New dismissal laws revisited
The Italian Employment Law Reform came into force in the summer of 2012. We revisit the major provisions.
Amongst the many changes introduced, the Reform substantially changed the provisions for protection against unfair dismissals pursuant to Article 18 of the Workers’ Statute, which applies to companies staffed with more than 15 employees in the production unit where a dismissal is served or more than 60 in Italy as a whole.
THE PREVIOUS POSITION
Before the Reform, Article 18 provided that if a dismissal was held unfair by a Tribunal, the employee was always entitled (i) to be reinstated and (ii) to be compensated for the damages suffered, equal to the salary lost by the employee from the date of dismissal until the effective reinstatement (a minimum of 5 monthly payments); as an alternative to reinstatement, the employee could claim payment of an additional indemnity equal to 15 monthly payments.
The revised Article 18 provides different consequences, depending on the specific case, as follows:
- Discriminatory dismissal or dismissal determined by an illicit reason is not affected by the reform. In such cases, the old protections still apply. This type of protection is also extended to executives (who otherwise are not protected by the Workers’ Statute) and to employees of companies that do not comply with the size requirements above.
- Disciplinary dismissal (for a subjective justified reason or for “cause”) – there are two different scenarios:
- reinstatement plus payment of a reduced indemnity, not exceeding 12 monthly payments, if (i) the judge decides that the employee did not carry out the alleged misconduct or (ii) according to the provisions of the applicable collective bargaining agreements or disciplinary codes, the misconduct should have attracted a less serious sanction; or
- payment of an indemnity between 12 and 24 monthly payments, if the judge considers that there was neither a subjective justified reason nor a cause justifying dismissal.
- Dismissal for an objective justified reason – there are two different scenarios:
- reinstatement plus payment of a reduced indemnity, not exceeding 12 monthly payments, if the judge holds that the objective reason of the dismissal was “clearly inexistent”; or
- payment of an indemnity between 12 and 24 monthly payments, if the judge considers that the dismissal was unfair.
In the case of a dismissal for objective reasons, the Reform also introduced a mandatory settlement procedure before the territorial labour bureau (DTL), for companies subject to the protection of Article 18. The dismissal may only be carried out following the conclusion of the settlement procedure.
Reinstatement is no longer a necessary consequence of an unfair dismissal, which may make it easier for an employer to dismiss an employee. However, on the other hand the Reform has made the role of judges even more important than in the past, as their interpretation of the facts behind the dismissal may lead to very different outcomes for the employer.