Angelo Zambelli, Grimaldi Studio Legale
Italy is facing an emergency, with more than 200,000 cases of COVID-19 having been detected.
Since the end of February 2020, draconian rules have been enacted by the Italian government to stop COVID-19 from spreading; among others, the restriction of people’s movements outside their house, unless it is for an essential reason (such as work), until 17 May; the suspension of non-essential production until 3 May; and the suspension of schools and universities until September.
This has led to a fall in consumption, which has affected all employers that do not operate in a sector qualifying as essential.
With a view to maintaining the same employment rate in Italy as before the spread of COVID-19, Law Decree no. 18/2020, as afterwards amended, sets forth that – starting from 17 March 2020 – collective dismissal procedures cannot be triggered for a five month term, expiring on 17 August 2020; procedures that started after 23 February 2020 are temporarily suspended throughout this term. Additionally, employers (regardless of how many of employees they have) are prevented from making individual redundancies (with the key exception of executive-level employees) until 17 August 2020; however, they may legitimately dismiss employees for disciplinary grounds, and for reasons relating to the maximum sick-leave allowance (as set out by the applicable national collective bargaining agreement) having been exceeded. Lastly, notification procedures to serve dismissals for individual redundancy which have been triggered before the date on which the above Law Decree no. 18/2020 was enacted (ie, 17 March) are suspended until 17 August as well.
Moreover, from 23 February 2020, employers may make use of specific salary protection tools where they have fully or partially suspended their business due to the spread of COVID-19 in Italy. The details of this are as follows:
Employers may make use of these salary protection tools for a period of up to 18 weeks until 31 October – although this maximum term is likely to be increased under regulations that are expected to be enacted by the Italian government and/or the Italian Parliament in the next months. (Longer periods apply where the employer is based in certain specific municipalities or regions that have been hit more significantly by the spread of coronavirus).
In addition, the above Law Decree no. 18/2020, as afterwards amended, sets forth measures aimed at helping employees with issues arising from the closure of schools:
Under Italian law, remedies against unfair dismissals vary depending on the size of the employer’s business, as well as the level of employment assigned to the relevant employee and his or her date of hiring.
In particular, employees at middle-management, white-collar or blue-collar levels, hired from 7 March 2015 onwards, are entitled to different protections from those granted to same-level employees hired before this date. Both the Italian Constitutional Court and the Court of Justice of the European Union (CJEU) have been asked for clarification as to whether this difference is compliant with provisions under the Italian Constitution and the Charter of Fundamental Rights of the European Union, respectively.
In November 2018 (ruling no. 194/2018), the Italian Constitutional Court declared the partial invalidity of section 3 of Legislative Decree no. 23/2015, whereby “newly hired” employees made individually redundant were entitled to an indemnity payment of two months’ wages for each year of service, with a minimum payment of six months’ wages and a maximum of 36 months’ wages. This “algorithm” has been considered to be in breach of the Italian Constitution, as – according to the Italian Constitutional Court – the amount of this indemnity payment does not take into account the circumstances surrounding the dismissal, other than the employee’s length of service, which may be very short. As such, it is possible that the payment neither compensates the damages actually suffered by the employee following his or her dismissal, nor prevents the employer from making unjustified dismissals.
According to a notice which has been published on 25 June 2020 on the website of the Italian Constitutional Court a ruling whereby this court declares the invalidity of a similar “algorithm” under section 4 of Legislative Decree no. 23/2015 will be issued in the next weeks, as requested by both the Labour Court of Bari (on 18 April 2019) and the Labour Court of Rome (on 3 January 2020). Such law provision, as it is in force as long as the announced ruling by the Italian Constitutional Court is formally issued, sets forth that in the case of an employer’s breach of the notification procedure to make individual dismissals employees who have been hired as of 7 March 2015 onwards are entitled to an indemnity payment of one month’s wages for each year of service, with a minimum payment of two months’ wages and a maximum of 12 months’ wages.
Moreover, on 18 September 2019, the Court of Appeal of Naples formally required the Italian Constitutional Court to declare that protections against unfair collective dismissals, to which “newly hired” employees are entitled, are in breach of the Italian Constitution and, in particular, the principle to equal treatment under section 3.
Non-executive-level employees who have been hired from 7 March 2015 onwards are entitled to an indemnity payment of between six and 36 months’ wages, regardless of the employer’s breach (including breach of the selection criteria to identify redundant employees), while those hired before this date are granted other protections, including (where the above selection criteria are subject to breach) their reinstatement in the role and an indemnity payment of up to 12 months’ wages.
According to the Court of Appeal of Naples, this led to “newly hired” employees being given detrimental treatment based on their date of hiring, even where the breach by the employer was the same as for those with a different date of hiring and occurred within the same collective dismissal procedure.
On the same date, the Labour Court of Appeal of Naples also required a ruling from the CJEU as, according to the Italian Court, the above regulations are in breach of the provisions under the Charter of Fundamental Rights of the European Union, namely: the equality principle under section 20; the prohibition of discrimination pursuant to section 21; the right to access social security and social assistance according to section 34; and section 47, whereby everyone whose rights and freedoms as guaranteed by the law of the EU are violated has the right to an effective remedy before a tribunal, in compliance with the conditions laid down in the same section 47.
Similarly, a ruling by the CJEU was requested by the Labour Court of Milan on 5 August 2019. According to this Court, statutory rules governing protections against unfair collective dismissals for “newly hired” employees are in breach of those to above and section 30 of the Charter of Fundamental Rights of the European Union, whereby every worker has the right to protection against unjustified dismissal, in accordance with EU law, and national laws and practices.
The Transfer of Undertakings (Protection of Employment) (TUPE) regulations in Italy comprise two sets of protections: a union information and joint examination procedure, to be triggered in advance by the transferee and the transferor, where the latter employs more than 15 employees (regardless of the number of employees with planned employment transfers); and certain rights that must be granted to the transferor’s employees. These protections do not apply in cases of transfers triggered by a share deal.
The rights to which the transferor’s employees are entitled include the automatic continuation of the employment relationship, as dictated by law, with the transferee maintaining any rights arising from this employment relationship. In particular, the transferee must give transferred employees any entitlements established by the collective bargaining agreements governing their employment relationships, from the transfer date until the expiry of such agreements, unless the agreements are replaced by those applied by the transferee to its employees. The transferor and the transferee are also jointly liable with respect to monies owed to the transferor’s employees at the transfer date. If these employees’ working conditions significantly change within three months of the transfer date, they are entitled to resign with immediate effect – and are thus entitled to the indemnity payment, in lieu of notice, that would apply in case of dismissal for individual redundancy. Finally, dismissals relying solely on the transfer are null and void; this invalidity entails that employees are entitled to continue their employment relationship with the transferee, and to be paid an indemnity equal to the wages that would have been accrued after the dismissal date (a minimum payment of five months’ wages is provided for).
Based on the current regulations, such rights of the transferor’s employees apply in any case of transfer, although – where the transferor is subject to an insolvency procedure or facing a company crisis and an agreement with the unions is reached whereby employment levels are (at least partially) maintained – these may be departed from. This departure may be made:
According to section 368 of Legislative Decree no. 14/2019, the above regulations governing employees’ rights, in the event that the transferor is under an insolvency procedure, would be replaced by new rules whereby such rights may be departed from even more significantly.
Based on the above Legislative Decree, these rules should have come into force as of 15 August 2019. However, due to the spread of COVID-19 in Italy, this date has been recently moved to 1 September 2021 pursuant to section 5 of Law Decree no. 23/2020.