The Court of Rome differs from the Capitoline Court of Appeal guidelines over the exclusion of the dismissal prohibition for managers during the Covid emergency.
Measures to combat Covid 19 – Decree Law no. 18/2020 and Decree Law no. 104/2020 – Dismissal prohibition for objective justified reason – Manager – Dismissal for position redundancy – Prohibition breach – Not applicable
The emergency legislation on prohibiting dismissal for objective justified reasons is exceptional and cannot be applied to similar cases not expressly mentioned by the regulation. This means that the dismissal prohibition cannot be applied to an individual manager’s dismissal.
Court of Rome 25 October 2022, no. 8722
A few months after the Rome Court of Appeal ruled in favour of the applicability of the dismissal prohibition to managers, the Capitoline Court, in its recent ruling no. 8722 published on 25 October 2022, came to an opposite conclusion.
FACTS OF THE CASE
In August 2020 – the period covered by the general dismissal prohibition for objective justified reasons under Decree Law 14/8/2020, no. 104 – an employer company dismissed a manager for objective financial reasons.
Considering that managers were included in the group of workers protected by the dismissal prohibition under the emergency regulations, and as part of the first phase of the Fornero Procedure, the Judge declared the dismissal null and void, ordered the manager immediate reinstatement, and the company to pay the remuneration due from the dismissal date until reinstatement.
The company appealed against this decision before the Court of First Instance.
LEGISLATION AND CASE-LAW
Art. 46 Decree Law 17 March 2020, no. 18 prohibited collective dismissal procedures and employers from “terminating the contract for objective justified reasons under Art. 3 of Law no. 604 of 15 July 1966” regardless of the number of employees.
The dismissal prohibition applicable to this case was extended and subjected to further conditions and exceptions, by Decree Law 14/8/2020, no. 104.
The provision stated that, to cope with the COVID-19 emergency, private employers who partly benefited from the wage subsidies or the exemption from the payment of social security contributions could not terminate employment contracts for objective justified reasons under Art. 3 of Law 15/7/1966, no. 604 of 15/7/1966, regardless of the number of employees. The ongoing procedures at the Local Labour Inspectorate referred to in Art. 7 of the same law, were suspended.
The prohibitions and suspensions listed above did not apply in the following cases:
a) redundancies due to the definitive cessation of the company business, resulting from the company liquidation without any business continuation;
b) collective bargaining agreement, stipulated by the trade unions that are comparatively more representative at the national level, as an incentive to terminate the relationship;
c) redundancies due to bankruptcy when there was no company provisional operation or business termination.
Since the introduction of the dismissal prohibition, two opposing approaches have alternated in legal theory and case law on the applicability of this emergency legislation to individual dismissals of managers.
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In its order no. 25287 of 24 August 2022, the Court of Cassation ruled on monitoring carried out by the employer and confirmed the legal principles within which the employer may use a detective agency.
This case involved a worker dismissed because he was accused of leaving the workplace repeatedly during working hours, for activities unrelated to his job (the contract allowed a certain workplace and time flexibility). This came to light as part of a broader investigation concerning the violation of leave under Art. 33 of Law no. 104/92 by a colleague which involved the appellant who had been reprimanded several times.
While the investigation on the other employee was lawful, the surveillance carried out on the employee in question was outside the detective agency remit.
According to the Supreme Court, the external monitoring must be limited to the employee illicit acts that are not attributable exclusively to the breach of an employment contractual obligation. In other words, to operate legally, detective agencies must not monitor work performance. Under the law, work performance monitoring must be carried out directly by the employer and its employees using audio-visual equipment and other monitoring tools.
Please note that internal work performance monitoring must follow legal limits.
The key provision is Art. 4 of the Workers’ Statute (Law 300/1970). Under this provision, information collected through monitoring can be used for employment relationship purposes, including disciplinary. However, certain criteria and “guarantee procedures” must be followed for them to be lawful.
Adequate information must be provided to the worker on the methods used to carry out monitoring. If audio-visual equipment or other monitoring tools are used, information must be provided on tools use and monitoring methods.
Under the last paragraph of Article 4, for the collected information to be usable for employment relationship purposes, personal data protection legislation, i.e., Regulation (EU) 2016/679 and Legislative Decree 101/2018, must be followed.
This allows the company, employer and data controller under the data protection legislation, to use the information collected and avoid incurring a heavy GDPR penalty for unlawful personal data processing.
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A disputed written dismissal notice cannot be proved by witnesses, according to the Court of Cassation ruling no. 26532/2022. The dismissal is null and void for a lack of the required legal format
In its order no. 26532 of 8 September 2022, the Court of Cassation stated that the power attributed to the Employment Tribunal to admit ex officio any means of proof, including those outside the limits established by the Italian Civil Code, cannot apply to the written format required ad substantiam for the dismissal letter. Witness evidence of a contract or unilateral deed that is legally required to be in writing under penalty of nullity is not permitted. There is only one exception under Art. 2724 no. 3 of the Italian Civil Code, which is when the document has been lost unintentionally. According to the trial Court, based on a public order rule, a witness is inadmissible including ex officio at any proceedings stage and level.
