returning with the worker’s clothes after the end of the shift appears to be an abstraction, regardless of the PPE, which, due to its features, exclude its use outside work.”
According to the Court, “this is a de facto situation where changing at work is an obligation due to the type of work. This means that even without unequivocal and explicit hetero-directed instructions, it is implicitly necessary to carry out this commitment in the work environment” as if the hetero-direction were in re ipsa due to the type of work.
Continue reading the full version published in Modulo24 Contenzioso Lavoro of Il Sole 24 Ore.
