This update looks at four Supreme Court decisions issued in September 2013 relating to transfers of business.

In Decision 20601/2013 the Supreme Court rejected an employee's appeal. It stated that the employee's dismissal following a reorganisation that involved the entire business group that owned the company to which the business was transferred constituted an objective reason to dismiss, because the outsourcing of services formed part of the reorganisation of the group referred to in the letter of withdrawal. The letter of withdrawal stated that the employee's position (marketing secretary) had never existed. Indeed, it was found that before the dismissal, most of the transferee's services had been entrusted to more affordable third parties and the company was forced to make the necessary organisational and production changes. Therefore, it appeared impossible for the company to guarantee the job previously held by the employee or to find the employee an equivalent position.

In Decision 20716/13 the court stated that in case of a professional demotion, the damage suffered by an employee should be compensated by both the company selling the branch and the assignee. The demotion created a right to compensation which was likely to be claimed jointly and severally against the assignee. The court confirmed the illegitimate demotion of a group of workers transferred from one company to another and consequently found that the two companies were jointly and severally liable to compensate the employees who were moved from the production team to the cleaning team. The law requires that the two tasks be professionally related in the sense that the new ones can be harmonised with the skills already acquired by the employees. The key issue arising from the decision is that compensation for demotion falls within the regime of joint and several liability. The only exception to joint and several liability is under Article 2112 of the Civil Code, where the employee is terminated before the transfer.

In Decision 20728/13 the court held that the employment relationship is considered to continue with the transferor where the alleged transfer of business is carried out in violation of regulations, since the economic entity transferred is not organised in a stable and self-sufficient manner, thus failing the legal test that requires a link between the professionalism of the staff and the activities of the branch.

Finally, in Decision 20829/13 the court found that an employee is demoted when the duties performed by the employee are found to be less important, despite a medium-sized company being merged into the larger business group. In this case the court ordered the employer company to pay damages to compensate the damage suffered by the employee. The decision also underlines that for the purpose of the quantification of non-pecuniary damage, the following must be taken into consideration:

  • the quantity and quality of previous work experience;
  • the kind of professionalism affected;
  • the duration of the demotion; and
  • the final outcome.

For further information on this topic please contact Andrea Stanchi or Annamaria Pedroni at Stanchi Studio Legale by telephone (+39 02 546 9522), fax (+39 02 551 91641) or email ([email protected], [email protected] or [email protected]).