Before analysing the ruling and its place in relevant case law, we will mention the legal provisions applicable to the case examined.
As an exception to the general principle of format freedom, the legal system requires several formal, procedural and substantial employer obligations. Dismissal must be notified in writing and the notice must specify the grounds. This is required by Art. 2 of Law no. 604/1966, as amended in 1990, and by the Fornero Law. The legislation does not require customary formats, if the will is clear and unambiguous.
The dismissal is required to be in writing ad substantiam and, since it is a unilateral reception act, must be received by the employee to be effective (Art. 1334 of the Italian Civil Code). This is based on the presumed knowledge at the time of delivery to the recipient’s address, unless there is proof of a blameless impossibility of knowledge (Art. 1335 of the Italian Civil Code).
The dismissal notice may be hand delivered in the workplace and treated as such even if the employee refuses its reception. According to the Court of Cassation, “The recipient’s refusal of the dismissal notice in the workplace does not preclude the communication from being considered as delivered, since it is a unilateral reception act which is under the general principle that the recipient’s refusal cannot be to the detriment of the obligor and the presumption of knowledge rule under Art. 1335 of the Italian Civil Code” (Court of Cassation, ruling no. 21017/2012).
Under Art. 2725 of the Italian Civil Code, called “Deeds for which proof in writing or written format is required”, under the law or the parties’ will, a contract must be proved in writing, evidence by witnesses is admitted only in the case under no. 3 of Art. 2724 of the Italian Civil Code.
The same rule applies in cases where the written format is required under penalty of nullity.
Under Art. 2724 no. 3, of the Italian Civil Code, evidence by witnesses is admissible “when the contracting party unintentionally lost the document that provided proof.”
Art. 421 paragraph 2, first part, by which the Employment Tribunal “may order ex officio the admission of any means of proof, even outside the limits established by the Italian Civil Code.”
The Court of Appeal of Florence dismissed the complaint brought by the employer company against the Court of Florence’s ruling. The latter declared the ineffectiveness of an oral dismissal of an employee on 8 September 2017, ordered the worker’s reinstatement and the employer to pay compensation for damages amounting to her last full salary, less earnings from other sources, plus social security and welfare contributions, and any additional sums;
The local Court upheld the Court of First Instance’s ruling, which upheld the order at the summary proceedings, on the grounds that the company did not prove it had complied with the written format required ad substantiam, and that the evidence by witness acquired during the first instance proceedings was inadmissible.
The Court of second instance stated that the issue disputed was not that the employee, classified as a manager, was dismissed at a meeting held on company premises on 8 September 2017, in the presence of the CEO and two employees, but the written format of the employer’s termination and the notification method.
Applying the principles expressed in the Supreme Court’s ruling no. 11479/2015, a precedent was considered significant given the similarity of some of the facts (oral dismissal challenged by the employee, while the employer claimed the dismissal notice was hand delivered, which must be proven by witnesses). the Court of Appeal noted that if the dispute refers to the dismissal letter reception by the employee at the time of dismissal, that notification method cannot be the subject of oral evidence because the testimony would contain oral evidence of a document for which the written format is required ad substantiam. Furthermore, the oral evidence prohibition under Art. 2725 of the Italian Civil Code on documents which are legally required in written format under penalty of nullity, cannot be rebutted by exercising the Employment Tribunal’s investigative powers.
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In its order no. 22115 of 13 July 2022, the Court of Cassation stated that the Court’s assessment of similar situations for evaluating unreasonable inequality can only be based on allegations present in the case, such as to allow an investigation and a viable comparison.
A worker was dismissed because of an accident with his service vehicle. A vehicle with a crane on top, driven by the employee, crashed against a provincial road bridge beam due to its incorrect positioning.
The company dismissed him for just cause. It claimed that the worker’s serious misconduct caused the accident and that he failed to fill out the compulsory parking disk and the tachograph, which attested to the vehicle speed.
The Court of first and second instance declared the dismissal lawful.
Objecting to the trial court ruling, the worker appealed to the Cassation Court, with a single ground of complaint. According to the worker, the Court of Appeal did not consider the different treatment of other employees for similar breaches.
In support of his argument, the plaintiff referred to the principles expressed by the Court of Cassation according to which “even if it is irrelevant for the existence of just cause or justified reason for dismissal, that a similar breach committed by the another worker was assessed differently by the employer, and if the worker’s breach irreparably compromised the fiduciary relationship, those situations may remove the dismissal of its justificatory basis” (see Court of Cassation ruling no. 14251/2015; Court of Cassation ruling no. 5546/2010; Court of Cassation ruling no. 10550/2013).
The Court of Cassation pointed out that the rulings cited by the plaintiff supporting his case made it clear that “the employer could not be required to provide a statement of dismissal reasons compared to others taken in similar cases (see Court of Cassation ruling no. 5546/2010). However, where the differences justifying the different treatment of workers did not emerge during the proceedings, the Court may consider other solutions for the same cases to assess the proportionality of the penalty.”
