Milan, 29 december 2016 – Through a recent Court Ruling (25201/2016), Italian Court of Cassation stated – for the first time in our legal system – the opportunity of dismissal due to economic reasons also in order to increase profitability. Until now individual dismissal for economic reasons could only take place in case of an extraordinary situation of company crisis, which constituted the only possible justification for a redundancy. Today, after the Court Ruling of the 7 th December, also a company’s profitability can be one of the reasons to accept a dismissal. This is an historical event for Italian law.
“One of the reasons for this ruling – as explained by Luca Failla, specialized in Labour Law, Co-Founder of LabLaw. – is the application of article 41 of Italian Constitution, which states that an entrepreneur is free, within the law, of taking decisions in order to make more efficient and profitable his company, with no possible intromission by a judge. In other words – continues Failla – with this ruling the judges of Court of Cassation stated for the first time in a definitive way that a dismissal is not only justified in case of an extraordinary situation of company crisis or, in the worst case, when the existence of the company itself is at risk, but also –that’s the point- in the case of a need to review the company’s structure in order to increase efficiency and profitability”.
The ruling’s reasons – “The Court of Cassation’s ruling of 7th December 2016 –continues Failla – is referred to a ruling of 29th May 2016 by Appeal Court of Florence which deemed not legitimate the dismissal of an employee of R.S. Spa”. The abovementioned ruling didn’t accept the opinion of the first judge, who considered the dismissal as legitimate since “motivated by the technical need of reshaping the command structure in order to improve the company management”. The Appeal Court of Florence stated that without any proof on the entrepreneur side regarding the urgency of such a dismissal, it “is only motivated by the need of cost reduction and so by mere increase in profit for the company”. The Court of Cassation intervened confirming the validity of the first ruling, and so the acceptance of the dismissal, under article 41 of the Constitution interpreted as “that principle for which the entrepreneur is free, within the law, of taking decisions in order to make more efficient and profitable his company, with no possible intromission by a judge on the motivations of these decisions”. It is stated that “granting the entrepreneur the faculty of suppressing a specific role/function in his company only in case of an extraordinary situation of company crisis, represents a strong constraint in his freedom and autonomy in managing the company, which is a Constitutional right”. With the second motivation, it is stated that art. 3 and 5 of Law n. 604/1966) is violated and wrongly applied in relation to art. 41 of Constitution. It is stated that, even where the suppression of a company role was dictated by profit improvement, this decision would be valid anyways, given that it is related to the economic freedom of the entrepreneur. It is challenged the idea that for a dismissal to be accepted there must be only the “economic requirement given by unfavorable company situation or necessity to sustain significant extraordinary expenses”.
Who is Luca Failla – Lawyer Specialized in Labour Law, Contract Professor at LUM Jean Monnet of Casamassima University (Bari). Lawyer of the year in Labour Litigation (Legal community 2013). Co-Founder of Lab law, first Italian Law firm specialized in labour law and industrial relations for its professionals and capillary diffusion on the territory. Expert in extraordinary corporate transactions / M&A, industrial relations, corporate law, international litigation, executives’ agreements and administrators’ responsability. Well known in Italian legal and academic circles, requested as professor in universities, involved in training and updates for companies on the subject of Labour law.