As this is the first contribution to the “Quarterly Report of Global Employment Law Issues for Multinationals” concerning Italian employment law, we thought it would be appropriate to focus our attention on the relatively new dismissal procedure that was introduced by Law no. 92 of June 28, 2012 (known as the Legge Fornero), that has amended Article 18 of Law no. 300 of May 20, 1970 (also known as the “Workers’ Statute”).

Such new discipline applies to companies with more than 15 employees and to white and blue collar workers and key employees (quadri) only. It does not apply to executives (dirigenti). We are also taking into account the dismissal of single employees (up to four), as the dismissal of at least five or more employees within a period of 120 days, because of a reduction, transformation or termination of the business activities, follows different rules.

According to Italian employment law, dismissals can be performed only if:

  • a just cause occurs, i.e., a serious violation of the employee’s contractual obligations capable of compromising the fiduciary relationship with the employee (stealing, insubordination, acting with willful misconduct, etc.); 
  • a justified subjective reason occurs, i.e., a less serious behavior than the just cause, capable, however, of being detrimental to continue the employment relationships (disciplinary violations, acting with gross negligence, etc.); or 
  • a justified objective reason occurs, i.e., a reason out of the control of both the employer and the employee, hence, not related to the employee’s behavior but due to reasons related to the production/operational activity of the employer (closure of the activity, automation of the production, outsourcing, etc).

Before the Fornero reform came into effect, should the judge have believed that the above-mentioned causes and the relevant reasons were without grounds, including the fact that the dismissals were null and void due to the lack of the written form as mandatorily provided by the law, the dismissal would have been declared unlawful and the employer obliged to rehire the employee (reintegra). In such a case, the employee would have also been entitled to receive (and the employer obliged to pay) his/her salary from the date of the dismissal until the date of the effective rehiring (including social security contributions). In addition to the above, the payment of an additional indemnity of no less than the last five monthly salaries would also have been due.

In the event of discriminatory dismissal (dismissals relating to political, religious, sexual reasons or due to the fact that the employee went on strike or due to marriage or maternity leave) the same above regime applies.

Since the Fornero reform, the above-mentioned cases (just cause, objective and subjective reasons, discriminatory dismissal) have not been amended, but material modifications have been made in terms of possible consequences in the event the dismissal is declared unlawful. Four different scenarios apply:

  1. Full reinstatement regime (reintegra piena): this applies in the event of discriminatory or null and void dismissal. The employee has the power to decide as to whether:
  1.  to be rehired; or 
  2. to be compensated with an indemnity equal to his/her last 15 monthly salaries.

Moreover, the employee will have the right to receive his/her salary from the date of the dismissal until the date of the rehiring (including social security contributions), even if the employee opts for the payment of the indemnity;

  1. Soft reinstatement regime (reintegra attenuata): this applies in the event of the inexistence of facts on which the dismissal was allegedly based should a just cause or a subjective justifiable reason be claimed, or in the event that the dismissal is completely groundless (e.g., the employer claimed economic reasons for justifying another kind of dismissal). The employee has the power to decide as to whether:
  1. to be rehired; or 
  2. to be compensated with an indemnity equal to his/her last 15 monthly salaries.

Moreover, the employee will have the right to receive his/her salary from the date of the dismissal until the date of the rehiring (including social security contributions), and in any case up to 12 monthly salaries, even if the employee opts for the payment of the indemnity;

  1. Full indemnity regime: this applies in the event of the occurrence of a just cause or a subjective justifiable reason other than those indicated under number 2 above. The employee is not entitled to be reinstated in his/her job position, but only to receive an all-inclusive indemnity of an amount ranging between 12 and 24 last monthly salaries;
  2. Soft indemnity regime: this applies in the event the reasons for the dismissal have not been properly specified in writing, unless such lack of detail could constitute a more significant violation under the above-mentioned cases. The employee is not entitled to be reinstated in his/her job position, but only to receive an all-inclusive indemnity of an amount ranging between 6 and 12 last monthly salaries.