In the Court’s view, any inequality must emerge during the proceedings through significant elements that do not require a related identification by the employer to justify the different treatment.
Based on these principles, the Court considered that the plea as formulated by the employee lacked the necessary indications that should have been attached in the trial proceedings. The Court dismissed the action brought by the worker and ordered him to pay the legal costs.
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In its ruling no. 183 filed on 22 July 2022, the Constitutional Court called on Parliament to amend Art. 9 of Italian Legislative Decree 23/2015 which covered the system of protection for cases of unlawful dismissal in companies with less than 15 employees.
The Rome Court of First Instance, acting as employment tribunal, by order of 26 February 2021, raised issues of constitutional legitimacy concerning Art. 9, paragraph 1, of Legislative Decree no. 23/2015 which covered the system of protection for cases of unlawful dismissal in companies with less than 15 employees. The provision was censured only in the part where it states “where the employer does not reach the size requirements set out in Article 18, paragraphs 8 and 9, of Law no. 300 of 1970, … the allowances and the amount under Article 3, paragraph 1, … is halved and cannot exceed the limit of six months’ salary.”
The Court ruling on an appeal brought by a worker dismissed for objective justified reason by an employer that did not reach the threshold of 15 employees, claimed that the existence of the justified reason had not been demonstrated. The Court found that the worker’s indemnity is to be identified “in the narrow range between the minimum of three and the maximum of six months’ pay.” This would be unsuitable “to meet the adequacy requirement and guarantee the recognition of a bespoke compensation.”
The Court argued that the provision was contrary to Articles 3, paragraph 1), 4, 35, paragraph 1) and 117, paragraph 1) of the Constitution, the latter in relation to Art. 24 of the European Social Charter. In its opinion, the distinction between protections based on the employer’s employment requirements is based “on an element that is external to the employment relationship.” Protecting the right to work, which would limit the employer’s power of termination, could be entrusted to a monetary mechanism, provided that the overall adequacy of the compensation, under the Article 24 of the European Social Charter.
The Court believed that “such a small compensation“, not exceeding six months’ salary and without “the alternative of re-hiring“, did not adequately balance any conflicting interests. Art. 24 of the European Social Charter requires fair compensation or appropriate redress in cases of dismissal without a valid reason. This effectively prohibits any predetermined maximum limit, which separates the compensation from the damage suffered and is not sufficiently dissuasive.
The Court of First Instance observed that the “compensatory function” and the “deterrent effectiveness of compensation protection” would be compromised (…) by an indemnity “falling within a range of between three- and six-months’ salary”, which would represent “an almost uniform form of protection” and would end up attributing sole importance to “the number of employees.” This would be a “negligible criterion in the current economic situation”, which would not allow any adjustment of the amount to the specific case and, particularly, the “breach seriousness”, to the more significant criterion of the company size, linked to the “financial data obtainable from financial statements.”
The Constitutional Court stated that the referral by the Court of Rome concerning the compensation under Art. 9 of Italian Legislative Decree 23/2015 was inadmissible for unlawful objective justified reason dismissals in companies with less than 15 employees.
However, it recognised that the framework outlined in Law no. 23/2015 profoundly changed from that analysed by its most recent rulings.
In the Constitutional Court’s opinion, reinstatement was limited within peremptory cases for employers, and the company size was not a distinguishing criterion between applying the more effective protection and granting a pecuniary compensation.
In the Constitutional Court’s opinion, when a system hinges on financial protection, the situation of small companies cannot justify a disproportionate sacrifice of the worker’s right to obtain adequate compensation for the prejudice suffered. The narrow gap between a minimum of three and a maximum of six months’ salary “defeats the need to adjust the amount to each case, to provide adequate compensation and effective deterrence, which considers the relevant criteria set out in the rulings of this Court and contributes to configure the dismissal as a last resort.”
The Constitutional Court pointed out that technological evolution and production process transformations meant that a small number of employees could be matched by significant capital investments and business volume. The criterion focusing only on the number of employees does not meet the requirement of not burdening with disproportionate costs production and organisational realities which are unable to sustain them. The Court stated that the uniform and closed limit of six months’ salary refers to various activities with the number of workers employed as a shared element, which has no significant value per se.
In conclusion, the Court acknowledged “the existence of the damage reported by the referring party (alias the Court of Rome).” It emphasised “the need for the legal system to provide appropriate remedies for unlawful dismissals by employers who have the number of employees as a shared element.”
However, this damage cannot be remedied by the Court, since it is “within the legislature’s overriding discretion to choose the most appropriate means to achieve a constitutionally necessary end, as part of “legislation of essential importance” (…), because of its connection with worker rights, a choice which projects its effects on the economic system.”
In concluding, the Court declared that it could not refrain “from pointing out that a further continuation of legislative inertia would not be tolerable and would induce the Court, if it were again called upon to do so, to provide directly, despite the difficulties described here (…).”
This is a clear invitation to the legislature to revise Art. 9 of Italian Legislative Decree 23/2015, failing which the Constitutional court will be forced to intervene.
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