Individual dismissal in Italy

Categories: Employment Law
Typology: Articles

Under Italian Law, the employer’s power to terminate the labour relationship is limited to a substantial extent by Article 1 of Law no. 604/1966.

The notion of justifiable reason is defined by Article 3 of Law no 604 as being of two types: (i) a serious violation of the worker’s contractual obligations (the so-called subjective reasons); and (ii) reasons concerning the production, the organisation of work and the regular functioning of the same (the so-called objective reasons).

Dismissal for objective reasons (individual redundancy) is determined by reasons related to the business activity, the organisation of work and the regular functioning of the same. According to case law, a genuine redundancy must derive from a real need for the employer to make a certain position redundant in order to deal with economic, organisational and/or production reasons.

A major controversy concerns the scope of judicial control when the employer justifies the dismissal – individual, but also collective – on grounds pertaining to the organisation of the enterprise or the functioning thereof.

The traditional prevailing opinion is that the Courts can only judge as to whether the reasons advanced by the employer actually warrant the single (or collective) dismissal, and have no power to judge as to the merit of the employer’s decisions, duly covered by the constitutional guarantee of free enterprise (Article 30, paragraph 1, Law no. 183/2010).

The requisites that must be fulfilled are basically as follows: the technical or organizational reasons cited by the employer in support of management decisions actually exist; and that dismissal is the necessary consequence of these decisions. The key issue in distinguishing between the legitimacy and illegitimacy of any such dismissal is the effectiveness of that stated in the motivation for dismissal.

The Court of Cassation in a judgment (no. 23620 dated November 18, 2015) stated that in the event of Company reorganization or restructuring, without prejudice to the need to prove the effectiveness of the relative process, it is lawful to seek increased profits through organizational changes.

However, according to case law, the motivation of reorganization as a justification for  dismissal is only valid when it is made on the basis of an unfavourable economic situation.

(Altalex, 20 March 2017. Article by Carlo Bruni)

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