News

Italian Supreme Court Rules that Executives Must be Reinstated in Cases of Unfair Dismissal

• 22 December 2016
• Ferrario Provenzali Nicodemi & Partners
• TERMINATION OF EMPLOYMENT CONTRACT, PUBBLICATIONS

Italian law provides for an employee’s reinstatement where a case of unfair dismissal has been established. Historically, this provision has not applied to executives, except in the case of discriminatory or verbal dismissal.

On 30 September 2016 the Italian Supreme Court provided for the sanction of executive’s reinstatement in the case of unfair dismissal, where such terms are included either in the executive’s terms of employment or by the national collective bargaining agreement applied by the company. This confirms a principle already expressed in a few previous decisions.

The principle expressed by the Supreme Court is a general principle, applicable not only to the executives but also to all the employees of a private employer. It confirms that the national collective bargaining agreement applied by a company or the executive/employee’s individual employment contract may grant higher protections than those provided by the law in the event of unfair dismissal, including the reinstatement.

The importance of such principle has increased over recent months, since the overall reduction of the employee’s protections (in the event of unfair dismissal) imposed by the recent labour reform (so-called “Jobs Act”) has often brought the parties (employer and employee) to negotiate additional protections for the employee, especially when the latter has strong negotiating power.

Who is affected by this decision?

The decision of the Supreme Court affects all the employees of a private employer, including the executives, and the Local HR Managers.

During the negotiation of their employment contracts, the executives/employees may claim the application of higher protections than those provided by the law or by the national collective bargaining agreement applied by their employer.

The employing company’s Local HR Manager must be aware of any special provisions which will affect the possible consequences of an unfair dismissal which are either negotiated into the employment contract or provided by the national collective bargaining agreement applied by the company.

What entitlement does the employee have to receive an indemnity?

If the national collective bargaining agreement applied by the company or the individual employment contract provide the sanction of reinstatement in the event of unfair dismissal, the executive/employee is entitled to be reinstated by the company and to receive an indemnity equivalent to the monthly salary lost from the date of dismissal until the date of reinstatement, up to a maximum of 12 months (plus payment of social security contributions). Further, the executive/employee is entitled to opt for a fixed indemnity of 15 months of salary (not subject to social charges) in lieu of reinstatement.

Further information

For further information or to discuss any of the issues raised, please contact Roberto Ferrario (roberto.ferrario@fp-lex.it) on +39 02 36742812) or Elisa Pansera (elisa.pansera@fp-lex.it) on +39 02 36742815).

Resources

- Italian Supreme Court, September 30 2016, no. 19554

- Art. 18, Law no. 300/1970

- Art. 10, Law no. 604/1966

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