The Decree approved by the Italian Council of Ministers on 20 February 2015 introduced remarkable changes concerning dismissal for objective reasons. In this case, as under the previous Law no. 92/2012, the legislator did not amend the substantial pre-requisites of early termination for economic reasons which remain unchanged, namely the existence of productive and organizational reasons (article 3 of Law no. 604 of 1966), the causal link that must exist between the grounds for and the removal from the job, the so-called practice of repechage (i.e. the obligation to offer to the targeted employee an alternative job where he/she can be profitably employed) and the application of the selection criteria, if applicable.

Law no. 92/2012 introduced a binary penalty system. If the event ground for withdrawal is "overtly without grounds" (for instance: it is not true that the employer suspended a certain activity and therefore the employee assigned to this duty no longer had activities to carry out), the dismissed employee is reinstated and is entitled to compensation from the date of dismissal to the date of actual reinstatement, equal to a maximum of 12 months’ gross salary. The remuneration received in relation to other employment during the period between termination and reinstatement is deducted from the amount of compensation and payment of the social security contributions from the date of dismissal to the date of actual reinstatement is mandatory.

Alternatively, the employee is entitled to claim compensation in the amount of 15 gross months’ salaries in lieu of reinstatement.

On the contrary, in all other cases (for instance: the employer suspended a certain activity and therefore the job to which the employee was assigned no longer exists but the latter could be re-employed in other positions with similar duties and at a similar level) the employee has only the right to compensation equal to between 12 and 24 months’ gross salaries and the judge has the power to set the relevant penalty according to the employee’s length of service and in consideration of a number of parameters, including: number of employees hired, size of the economic activity, parties’ behaviour and conditions, with the judge’s obligation to specify the reasons of the decision.

The system introduced by Law no. 92/2012 is still in force and will be in relation to employees working in companies with more than 15 employees employed before the coming into force of the Decree in question.

On the contrary article 3 of the Decree, that has been just passed, establishes that if dismissal for objective reasons is unfair, the judge declares the employment relationship terminated at the date of dismissal and orders the employer to pay compensation, not subject to social security contributions, equal to two months’ gross salary for each year of service or, in any event, in an amount not less than four and not exceeding twenty-four months’ salaries.

Therefore, the Decree follows the steps of Law no. 92/2012 that had already reduced the number of cases of reinstatement, limiting reinstatement to cases of overt lack of grounds of the event which is ground for dismissal, while permitting for compensation only in all other cases.

The new measure excludes the possibility of reinstatement following termination for objective reasons and excludes also the judge’s discretion to set the amount of compensation, that cannot be calculated according to the aforementioned parameters, but it is exclusively predetermined on the basis of the length of service of the dismissed employee.

The Decree in question groupsthe regulations on collective dismissal together with individual dismissal for objectivereasons. Hence, according to the new rules and regulations, in the case of dismissal of employees contracted after the coming into force of the Decree, in case of breach of the procedure of information and consultation of the Trade Unions, as referred to in art. 4 and 24 of law 223 of 1991, or in the case of breach of the selection criteria envisaged by art. 5 of said law, only the compensation described above, i.e. a minimum of 4 to a maximum of 24 months’ gross salary, shall apply.

Employees contracted before the coming into force of the decree will still be protected by Law 92/2012 that provided for, at least in the case of breach of the selection criteria, reinstatement to service of the dismissed employee.

The Decree means the new regulations also apply to employees hired by companies with less than 15 employees, after its coming into force. Reinstatement of these employees in case of disciplinary dismissal is excluded and this only applies in case of dismissal for discriminatory reasonswhilst , “progressive protection” provided for above applies according to the length of service. However, such amount will be halved and the maximum threshold will be fixed at 6 months’ salary, equal to the limit envisaged by Law 604/1966; the minimum threshold will be 2 months’ salary, instead of 2.5 months’ salary which are currently provided for by Law 604/1966.

Preliminary mediation procedure that had to be carried out before the Direzione Territoriale del Lavoro (The Labour Office for the Territory) is revoked and is replaced by a new voluntary mediation procedure to be carried out after dismissal. The employer may, within 60 days of dismissal, offer the employee a settlement compensation, exempt from tax and contributions, in the amount of a month’s pay for each year in service, ranging from 2 to 18 months’ salary. The offer must be made by bank draft at the institutions listed in article 2113 of the Italian Civil Code or at the commissions certifying employment agreements at bilateral institutions. Acceptance of the offer implies waiver of any claim for fair dismissal.