With Order of 23 January 2023, No 1965, the Italian Court of Cassation stated that, for the purposes of applying the collective dismissal procedure referred to in Italian Law 223/1991, the size requirement of at least 15 employees must refer to the company as a whole and not to the single production unit.
In the case examined by the order in question, the worker had been fired for a justified objective reason. The Court of Catania had declared the dismissal unlawful since it was ordered without observing the procedure for collective dismissals referred to in Italian Law 223/1991.
The Court of Appeal of Catania confirmed the decision of the judge of first instance and, therefore, the reinstatement of the employee.
The judges of the Italian Court of Cassation, in confirming the lawfulness of the worker’s dismissal, pointed out that the size requirement in the collective dismissal procedure must be assessed with reference to the company as a whole and not to individual territorial business units.
According to the Italian Court of Cassation, from a literal interpretation of Article 24 of Italian Law 223/1991, under Article 12 of the Italian general provisions on the law, the legislator’s intention emerges from the fact that the term ‘undertaking’ is not to be confused with the concept of ‘production unit’ referred to in Article 18 of Italian Law 300/70.
This conclusion can also be reached on the basis of the rationale for the provisions on collective dismissal the purpose of which is both to protect the worker as an individual but also to eliminate or reduce the social impact of the measure imposed on all workers.
Therefore, given the diversity of the interests protected, Italian Law 223/1991 cannot in any way be superimposed on Article 18 of the Italian Workers’ Charter which, for the purposes of offering real protection, requires the assessment of the size requirement in the production unit of the dismissed employee.
In the light of the principles set out above, the Court rejected the company’s appeal, confirming the unlawfulness of the dismissal and, consequently, the employee’s right to reinstatement.
Other related insights:
On 23 September, Decree Law 144/2022 ( Aiuti-ter (Aid ter) decree) was published on the Official Gazette. The Decree introduced significant changes which benefit workers and established new and different allowances for employees, self-employed workers and other categories. This is additional to the provisions of the Aiuti (Aid) decree (Decree Law 50/2022) and modifies the rules introduced by the Budget Law 2022 on production termination of large companies.
Among the many important changes introduced by the aiuti-ter decree, relocations are the most significant.
Budget Law 2022 (Law no. 234 of December 2021), introduced a new and complex procedure into our legal system, for companies with at least 250 workers. This preserves the employment and production fabric. During business termination or reduction, the employers must initiate a consultation procedure and submit and discuss a plan for limiting the employment and financial fallout, with trade union representatives, the involved regions, Ministry of Labour, Ministry of Economic Development and ANPAL.
With the entry into force of the aiuti-ter decree, the government made some restrictive changes to the budget law procedure. The decree requires the reimbursement of public subsidies, grants, and financial aids or advantages by the beneficiary production plants which terminate or downsize their business.
Decree changes analysis.
The “relocation” procedure timeframes were extended.
The period following the consultation procedure commencement was doubled (from 90 to 180 days). During this period any dismissal notified by the employer is null and void.
The period during which the employer and trade unions, regions, ministries of labour and economic development, and ANPAL must discuss the above plan was quadrupled (from 30 to 120 days).
A provision contained in the original rule was removed. This stated that, if a collective dismissal procedure was initiated following the failure to sign the plan, the ordinary duration of the mandatory consultation would have been reduced from 75 to 30 days. With the aiuti-ter decree, any collective dismissal procedure under Law no. 223/91 must be followed.
The penalty for the increased dismissal tax is raised by 500 per cent if the trade unions do not sign the plan.
The regulation introduced an obligation to repay public subsidies received in the previous ten years by production plants subject to layoffs or downsizing and calculated proportionally to the staff reduction percentage. The provision applies if the staff reduction is more than 40 per cent of personnel employed on average in the last year, nationally or locally, or in the department subject to relocation or closure.
In ruling no. 11638 dated 11 April 2022, the Court of Cassation established that the single company attribution in the employment relationship implies that the verification of the redundancies must be carried out considering the entire workforce, i.e., the workers employed by the other companies of the established individual company organisation and not only those of the formal employer company.
In the first and second instances, the existence of a single company organisation between two defendant companies was established, and the dismissal of a worker because of a collective dismissal procedure activated by his formal employer company was declared illegitimate.
According to the Court, the worker’s redundancy was attributable to the employment situation including the employees of the other defendant company already acquired and owned by the first company.
