An employee recently challenged her dismissal, claiming that she had been employed by a cooperative as a cleaner in a healthcare structure under a contract between the cooperative and the healthcare structure's own company. The healthcare structure was subsequently incorporated into another company, which decided to internalise the services previously performed by the cooperative and terminate the contract between the two parties. As a result, the cooperative fired its employees, many of whom were subsequently hired by the company that had incorporated the healthcare structure. The employee challenged her dismissal on the grounds that the operation described above constituted a transfer of undertaking.

On June 26 2017 the Court of Milan declared the dismissal to be unlawful on the grounds that a transfer of undertaking had occurred.

The judge stated that for Article 2112 of the Civil Code (concerning the transfer of an undertaking) to apply, it is sufficient that a company's assets be transferred to a different holder by virtue of an agreement – irrespective of a direct contractual relationship between the outgoing company and the one taking over management – provided that the relevant non-negligible assets are transferred in order to enable a specific agreement.

Further, according to a recent Supreme Court decision, Article 2112 of the Civil Code, in line with European Court of Justice case law, also applies to the transfer of the branch of a business, provided that it:

  • is an autonomous asset that carries out an activity that existed before the business transfer;
  • meets the aims of the company to which it has been transferred; and
  • maintains its autonomy.

Therefore, in the case of the re-internalisation by a contractor of a service previously subject to a contract, the discriminating element under Article 2112 of the Civil Code is that the transfer of a non-negligible asset must also have occurred.

Thus, if a contractor enters into another contract and acquires the personnel, instrumental assets and autonomous operational capacity of employees of the contracted undertaking, the case is governed by Article 2112 of the Civil Code.

For further information on this topic please contact Andrea Stanchi at Stanchi Studio Legale by telephone (+39 02 546 9522) or email ([email protected]).