Guide To Dismissing Employees In Italy

Considerations on dismissal in Italy

Under Italian law, the dismissal of employees is subject to stringent restrictions and rigorous procedures and any termination of employment must be justified.

The reasons to terminate an employment contract can be divided into two main categories:

  1. Just Cause
  2. Justified Reason 

The reasons which may validly ground a dismissal are: 

1) just cause (termination without notice): 

Any gross misconduct which triggers a breach of trust so serious that the employment relationship cannot continue and shall be immediately terminated without notice. In such cases, the termination of the employment relationship is immediate and the employee is not entitled to any notice period. In this case, before the dismissal letter is given/sent to the employee a formal disciplinary procedure must be carried out. 

 

2) justified reason (termination with notice), which may be either: 

 

(i) subjective: i.e. serious breach of the employment contract by the employee. 

This breach is less serious than the breach that constitutes a just cause. A disciplinary procedure must be carried out before issuing the dismissal letter. Since both the dismissal for justifiable subjective reason and for just cause must be preceded by a disciplinary procedure, they are both conventionally referred to as Disciplinary Dismissal. 

 

(ii) objective: i.e. a reason which relates to the employer’s need to reorganize its production activities or its labour force 

(e.g. redundancy/excessive illness /physical inability to carry out the tasks assigned. Before dismissing redundant employees hired before 7 March 2015, companies, whose headcount is larger than 15 employees, have to follow a special redundancy procedure (the Redundancy Procedure) before the Local Labour Office. The Redundancy Procedure is a sort of attempt to settle any possible dispute between the employer and the employee before the dismissal is issued, but the Local Labour Office does not have power to block the dismissal.

During the Covid-19 pandemic, the Cura Italia Decree (Law Decree 18/2020) introduced a ban on individual terminations for economic reasons and collective dismissals. The ban, entered into force on 17 March 2020, was extended until 31 December 2020 and the Italian Government later announced that it will further extend the ban on dismissals until 31 March 2021. Any termination in breach of the ban is considered null and void. It is therefore possible to dismiss only for just cause and/or during the trial period. The extension of the dismissal ban applies to employers who have not fully benefited from the Wage Fund or exemption from social security contributions, for both collective and individual dismissal procedures initiated after 23 February 2020.

 

An employee does not have to have any grounds for terminating an employment contract. The employee must use the online procedure for resignation and comply with the statutory requirement to serve the contractual notice period stated in the relevant National Collective Labour Agreement (CCNL) and must follow any notice formalities provided for in the contract of employment.

Before serving a disciplinary dismissal, the employer is required to follow a disciplinary procedure. Under this procedure, the employer must: 

  1. Promptly send the employee a letter of disciplinary warning describing the facts on which the  breach is based in as much detail as possible; in most serious cases, during the disciplinary  procedure the employee can be temporarily suspended from work; 
  2. The employee, in the following 5 days, is entitled to send his/her written justifications and/or to  ask to set out his/her views orally during a meeting with the assistance of a Unions’  representative; 
  3. After receiving the reply – or if the term of 5 days has expired without any reply – the employer  is entitled to proceed with dismissal, by sending a letter explaining why the employee’s justifications cannot be accepted. 
  4. According to the applicable NCBA, the dismissal letter shall be notified to the employee by registered  letter with return receipt or other appropriate means of certifying the date of receipt, within 15 days  following the expiry of the term for the employee to submit his/her justifications. 

Poor performance is normally construed in Italy as a case of negligence or unskillfulness and therefore  as a breach of an employee’s obligation to diligently perform his/her duties.  

Dismissal for poor performance is in principle possible, but, from a very practical perspective, very difficult in terms of the evidence that an employer has to prepare and give in Court, if dismissal is challenged (given the fact that the burden of proof – in all dismissal proceedings – is upon the employer).

