Responses by Olimpio Stucchi, Partner, LABLAW – Studio Legale, Milan.
Is there a requirement for employers to legally justify redundancies and if so, what reasons do they need to provide?
Two articles on the Italian civil code (codice civile) cover the dismissal of individuals, managers, and executives.
The first is article 2118, which establishes the free withdrawal of the working relationship for both the employee and the employer, with the only obligation being to give notice or if the other party (in this case the employee) will allow - a payment in lieu of notice which would correspond to any remuneration due for what would have been the notice period.
Then there’s article 2119, which permits the termination of employment relationships without any given notice period in situations where there is ‘just cause’. For example, theft, harassment, non-fulfillment of duties.
Any redundancies must be in writing, with the reasons for the termination of the working relationship outlined. In the Italian financial sector, there requirement for written notice is stipulated in article 24 of the CCNL (Contratto Collettivo Nazionale di Lavoro) – or the national collective bargaining agreements. Within 15 days of receiving notification of their dismissal, a manager can request the reason behind it, and a company must send it in writing with seven days of the request.
What is the statutory minimum notice period for redundancies (if any)?
The notice period for managers and executives working in the financial sector in Italy is determined by the CCNL and usually is equivalent to 5 to 12 months for executives, depending on the length of service. There is no need for a notice period if the employment relationship is being terminated for ‘just cause’. More specific information on this point can be found by referring to Article 28 of the CCNL.
What is the statutory minimum calculation for redundancy payments (if any)?
In the financial sector, managers and executives have the right to an indemnity payment, which ranges from 5-12 months of salary. If there’s no notice period, however, the dismissed manager will still receive a payment equivalent to the sum they would have received if a notice period had been given.
The TFR - Trattamento di Fine Rapporto (which translates as ‘Treatment at the End of the Employment Relationship’ or ‘Mandatory Severance Payment’) takes into account the annual salary as a point of reference – as well as all of the other economic benefits (such as company cars, pensions, private health insurance, etc).
If an employee’s dismissal is for ‘just cause’ and as such has provoked material damage to the employer – then there is a case for the employer to withhold part or all of the indemnity payment as compensation. This particular regulation is detailed in Article 1252 of the Italian civil code.
According to law, what are the main steps that employers must take during a redundancy process?
In addition to Article 2118 of the Italian civil code (which covers the free withdrawal, in writing, from an employment relationship), there are also regulations concerning the termination of an employment relationship for disciplinary reasons outlined in Article 7 of the Italian Workers Statute. Here, notice of the termination must be given – along with the reasons for the dismissal. However, at the same time the employee must be given the opportunity to defend themselves in face of the accusations.
What are the consequences for employers who fail to comply with redundancy laws? What kind of compensation can employees claim, and is the amount capped?
The consequences of the sanctions depend on the type of violation made by the employer.
For example, with ‘discriminatory’ dismissals, based on the recent reforms made to Article 18 of the Workers Statute, there is the possibility for an employee to be reintegrated into a company’s workforce in addition to an indemnity payment, which would be equal to the salary lost between the date of dismissal and the date the employee was re-hired. In these types of cases the minimum payment is 5 months’ salary.
In other cases (such as dismissals for ‘just cause’ or disciplinary dismissals) the judicial sanctions will also include the payment of a supplementary indemnity. If the dismissed employee decides to refer the matter to an arbitration court – the supplemental indemnity will be guided by the criteria set out in the CCNL specifically for managers or executives in the Italian financial sector (more specifically Article 39 of the CCNL). The sum is usually between 2 and 7 months’ salary, depending on the seniority of the executive.