This circumstance, according to the court, entailed the need that the verification of redundancies in the collective procedure initiated by the formal employer, should be carried out considering the workers employed by the other company and not only those of the formal employer.
The losing companies appealed against the Court’s ruling in cassation, relying on four pleas in law, which the worker opposed with a counter-appeal.
The Court of Cassation held that the assessment made by the local Court as to the existence of a single company attribution was above reproach.
In the Court of Cassation’s opinion, the established elements of connection between the companies went beyond the implications of a simple synergy between associated companies in terms of features and purposes. These elements encroached on an interpenetration of means and activities, where the latter is indicative of substantial subjective unity and of an individual decision-making centre.
The unavoidable consequence of the single employer attribution is, according to the Court of Cassation, the need for the collective procedure to involve the workers of the individual company organisation resulting from the integration of the two companies, this is because the prerequisites for limiting the number of workers to be dismissed to the sole workforce of the formal employer have not been deduced and proven.
Given the above, the Court of Cassation dismissed the appeal and ordered the two companies to pay the costs of the proceedings
Other related insights:
The Court of Cassation, with order no. 118 of 7 January 2020, on the subject of collective redundancy, stated, recalling its own consolidated case law, that the choice of workers to be dismissed cannot fall exclusively on the personnel assigned to the department or sector eliminated or reduced. There must, in fact, be objective business needs underlying the choice of those subjected to the restructuring project. And the burden of proof of the existence of such reasons lies with the employer.
Facts of the case
Both the Judge at first instance and the Court of Appeal had declared unlawful the dismissal of a worker in the context of a collective redundancy procedure, declaring the employment relationship terminated and ordering his former employer to pay twenty months’ salary as compensation, in addition to the reimbursement of legal costs.
As the basis of the decision, the Court of Appeal found that the trade union agreement signed made it possible to consider that the reasons put forward by the company to demonstrate the abolition of the department to which the worker was exclusively assigned existed. However, this agreement could not be regarded as sufficient to remedy the obligation not to limit the scope of choice to the department abolished. According to the District Court, the company should have compared the worker with the workers employed in the other departments. This was because he had shown that he had a number of skills similar to the workers in question (repêchage rule) and he was physically fit to be compared with them. Finally, in the Court’s view, the compensation under Article 18 of Law 300/1970 provided for following the termination of the relationship did not require the deduction of either the aliunde perceptum [refers to the event in which the employee has earnings from other employment undertaken in the meantime] or the aliunde percipiendum [refers to the event in which the employee has not sought other employment in the meantime].
The unsuccessful company appealed to the Court of Cassation against the decision of the Court of Appeal with only one ground of appeal. The applicant resisted with a counter-appeal.
The decision of the Court of Cassation
By its ground for appeal, the company argued that (i) in a collective redundancy procedure the repêchage obligation does not apply and (ii) in the presence of a trade union agreement, there is no need for comparison with departments other than the one to be abolished.
The Court of Cassation, citing its own precedent, first of all stated that “in the matter of collective redundancy for reduction of staff, where the company restructuring project relates exclusively to a production unit or a specific sector of the company, the pool of workers concerned may be limited to those employed in a given department or sector only on the basis of objective company requirements, in relation to the company restructuring project, and it is the burden of the employer to prove the fact that it determines the objective limitation of those requirements and to justify the narrowest possible space in which the choice was made; with the consequence that the choice of workers cannot be considered lawful only because they are employed in the operational department abolished or reduced, neglecting the possession of professionalism equivalent to that of employees in other organizational units“.
In the present case, in the Court’s view, it was the company’s obligation – since the employee had demonstrated that he possessed many professional skills acquired during the course of the employment relationship – to compare him with the employees of the other departments remaining in operation.
That said, the Court of Cassation, again recalling its own precedent, has observed that in the matter of collective redundancies, the employer and trade unions can sign an agreement to regulate the placement of redundant workers in mobility also by establishing conditions different from the statutory ones, provided that the requirements of objectivity and rationality are respected. This is because the agreement fulfils a function duly delegated by law.
However, in the present case, according to the Court of Cassation, the agreement reached between the parties did not comply with those requirements, because in providing for the redundancy of the worker it did not take into account his documented professionalism and the positions he could have occupied.
In view of all the above, the Court of Cassation rejected the appeal and ordered the Company to pay the costs of the proceedings.
