COVID-19: ban on workers dismissal
By: Domenica Cotroneo e Selene Catanzaro
COVID-19: ban on workers dismissal
Following the health emergency due to the spread of the COVID-19 pandemic and the consequent and inevitable economic crisis that hit Italy, the Italian Government, with art. 46 of Decree Law no. 18 of March 17, 2020 (so-called Decree “Cura Italia” i.e. “Cure Italy”) introduced the prohibition for all companies, regardless of the number of their employees, to serve dismissals for economic reasons and, at the same time, has suspended all pending procedures under articles 4, 5 and 24 of Law no. 223 of July 23, 1991 started after February 23, 2020.
The original wording of the aforementioned article 46 (later amended by the so-called Decree “Rilancio” i.e. “Recovery”) provided that: “as from the date of entry into force of this Decree, the initiation of the procedures referred to in articles 4, 5 and 24 of Law no. 223 of July 23, 1991 is precluded for 60 days and, during the same period, all pending procedures initiated after February 23, 2020 are suspended. Until the expiry of such period, the employer, regardless of the number of its employees, may not terminate the employment contract for justified objective reasons under article 3 of Law no. 604 of July 15, 1966“.
It shall be noticed that the ban does not include, among others, dismissals for “disciplinary” reasons, dismissals served during or at the end of the probationary period and apprenticeship period, dismissal for exceeding the protected period, dismissal for reaching retirement age, and dismissal served to employees who are not able to perform their job tasks anymore.
The aforementioned provision, originally effective for 60 days starting from March 17, 2020, was extended until August 17, 2020 by Law Decree no. 34 of May 19, 2020 (the so-called Decree “Rilancio”); at the time of this writing, according to the statements made by the Minister of Economy Roberto Gualtieri, the ban could be extended until the end of the year, giving rise to a situation of uncertainty about its effective extension.
Such provision, inspired by the commendable need to protect jobs places in a moment of extreme difficulty and contraction of the labor market, has aroused some debates, first of all, on the executives’ dismissal.
In order to better understand this aspect, it is necessary to make a brief excursus on the Italian Labor Law.
Executives (i.e. “Dirigenti”) have always been expressly excluded from the application of Law no. 604, of July 15, 1966, which provides for protection against unjustified dismissals, as well as from the application of the forms of protection contained in art. 18 of Law no. 300 of May 20, 2020 – so-called “Workers’ Statute”, with an exception for the protection against null and void dismissals.
The aforementioned exclusion implies that only articles 2118 and 2119 of the Italian Civil Code apply to the dismissal of executives (i.e. dismissal ad nutum with notice and immediate dismissal for just cause); moreover, executives can enjoy the forms of protection provided by the National Collective Bargaining Agreements applied to their employment relationship.
Both the Decrees “Cura Italia” and “Rilancio” make explicit reference to art. 3 of Law no. 604, of July 15, 1966, so excluding executives from the area of application of the dismissal ban.
However, such exclusion has aroused some perplexities, as the ratio behind the ban, as we have already pointed out, is to avoid job losses in a period of “emergency”. Moreover, the settled case-law has always tended to extend to executives the same protections applicable to employees: in particular, by introducing a distinction between the so-called “dirigenti apicali (i.e. “top executives”), who operate as an alter-ego of the employer, and the so-called “dirigenti non apicali” (i.e. “non-top executives”), also called “pseudo-executives“, who, according to a large part of the settled case law, would be subject to the application of Law no. 604, of July 15, 1966 (see ex multis Court of Cassation, ruling no. 7295/2018, and Court of Cassation, ruling no. 20763/2012).
However, there is no trace of such distinction in the aforementioned Decrees: while waiting for a (hoped-for) clarification at legislative level, it seems extremely complicated to establish whether or not the prohibition extends to the category of pseudo-executives and, if so, what could be the consequences of dismissals served to executives during the period of the ban.
Another central issue is the employees’ right to receive the NASpI indemnity (an Italian unemployment benefit) also in case of dismissals served during the period of the ban, an aspect that has been recently clarified by the INPS (Italian National Social Welfare Institution) with the decision no. 2261/2020.
As pointed out by the Legislative Office of the Ministry of Labor and Social Policy, in fact, the NASpI is an unemployment benefit granted to employees who have lost their jobs against their will: therefore, the fact that a dismissal for justified objective reason was void (for being served during the dismissal ban) does not exclude the right of the employee to receive the NASpI; in fact, only the Labor Judges are entitled to ascertain the (un)lawfulness of the dismissal and to determine which forms of protections apply to the case of the employee.
In light of the foregoing, the INPS has clarified that it will accept (whether all legal requirements are met) those applications for NASpI submitted by employees who have been dismissed on the grounds referred to in art. 46 of the Decree “Cura Italia” after its entry into force (March 17, 2020).
However, should the employee be reinstated in his job place (as a result of a legal proceeding or an extra-judicial litigation), the INPS reserves the right to recovery the amounts paid to the employee as NASpI indemnity.
It should also be considered that art. 46 of the Decree “Cura Italia”, as amended by the Decree “Rilancio”, has already introduced the possibility for employers to revoke at any time the dismissals for justified objective reasons served in the period between February 23, 2020 and March 17, 2020, as long as they simultaneously apply for the wage guarantee funds referred to in articles 19-22 of the Decree “Cura Italia”, as from the effective date of the dismissal. In this case, the employment relationship shall be deemed to be restored without interruption, without charges or sanctions for the employer.
Also in this case, any amount already paid by the INPS as NASpI indemnity will be recovered by the Institute, in consideration of the sum that will be granted to the employee by the wage guarantee fund.
Lastly, we would like to make some considerations on the consequences for employers in case of dismissals served in violation of the ban imposed by the current legislation.
According to some scholars, such dismissals should be considered as ineffective (for the moment and save for further extensions) until next August 17; according to other scholars, however, the same should be considered as null and void for violation of mandatory rules, with consequent condemnation to reinstatement of the employee and conviction of the employer to the payment of an indemnity corresponding to the salary that the employee should have received from the date dismissal until his actual reinstatement, in addition to a minimum of five months’ salary and the obligation to pay social security contributions.
On this point, too, there is no certainty, and the matter shall necessarily be left to the assessment of the judges of the labor sections of the courts.