As if the forced lockdown was not enough, we are also submerged by a shower of ordinances and decrees – (impacting health, the economy, as well as private and professional life) from the Italian authorities in order to manage the pandemic emergency currently in progress. Everything (so it seems) is justified for the protection of health.
We are in a state of war (against the virus) without a formal deliberation of the Italian Senate or Chamber of Deputies – not even an act of the Parliament except for the State of Emergency which was declared on January 31st LINK. However, the declaration of the State of Emergency was not followed by appropriate health or public measures (such as the timely lockdown of the red areas, adequate and timely supply of swabs, the supply of masks and gloves to the doctors on the front line) necessary to avoid or reduce the extent of the catastrophe.
One of the last acts of this cumbersome landslide of (often unnecessary) emergency decrees is Italian Article 46 of Legislative Decree No. 18/2020 which introduced (herein arises an important question for the Italian labour market) the “suspension of the procedures for appealing redundancies“. The actual text of the decree certainly does not create a great interpretative serenity.
Even more, this same decree specifically prohibits collective and economic dismissals for 60 days starting from March 17th,2020 which includes both “the start of the procedures referred to in Articles 4, 5 and 24 of Italian Law No. 223/1991,” as well as “any pending procedures started after February 23rd, 2020“. In addition, individual dismissals given that “until the expiry of the aforementioned term, the employer, regardless of the number of employees, cannot withdraw from the employment contract for justified objective reason pursuant to Art. 3 of Law No. 604/1966“. The official end date of this suspension, at the moment, that is the end of the 60 day time limit, is Saturday, May 16th, 2020.
Italian law has only one precedent in this area – which is connected to a real state of war. It is Article 1 of Legislative Decree n. 523/1945 which suspended layoffs until September 30th, 1945. (Let us not forget that the Italian Constitution was not in force at this time period in history as it was only ratified on December 22nd, 1947 and came into force on January 1st, 1948 LINK).
But what are the implications of this new (Article 46 of Legislative Decree No. 18/2020) legal provision? Beyond the effect of suspending existing or to be implemented mobility procedures – in the event of individual dismissal the regulation goes straight to the point. Dismissals in Italy for justified subjective reasons (giustificato motive soggetivo in Italian – often abbreviated as g.m.o.) are currently forbidden. This imperative and mandatory law applies to all companies (regardless of size) potentially leading to the annulling of the withdrawal of the employment contract (that is once the Courts are reopened and the regular hearing activities commence again).
The logic is evident. With these exceptional regulations, the withdrawal of an employment contract is prohibited (even worse – collective redundancy procedures are suspended immediately) due to the evident economic crisis. On the other hand, economic support is being provided through the use of government social safety nets for all (or almost all). The rational can be seen in the balance of interests between the freedom of enterprise (Art. 41 of the Italian Constitution – see below) and the right to work (Articles 1, 3, 4, 5, 35 of the Italian Constitution – see below).
However it must be noted that Executives in Italy are excluded from this new regulation which freezes dismissals. This is due Law 604/66 and the Italian National Bargaining Agreement (CCNL – Contratto Collettivo Nazionale di Lavoro) and will imply that this category does not benefit from any social safety nets.
There is no need however to discuss the constitutionality of this regulation. This is especially true considering that it is of limited scope (a time period limited to 60 days) – which is the reason why it could pass a test of constitutionality even if it conflicts with Article 41 of the Italian Constitution (see below). It would be different if – as I believe and fear – this ban is extended for another 6 – 8 months.
If this trade-off is in fact currently justified – in my opinion it would not be justifiable if there would be an extensions of the suspension as the provision would then lose its exceptional and temporary nature.
This is because the use of the social safety nets in Italy (which are certainly welcome at this moment ) are a
faculty but certainly not an obligation for companies. In fact, companies could also decide, if the crisis persists, that the reduction or closure of its activities might be more convenient than trying to continue with operations. It is at this point that Article 41 (see below) of the Italian Constitution would victoriously support such a decision.
It should not be forgotten that the cost of labour is one of many factors which makes up the cost of production. Fixed costs such as rent, machinery, energy etc. would remain a burden of a company even if the burden of the labour costs became the burden of the State for a few months through the social cushion shock absorbers (more formally referred to as CIG – Cassa Integrazione Guardagni).
Similarly, in the event of an extension of the “block” on the collective dismissal (Law 223/91) too – it could be in fact introduced, in a creeping manner, an easily conceivable ban on layoffs with a trade unionist / judicial queue.
In short, Article 46 of Legislative Decree No. 18/2020 is an exceptional regulation – and must remain so. It is not certainty that placing the consequences of the pandemic on businesses will resolve the problems of employment risk that this unique emergency brings. The State must do its part to support businesses with adequate incentives and support.
Bans of this nature have never worked. Much less now.
ITALIAN CONSTITUTION LINK
Article 1- Italy is a democratic Republic founded on labour. Sovereignty belongs to the people and is exercised by the people in the forms and within the limits of the Constitution.
Article 3- All citizens have equal social dignity and are equal before the law, without distinction of sex, race, language, religion, political opinion, personal and social conditions. It is the duty of the Republic to remove those obstacles of an economic or social nature which constrain the freedom and equality of citizens, thereby impeding the full development of the human person and the effective participation of all workers in the political, economic and social organisation of the country.
Article 4- All citizens have equal social dignity and are equal before the law, without distinction of sex, race, language, religion, political opinion, personal and social conditions. It is the duty of the Republic to remove those obstacles of an economic or social nature which constrain the freedom and equality of citizens, thereby impeding the full development of the human person and the effective participation of all workers in the political, economic and social organisation of the country.
Article 5- The Republic is one and indivisible. It recognises and promotes local autonomies, and implements the fullest measure of administrative decentralisation in those services which depend on the State. The Republic adapts the principles and methods of its legislation to the requirements of autonomy and decentralisation
Article 35- The Republic protects work in all its forms and practices. It provides for the training and professional advancement of workers. It promotes and encourages international agreements and organisations which have the aim of establishing and regulating labour rights. It recognises the freedom to emigrate, subject to the obligations set out by law in the general interest, and protects Italian workers abroad.
Article 41- Private economic enterprise is free. It may not be carried out against the common good or in such a manner that could damage safety, liberty and human dignity. The law shall provide for appropriate programmes and controls so that public and private-sector economic activity may be oriented and co-ordinated for social purposes.
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