With particular reference to termination grounded on organizational or productive reasons resolving in  the suppression of a job position, the employer shall prove: 

a) the organizational/technical/economic reasons for the redundancy; 

b) the actual suppression of the job position made redundant; 

c) the causal link between reasons under letter a) and the job position suppression under letter b); 

d) that the position made redundant will not be assigned to another person within the organization of  the employer (either newly hired or already employed by the employer); and 

e) that no other available position (if any) within its organization is compatible/consistent with the employee’s skills so that it could be assigned to him/her. 

Repêchage Duty

If the objective justified grounds of dismissal, case law states that the employer has to seek,  within its organization, for another possible job for the employee in order to avoid the dismissal

The procedure that the employer has to follow in the case of a dismissal for objective justified reasons depends on the company’s size and on the hiring date. In case the employer has more than 15 employees and the employee was hired before 7th March 2015, the following procedure must be carried out:

1) a letter indicating the intention of the employer to dismiss the employee for an objective justified reason must be sent to the competent Labour Office (the one in the territory where the employee carries out his/her working activity) and a copy of it must be sent to the employee. The letter must indicate the reasons for the dismissal and confirm that there is not any suitable alternative job position.

2) within 7 days from the receipt of the employer’s letter, the Labour office must schedule a

meeting, which is aimed at reaching a settlement agreement.

 

3) if the parties reach a settlement agreement, the employment relationship will terminate with a mutual termination.

 

4) if the parties do not reach an agreement, the employer may dismiss the employee by delivering a dismissal letter to him.

 

The above procedure should last no more than 20 days from the day on which the Labour Office has convened the first meeting between the parties. The dismissal is effective from the day on which the employer has sent the letter indicating the intention to proceed with the dismissal to the Labour Office.

In the case of dismissal for “objective justified reason” of employees hired after 7th March 2015, no mandatory procedure has to precede the delivery of the dismissal letter to the employee.

The rules which apply to the dismissal of managers (dirigente) differ from those which apply to ordinary employees. 

 

If there is a breach of the fiduciary relationship between the parties (rottura del vincolo fiduciario) the employer is entitled to dismiss a dirigente (known as a “dismissal ad nutum_”). 

 

Due to the special nature of the employment relationship between _dirigente and employers, dirigente can be dismissed at any time with due notice as provided for by the applicable CCNL. If the dirigente does not work out their notice, the employer must pay the relevant payment in lieu of notice. In practice, however, the relevant CCNL is likely to contain provisions which will significantly complicate and increase the financial risk of dismissing dirigenti.

 

Risks in case of unfair dismissal

In case of dismissal of an executive, should the dismissal be considered unfair, the employer may be ordered to pay to the executive (in addition to the severance payments and indemnity in lieu of notice) an additional indemnity (called “indennità supplementare”) established by the applied NCBA. This is variable according to the executive’s length of service and age, as follows:

 

Years of service 

Months’ salary

Up to 4 

between 4 and 8

over 4 and up to 6 

between 6 and 12

over 6 and up to 10 

between 8 and 14

over 10 and up to 15 

between 10 and 16

over 15 

between 12 and 18

 

 

If the length of service exceeds 12 years: 

 

Age 

Months’ salary

between 50 and 55 

4

between 56 and 61 

5

over 61 

6

Poor performance is normally construed in Italy as a case of negligence or unskillfulness and therefore  as a breach of an employee’s obligation to diligently perform his/her duties.  

Dismissal for poor performance is in principle possible, but, from a very practical perspective, very difficult in terms of the evidence that an employer has to prepare and give in Court, if dismissal is challenged (given the fact that the burden of proof – in all dismissal proceedings – is upon the employer).

During the probationary period, the employment relationship may be terminated at any time by either  party, without notice (nor the indemnity in lieu thereof) and without need to specify the reason  grounding the dismissal. 

During sick leave, an employee can be dismissed only for just cause or discontinuance of the company’s activity. For other reasons, termination of the employment relationship by the employer in the event of the employee’s illness is possible only after the illness-protected period provided by NCBA has been exceeded. 

According to the applicable NCBAs, the illness protected period lasts up to 180 days in a calendar year for employees and 240 days for executives.  

After the expiry of the illness-protected period, if the illness persists, the employer may proceed with  dismissal. 

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