The rigid and uniform criterion used to determine the compensatory indemnity due to an employee dismissed without just cause or justified reason, established by Legislative Decree no. 23/2015 concerning the employment contract known as “increasing protection contract” which consists of the payment by the employer of an indemnity of 2 months’ salary per year of employment (minimum 6 – maximum 36 months’ salary) is unconstitutional. The discretionary assessment of the court therefore raises once again the issues of the uncertainty of the cost of the dismissal and the discretionary evaluation of the courts which had been considered overcome.
Giulietta Bergamaschi, Employment Law Specialist, Managing Partner of Lexellent
Compensatory damages for unlawful or unfair dismissal, regulated by Section 3, sub-section 1, of Legislative Decree no. 23/2015, not modifiable by the judge, takes on, according to the Constitutional Court, the characteristics of a “fixed and standardised payment”.
Hence the contrast between the criterion of determination of the indemnity and the principles of equality and reasonableness established by section 3 of the Italian Constitution, and the protection established by sections 4 and 35 of the Italian Constitution, and in relation to section 24 of the European Social Charter, and sections 117, sub-section 1, 76 of the Italian Constitution.
With reference to the principle of equality, the Constitutional Court finds an unjustified “identical protection” in the fixed mechanism for determining the indemnity with respect to “substantially highly dissimilar situations”.
According to the Constitutional Court it is “common knowledge, amply proven by case law, that the prejudice created in the various cases by unfair or unlawful dismissal stems from a plurality of factors” and not only from length of service.
Factors which must be taken into consideration by the court when determining the indemnity in order to respond “to the need to personalise the harm suffered by the worker” imposed by the principle of equality to avoid undue homogenisation of situations which in actual experience may be quite different one from the other.
With reference instead to the principle of reasonableness, the Constitutional Court considers that the indemnity established by section 3, sub-section 1, of Legislative Decree 23/2015 does not “constitute an adequate remedy for the actual prejudice suffered by the worker due to unfair or unlawful dismissal, and neither is it adequate to dissuade the employer from unfairly or unlawfully dismissing a worker”.
In particular, what is inadequate in this sense is not, according to the Constitutional Court, the upper limit of 24 months’ salary (now 36 months’ salary as a result of the amendments introduced by Law Decree no. 87/2018, converted into Law no. 96/2018), but the rigid criterion used to determine the indemnity, which is deemed inopportune, particularly when the length of service is quite short.
This indemnity does not compensate for the prejudice suffered by the worker and does not constitute an adequate dissuasion for the employer to unfairly or unlawfully dismiss a worker, therefore “does not create a balance of the interests at stake: the company’s freedom to organise on one hand and the protection of the unjustly dismissed worker on the other”.
Hence the contrast with sections 4 and 35 of the Italian Constitution, as the worker’s interest in having a stable job is not well enough protected by a provision such as the one at hand, which is not able to dissuade the employer from dismissing an employee unfairly.
According to the Constitutional Court, section 3 sub-section 1 of legislative decree no. 23/2015 is, furthermore, in contrast with section 117 of the Italian Constitution in relation to art. 24 of the European Social Charter: the reference, in particular, is to a principle expressed by the European Social Rights Committee. The Court, in fact, recognized the authority of the decisions taken by the Committee, which, in relation to the determination of the indemnity due for arbitrary dismissal affirmed its adequacy “if it is such as to ensure adequate reparation for the real prejudice suffered by the worker dismissed without good reason, and to dissuade the employer from dismissing employees unjustly”.
With this decision by the Constitutional Court, the certainty of the monetary indemnity, increasing but not modifiable, is definitively overridden.
Discretionary assessment by the court raises again the issue of quantifying it for those who work in the sector – judges, lawyers, finance people, etc. One thing is certain, however: what we are dealing with is a compensatory indemnity for unfair dismissal which is once again uncertain, variable, and differs dramatically from one tribunal to another, while remaining within the pre-established minimums and maximums.