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Termination

Notice Are employers required to give notice of termination? Yes. Employers must give notice of termination unless there is a serious disciplinary reason for the dismissal.

The duration of the notice period is determined by the collective bargaining agreement. During the notice period, the employee must work and must be paid. Alternatively, paid garden leave can be agreed.

Redundancies What are the rules that govern redundancy procedures? Under Italian law, a justified objective reason for dismissal occurs when the company ceases operating or implements a reorganisation leading to a reduction in the workforce.

In case of litigation, the company should be able to demonstrate the suppression of the position previously held by the dismissed employee.

Further, in order to rule on whether a dismissal is valid, the judge can examine factors other than the mere suppression of the role.

Prevalent case law provides that in the case of individual dismissal, the selection of employees to be dismissed in the same role must be subject to the same legal criteria as for collective dismissals (including dependent family members and seniority of service). Thus, the employees to be dismissed must be those who are less senior and who have fewer dependent family members.

Are there particular rules for collective redundancies/mass layoffs? Law 223/1991 applies and was recently extended to executives (the ‘dirigenti’).

If a medium to large company with more than 15 employees wishes to dismiss more than four employees over a 120-day period for justified objective reasons, it must launch a special redundancy process.

An objective justified reason for dismissal occurs if a company reorganises its structure to deal with an unfavourable business situation.

The procedure begins with a written communication to the internal works council and the trade unions stating:

  • the reasons for the redundancy process;
  • the reasons why it is not possible to take alternative measures instead of dismissal;
  • the number and job classification levels of the redundant employees;
  • the timeframe for the dismissals; and
  • any measures to mitigate the social consequences of the collective dismissal.

Within seven days of receiving this information, the works councils and unions may request a joint procedure to examine:

  • the reasons for the redundancy,
  • the possibilities of using the workforce (or part of it) in different ways (including flexible working hours and downgrading or retraining dismissed employees).

This procedure must be completed within 45 days of the initial communication. If the parties fail to reach agreement, the next step is a conciliation phase conducted by the Public Labour Office, which may last for up to 30 days. Overall, the procedure takes 75 days.

At the end of the procedure the employer notifies the employees in writing of their dismissal, observing the required notice period.

The selection criteria for the employees to be dismissed are set out by law (ie, length of service, family responsibilities and technical, production and organisational needs). For example, in order to avoid the risk of litigation, a company cannot choose to dismiss the oldest employees or any underperforming employees. It is possible to avoid applying the selection criteria only if an agreement on alternative rational and objective criteria is reached with the unions.

In practice, usually the unions will agree only if the company undertakes to dismiss only employees:

  • eligible for a pension; and
  • who accept an economic incentive to leave, as agreed with the unions.

A letter, including the list of employees being dismissed, must be sent to the unions and the Public Labour Office for registration on the availability list, which gives the employees a number of financial and regulatory benefits (eg, entitlement to an availability allowance).

In the letter the company must explain and demonstrate that the employees to be dismissed have been chosen by applying the criteria stipulated by law.

Protections What protections do employees have on dismissal? There are differences between employees hired before and after March 7 2015, when the Jobs Act entered into force, with regard to protection against unfair dismissal. Before March 7 2015 Law 92/2012 applied.

The following applies to the unfair dismissal of an employee hired before March 7 2015:

  • Where the reasons for the dismissal are found to be non-existent, the company must reinstate the worker or pay the equivalent of 15 months’ salary – the employee has the choice. In addition, the company must pay compensation equal to the salary that the employee would have received from the date of dismissal until the date of the court ruling up to 12 months plus the relevant welfare contribution costs.
  • If the court finds that the dismissal was simply not justified, the employee has the right to obtain compensation of between 12 and 24 months’ wages.
  • If the dismissal is found to be based on discriminatory reasons, the judge can order the company to pay the salary that the employee would have received from the date of dismissal until the date of the court ruling (with no cap) and to reinstate the employee or pay him or her the equivalent of 15 months’ salary.
  • If the dismissal is found to be legitimate but the company failed to follow all the procedural steps set out by law, the company must pay an indemnity of between six and 12 months’ salary.

For employees hired after March 7 2015, according to the Jobs Act the following rules apply.

  • Null and void dismissal – if the dismissal is found to be based on discriminatory reasons or parental issues, or null or void for other reasons (eg, it is found to be retaliatory), the court will order the company to pay the salary (subject to social security contributions) that the employee would have received from the date of dismissal until the date of the court ruling, and to reinstate the worker or pay him or her the equivalent of 15 months’ salary (the employee has the choice).
  • Unfair objective dismissal – if the court ascertains that the dismissal was simply not justified, the employee has the right to obtain compensation equal to two months’ salary for each year of service, with a minimum of four and a maximum of 24 months.
  • Unfair disciplinary dismissal – the reasons for the dismissal are found to be overtly non-existent (merely non-existent for Law 92/2012), the court will order the company to reinstate the employee or pay him or her 15 months’ salary, and to pay the salary that the employee would have received from the date of dismissal until the date of reinstatement, with a cap of 12 months.
  • In other cases where the dismissal is found to be unfair (eg, if the penalty is disproportionate to the facts), the employee has the right to compensation equal to two months’ salary for each year of service, with a minimum of four (12 under Law 92/2012) and a maximum of 24 months.

Regarding the unfair dismissal of an executive (‘dirigente’), except in the case of discrimination, the amount of compensation is established by the collective bargaining agreement, depending on the dirigente’s seniority and age.

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