_“Increasing” protection: goodbye forever?

“Increasing” protection: goodbye forever?

by Andrea Savoia and Silvia Fumagalli

After weeks of eagerly awaiting, on November 8, 2018, the Constitutional Court “revealed” the reasons why the criterion applied to determine the indemnity for unlawful dismissals of employees hired through “increasing-protection” contracts is against the principles of the Italian Constitution.

According to the Constitutional Court, article 3, paragraph 1, Legislative Decree no. 23/2015, granting an indemnity for unlawful dismissals based on the employee’s length of service, violates two constitutional principles: the principle of equality and the principle of reasonableness.

As for the principle of equality, the rule set forth under the abovementioned article leads to an unjustified homologation of structurally different situations (which is forbidden by art. 3 of the Constitution), since the amount of the indemnity is strictly predetermined (two months’ salary for each year of service) and it is identical for all employees with the same length of service.

Since unlawful dismissals result in damages that might be different case by case, the rigid determination of the indemnity based only on the length of service leads to treat different situations as if they were identical.

According to the Court, the Judge has the duty to determine the amount of the compensation for damages suffered by dismissed employees, though between a maximum and a minimum range established by law, taking into account not only the employees’ length of service but also other criteria, subject to the discretionary and prudent assessment of the Judge, to guarantee a fair compensation.

As for the violation of the principle of reasonableness, the Court affirmed that the way the legislator determined the indemnity set for under Legislative Decree no. 23/2015 does not grant the dismissed employees a fair compensation for damages suffered and, at the same time, does not dissuade the employer from unlawfully dismissing his employees. This is particularly true when the employees do not have a long length of service.

According to the Judges of the Constitutional Court, the provision failed to balance two opposite interests (freedom of economic initiative and employees’ protection), since the employee’s interest is almost suppressed, thus violating the principle of reasonableness.

Lastly, the provision of the “increasing-protection” Decree is in contrast with the sources of International Law and, in particular, with the provision of the European Social Charter which enshrines the right of employees dismissed without a valid reason to get an “adequate compensation or other appropriate relief”.

Since Law no.183/2014 delegated the Government to “reform” the complex of provisions on the dismissal of employees hired through the so-called “increasing-protection” contract, in accordance with International and European Law, granting an indemnity not adequate and not dissuasive violates the Social Charter’s provision, as interpreted by the European Committee on Social Rights.

In conclusion, it is up to the Judges to determine, on a case-by-case basis, the amount of the indemnity, between a minimum and a maximum range established by law, taking into account not only the length of service but also other criteria that may derived from the dismissals provisions (e.g. number of employees employed and size of the undertaking).

We can only wait and see how the Courts will determine the amount of the new “indemnities” to discover such criteria and how they will be balanced by the judges. After all… “nothing’s sure about tomorrow”.