On 20 February 2014 a Decree was passed by the Italian Council of Ministers and is now in force: such Decree contains provisions on open-ended employment contracts covering various topics but is particularly focused on dismissal for discriminatory reasons, dismissal deemed null and void as well as verbal dismissal, dismissal for just cause and justified reasons and formal and procedural defects.

Rules concerning dismissal for discriminatory reasons remain basically unaltered

If a tribunal rules that dismissal of an employee is discriminatory and as such null and void, the dismissed employee is entitled to be reinstated. The employer has to pay compensation for the damages incurred by the claimant employee in an amount equal to the last gross salary for the period from the dismissal until the reinstatement. Any remuneration received by the employee for work carried out post termination but prior to reinstatement is deducted from the compensation. The amount of compensation must be at least 5 months’ salaries. The employer also has to pay social security contributions on the above mentioned sums.

Notwithstanding compensation for damages, an employee has the right to claim, in lieu of reinstatement, for an allowance of 15 months’ gross salaries, provided that such claim, resulting in the termination of the employment relationship, is submitted within 30 days of the notice of filing of the judgment or of the employer’s invitation to return to work, if it is prior to the notice.

The Decree provides a clear definition of dismissal for discriminatory reasons, with express reference to art. 15 of the Italian Workers’ Statute which contains a list of the discriminatory reasons that cannot be considered as a lawful reason for dismissal: Trade Union membership, participation in strikes, political, religious or racial discrimination, discrimination based on language, sexual discrimination, discrimination based on disability, discrimination based on age and discrimination related to sexual orientation or belief. The provision applies in any event to null and void or verbal dismissals.

A step change in comparison to the content of Italian art. 18, as amended by law 92/2012 reform, is made by art. 3 of the Legislative Decree concerning dismissal for just cause and justified reasons.

Where dismissal for just cause or justified reasons is determined to be insubstantial, the judge declares the employment relationship terminated at the date of dismissal.

The concepts of justified reasons and just cause, introduced by art. 3 of law no. 604 of 1966 and law no. 2119 of the Italian Civil Code, remain unaltered. However the number of cases of reinstatement for unfair dismissal are drastically reduced in favor of compensation. In the Decree, dismissals for unfair and unjustified reasons are considered jointly and sanctioned with pecuniary compensation.

Article 18, paras. 5 and 7 of the Italian Workers’ Statute, as amended by law 92/2012, established, in relation to disciplinary and economic dismissals not followed by reinstatement, that the employer should pay a gross compensation set between a minimum of 12 months’ salaries and a maximum of 24 months’ salaries of the last gross month’s salary depending on the employee’s length of service and in consideration of the following parameters: number of employees employed, sizes of the economic activity, the parties’ behaviour and situation of the parties and the judge was held to specify the relevant reasons in the judgment. Whereas now article 3, para. 1 of the Legislative Decree in question states the employer’s obligation to pay compensation (not subject to social security contribution) amounting to two gross months’ salary for each year in service, comprised between a minimum of 4 months and a maximum of 24 months salaries.

Therefore the cases of reinstatement are now severely limited by the new provisions and compensation is strictly pre-determined. In this regard, the judge’s discretion is severely limited, since the only parameter of reference is the length of service, according to a rigid and predetermined scheme. Hence the purpose was to make the cost of unfair dismissal certain, circumventing the judge’s discretion, while reducing costs and amounts of compensation in the event of short length of service. Exclusively in cases of dismissal for just cause and justified reason, where the nonexistence of grounds of the material fact alleged against the employee (in relation to whom the disproportion of the dismissal is not considered), is proven at trial, the judge declares the dismissal null and void and orders the employer to reinstate the employee and pay a compensation for damages in the maximum amount of 12 monthly salaries, plus social securities contributions from the date of dismissal to the date of reinstatement. However the judge’s discretion is significantly limited in this case too: reinstatement seems to be excluded also in the event that the judge rules that the misconduct does not deserve the dismissal as a sanction. In such cases, which represent also a significant amount in litigation cases, the judge may order only a compensation penalty in the amount already indicated. In addition to the above, unlike law 92/2012, the Decree does not require, once the existence of the fact is verified, to ascertain that the misconduct is included in the Disciplinary Code of the Italian Collective Bargaining Agreements among the misconducts to be sanctioned by way of dismissal. The burden of proof initially borne by the employer under art. 2, par. 5, of Italian Law no. 604/1966 also appears to be upon the employee, who should give evidence of the lack of grounds of the event, with significant consequences at trial.