Italy: judges have significant leeway when setting employment dismissal compensation amounts (in brief)

On 08 November, Italy’s Constitutional Court published the grounds for its ruling of 26 September that reverses measures within the Jobs Act and the Dignity Decree law (c.f. article No. 10787), which address unfair dismissal compensation payments for workers hired after March 2015 under the ‘rising levels of employment protection’ system. According to the court, judges who set compensation amounts will still have to respect the legal bands (between 6 and 36 salary months) but in contrast with what is intended in both legal texts, they will not have to decide exclusively on the basis of career length. Additional required criteria include the number of employees within the company in question, the business being undertaken by the company in question, and the parties’ ‘behaviour and conditions.’ The Constitutional Court stated that only taking career length into account ran counter to the principle of equality and did not take into account the need to tailor specific individual worker compensation. One of the perverse consequences of the decision is that employment contracts concluded under the ‘rising levels of employment protection’ system that was designed to facilitate redundancies, has become more advantageous for unfairly dismissed workers, compared with the traditional Article 18 from the Workers Statute. Unfairly dismissed employees who were hired before March 2015 in companies employing more than 15 staff can either be re-instated in their former job role (something that is become increasingly less frequent), or receive much lower levels of compensation (with the maximum ranging between 15 and 24 months of salary, depending on the particular case).