Italy: Constitutional Court rejects one the Jobs Act’s flagship measures and returns more leeway to judges for setting compensation in cases of unfair employment dismissal

At the end of June, Italy’s Constitutional Court examined the constitutional questions raised by the courts of Bari and Rome over the criteria used to determine the severance pay due to workers who were hired under the ‘rising levels of employment protection contract’ after March 2015 and who were subsequently individually and unfairly dismissed. In a statement preceding the submission of its ruling, the Constitutional Court stated that it considers the fact of basing the compensation payment on an ‘amount equal to one month of the last reference salary (…) for each year of service,’ to be unconstitutional because it is a ‘rigid and automatic criterion, solely linked to the element of seniority.’ The Constitutional Court thus confirmed its previous 2018 judgment of 2018 (c.f. article No. 10893) and as such dismantles one of the key points of the 2015 Jobs Act, which was intended to facilitate individual dismissals, by effectively eliminating the possibility of reinstatement and by providing for a predetermined compensation payment. As the Italian daily publication Il Sole 24 Ore of 01 July points out, “the real departure of the reform (Ed. note: Jobs Act) was indeed this: the company, at the time of the employment termination and before the judge’s decision, was able to work out using a simple mathematical formula how much compensation would be due to the worker in case the decision (Ed. note: the employment termination decision) was found to be illegitimate, and without any discretionary intervention by the judge”. This separation that the Jobs Act had introduced now seems to be definitively compromised. Several other courts have also referred to the Constitutional Court to determine whether the “indefinite employment contract with rising levels of protection” is discriminatory in the case of collective redundancies (c.f. article No. 11531).