The different systems of penalties provided for the case of illegitimate collective dismissal, before and after the so-called “Jobs Act”
Under the Italian discipline of collective dismissal, Article no. 5 of Law no. 223/1991 provides that the selection of employees to be made redundant within a given group subject to reorganisation, should be made on the basis of the “selection criteria” laid down in collective agreements or provided by the Law, to be applied in combination with each other:
- family burden;
- length of service;
- technical, productive and organisational needs of the company.
In the event of collective dismissal notified in violation of the mentioned “selection criteria”, two differentiated systems of sanctions could apply, depending on the hiring date of the dismissed employee:
- in case of employees hired with an open-ended employment contract before 7 March 2015, Article no. 5 of Law no. 223/1991 provides for the consequences referred to in article 18, par. 4 of Workers’ Statute (i.e. reinstatement of the employee, in addition to the payment of wages from dismissal to reinstatement up to a maximum of 12 monthly instalments);
- differently, in case of open-ended employment contracts (the so-called “contracts with proportionate protection”) signed after 7 March 2015, pursuant to Article 10 of Legislative Decree no. 23/2015, the only possible remedy would be a compensation equal to 2 monthly instalments for each year of service, within a minimum of 6, and a maximum of 36 monthly instalments.
The case analysed by the Court of Milan
A female employee, first hired with a fixed-term employment contract, then confirmed with an open-ended contract (the so-called “contract with proportionate protection”) after 7 March 2015, was in the end dismissed, through a collective dismissal procedure, together with other employees all hired before 7 March 2015.
The latter employee challenged in Court her dismissal questioning for the recognition:
- of the violation of the “selection criteria” provided by art. 5 of Law 223/1991;
- of the protection regime of reinstatement, highlighting that the assessment of only an indemnity protection for the case of declaration of the unlawfulness of her dismissal, would determine a strong difference in treatment with respect to other colleagues dismissed through the same collective procedure, but hired before 7 March 2015 (and so destined to reinstatement).
The question raised by the Court of Milan before the European Court of Justice
By ruling of 5 August 2019, the Court of Milan referred to the European Court of Justice to evaluate the compatibility of Article 10 of Legislative Decree no. 23/2015 (which, as mentioned above, provides only for an indemnity protection for employees hired after 7 March 2015), with the European principles of equality, reasonableness and non-discrimination (as provided by “Charter of Fundamental Rights of the European Union”, EU Directive 99/70/CE and EU Directive 98/59/CE).
In the interpretation of the Court of Milan, the coexistence of two different sanctioning regimes for the case of illegitimate collective dismissals, ends up causing significant issues both in terms of:
- adequacy and effectiveness of the protection against illegitimate dismissal;
- difference in treatment(i.e. reinstatement against only compensation) between employees hired before or after 7 March 2015.
Therefore, the Court of Milan specifically referred to the European Court of Justice to decide whether the European principles of equal treatment and non-discrimination prevent the applicability of a different protection regime, according to which employees involved in the same collective dismissal procedure can be recognised with the protection of reinstatement rather than a mere compensation, depending if they were hired before or after 7 March 2015.
We will continue to monitor this case closely and will report back on the interpretation of the European Court of Justice on this matter.