On January 15 2016 the Court of Rome ruled that the transfer of an undertaking is not a ground for dismissal for economic reasons when an employment relationship continues with another employer.
The decision concerned the legality of a dismissal at the end of a collective dismissal procedure by Alitalia Italian Air Company (CAI) to identify redundancies in the context its sale to a new company, Alitalia Italian Air Company (SAI), and an international partnership with Etihad Airways. In this context, the plaintiff – an Alitalia Italian Air Company (CAI) employee – applied to the court asking to be reinstated.
The defendant companies underlined that the transfer of an undertaking had taken place under the procedure set out in Article 47 of Law 428/90, which allows agreements between a company and unions to waive Article 2112 of the Civil Code if the transfer involves a company in a state of financial crisis. According to the companies involved, a financial crisis had been declared and a trade union agreement had expressly provided for the possibility of layoffs to:
- facilitate the transfer of undertaking; and
- maintain a section of the workforce.
Therefore, a ban on layoffs was not applicable.
However, according to the court, Paragraph 4bis of Article 47 cannot be interpreted in this manner, as it would constitute a misuse of the ban on dismissals under Article 5 of the EU Transfer of Undertakings (Protection of Employment) Directive (2001/23/EC), and mean that such an exemption would be delegated by law to trade union agreements without any limitation.
In keeping with a previous European Court of Justice decision, the court held that an exception to the ban on dismissals during a transfer of undertaking must operate within the framework of a close-out procedure by the transferor, subject to judicial or public review. Therefore, even when the transferor is undergoing a publicly certified financial crisis and national law provides for a procedure with trade unions – without the aim of liquidating the transferor's assets – dismissals are prohibited.
The EU Transfer of Undertakings Directive prohibits dismissals due to a transfer of undertaking and the Court of Justice rejected the argument that a financial crisis justifies exemptions to the ban on dismissals. Therefore, it must be concluded that Article 47(4) of Law 428/90 does not authorise trade union agreements in this regard.
It was clear from the trade union agreement signed by Alitalia Italian Air Company (CAI) that redundancies were a condition of the transfer of undertaking. If a certain number of employees were not dismissed:
- Etihad would not have accepted the partnership;
- Alitalia Italian Air Company (SAI) would not have been constituted; and
- the transfer of undertaking would not have occurred.
However, the court stated that Alitalia Italian Air Company (CAI)'s financial crisis did not justify the prior dismissal of a number of its employees, as it had elected for the transfer of undertaking to address its financial problems and therefore had opted for the extension rather than the sale of its business.
The court declared that the dismissal had violated Article 2112 of the Civil Code and Article 4 of the EU Transfer of Undertakings Directive and ordered Alitalia Italian Air Company (SAI) to reinstate the employee and pay his wages for the period from dismissal up to effective reinstatement.
For further information on this topic please contact Andrea Stanchi at Stanchi Studio Legale by telephone (+39 02 546 9522) or email ([email protected]).