COLLECTIVE DISMISSIALS IN ITALY

COLLECTIVE DISMISSIALS IN ITALY

Over the recent years, Italy has introduced to the Italian legal system a number of changes related to labor law. The date 7th March 2015 turned out to be a breakthrough for new regulations regarding dismissals. According to the new rules, employers who perform collective dismissals must follow a strict, mandatory procedure (the mobility procedure) and any violations of this procedure may lead to offences and penalties for them. Let’s present in a short brief, the concept
of collective lay-offs in Italy, what are the main requirements of collective redundancies and which are the penalties for employer envisaged in the case of breaching these regulations.

DEFINITION OF COLLECTIVE REDUNDANCIES

The legal definition of collective dismissal it is possible to find in art. 24 of Law no.223/1991, which defines as ,,collective’’ a dismissal effected when ,, as a result of a reduction or transformation of business or work, the employer intends to make at least 5 redundancies, over
a period of 120 days in each production unit, or in a number of production units within the same Province’’. The definition given by law provide us, at least two defining factors of this issue: qualitative (the purpose of the dismissal) and quantitative. With reference to the qualitative aspect, the collective dismissal may be performed by the employer due to some reduction
or transformation of the activity or job in each production unit, or several production units in the territory of the same province. The quantitative requirements basically means that collective redundancies have an objective numerical requirement, and occurs only when company intends
to make at least 5 redundancies within a period of 120 days.

PROCEDURE

As it was mentioned above, when an employer intend to make a number of redundancies he is obliged to follow a specific, complex procedure provided by law, divided into the following stages:

1) communication in written form. The procedure begins with a written notice addressed to the RSA or RSU (unions), to the Trade Work Council Organizations and to the Provincial Employment Office. Taking into account that under new law, the executives are also included in collective dismissal procedures, notice of the commencement of the procedure must also be communicated to representatives of this category of employers. The formal letter (notice)  must indicate the reasons that led to the surplus of the employers, the technical or organizational limitations which makes it impossible for employers to take alternatives to the intended dismissals, specification of the number and job profiles of the surplus staff and the numbers of staff that is normally employed within the company, plan to implement the mobility programme with specific dates, and any measures that are planned to deal with the social consequences after commencement the procedure of  collective dismissal;

(2) payment to INPS ( Istituto nazionale della previdenza sociale) of the entrance contribution, equal to one month’s redundancy fund instalment;

3) at the same time employer is obliged to send the copy of the written notification which he prepared at the beginning of the process of the dismissial to the local authorities- the Local Employment Department or the Director of the Regional Labor Department or the Minister (there are different bodies, depending on whether the surplus of employees affected a single province, a few provinces, the same region or several regions);

3) joint examination procedure. Within 7 days of receiving the notification, which informs about the intended redundancies within the company, the employer is forced to begin the consultations with the representatives of trade unions bodies in order to make the joint assessment. As a consequence of these consultations there may be reached different types of the agreements (e.g. agreements specifying criteria that should be taken into account when dismissing staff or agreements regarding the scope of redundancies);

4) conciliation phase conducted by the Labour Offices. After consultations, the company must inform the bodies that where mentioned under 3) whether and what type of agreement the company managed to achieve with trade unions. If the entrepreneur haven’t reached the agreement with the trade unions in the first phase of the consultations, in the second phase are taking part the competent public institutions ( see under 3) ) in order to get further assessments. The second stage of the consultation last max. 30 days;

5) in the event of reaching the agreement with trade unions or after finishing the consultation procedure provided by the law, employer is sending to the workers, that are going to be made redundant, the letter of withdrawal;

6) the last step of the procedure is to inform The Office of the Regional Employment Office, the Regional Commission for Employment and trade associations about sending to the workers letters of withdrawal. The entrepreneur is obliged to fulfill this obligation within 7 days after sending abovementioned letters to employees.

SELECTION CRITERIA

Another crucial issue that is connected with collective dismissal is the selection criteria which are used by the employer in order to make a decision which workers will be dismissed. The employer during the process of selection the employees which will be made redundant should follow the criteria that were set out in agreements reached during the consultations with trade unions. If the negotiations has finished without positive outcome or in the absence of union agreements, he is obliged to take into account the criteria envisaged under Law ( art.5 of Law no.223/1991) .

In other words the selection of the staff will be made using the criteria laid down in collective agreements or alternatively, legal criteria of family responsibilities, seniority and technical-productive and organizational needs. When it comes to the criterion of seniority, according to case law the employer should always consider the length of service in the company, not the age of the employee. With reference to technical-productive and organizational needs,
it must be highlighted that these are simply reasons which forced the employer to begin the process of dismissal within his company. Not to mention that the case law does not clearly specify the weight of each criteria. In some court judgments, we are able to meet the approach that they are having the same value, while in others the greatest importance is giving to the criterion of technical-productive and organizational needs.  

 

PENALTIES

In order to avoid the penalties provided by the law, the employer must fulfill all the envisaged  formal requirements. Any deviations from the procedural requirements will be penalized. In the procedure of collective redundancy the employer can fail to:

1) follow the collective procedure in a proper manner. Typical violation of the procedure is the lack of the written form of dismissal. In that case the redundancy will be ascertained as a null and the employer will be obliged to: 1) reinstate the worker in the workplace ( or pay the employee compensation which is a lump sum equal to up to 15 month’s salary if he/she opt for it) and 2) pay the worker compensation equal to the overall salary for the months from dismissal to reinstatement and in any case no less than 5 months.

2) comply with the selection criteria (see above) set out under Art.5 of Law no.223/1991. In the event of occurrence such infringement , the employer will suffered the consequences mentioned in art.18(4) of the Workeres’ Statute, which are obligation to reinstate the worker (unless the worker chooses the 15 month’s salary in lieu of reinstatement) and in addition obligation to pay damages of up to 12 months’ salary.

3) comply with any other aspect of the mobility procedure (violation of the procedure referred to in art.4 (12)). While these breached will be ascertained, the employer may be only ordered to pay all-inclusive compensation for damages between a minimum of 12 and a maximum of 24 months of the last total remuneration.

At the end it is worth to mention that the procedures set out above apply also to employees at executive level (dirigenti).

 

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