Lavoro Diritti Europa, 20 November 2024
By: Carlo Pisani Category: Dismissal
1. Following the recent Constitutional Court judgments No. 128 and No. 129, both published on 16 July 2024, the rulings handed down by the Constitutional Court on dismissal sanction regimes since 2018 now number nine; and they become ten if we also count the “warning” judgment concerning dismissals in small undertakings.
It does not seem far-fetched to speak of an unprecedented degree of judicial activism on the part of the Constitutional Court in this area. Never before had the Court so deeply affected specific choices made by the legislature under two different parliamentary majorities.
The techniques employed by the Court also share a markedly “manipulative” character with respect to the statutory text: in some cases, this took the form of an ablative excision of words from the text of the law, producing a sanction system that is very different (judgments No. 59/21 and 125/22), if not the exact opposite (judgments No. 194/18 and No. 150/20), from the one originally enacted by Law No. 92/12 and Legislative Decree No. 23/15, respectively. Other rulings are strongly additive in nature, involving a shift in the technique used to remedy the constitutional defect, thereby allowing the Court to effectively rewrite significant parts of the provision (judgment No. 128/24). Even the judgments dismissing the constitutional challenge (No. 183/22 and No. 129/24) are bound to leave their mark. The latter, in particular, in substance reintroduces a case that Legislative Decree No. 23/15 had sought to eliminate for employees hired from 7 March 2015 onward.
2. In short, with judgment No. 194/18, by striking from Article 3(1) of Legislative Decree No. 23/15 the words “[the judge orders the employer to pay an indemnity…] equal to two months’ worth of the employee’s last salary… for each year of service…”, the Court eliminated the automatic mechanism for calculating the indemnity payable for unjustified dismissal based on the employee’s length of service (the so-called “increasing protections” regime), on the premise that the individualisation of damages by the judge in relation to unjustified dismissal is constitutionally required. Through this lexical amputation, the resulting provision (the judge orders the employer to pay an indemnity of not less than six and not more than thirty-six months’ salary) radically alters the system for calculating the indemnity, which is now left to the judge’s discretion within a broad range of 6 to 36 months’ salary.
The other, almost “twin” ruling, judgment No. 150/19, likewise eliminates the seniority-based indemnity calculation system, this time in the case of a formal or procedural defect in the dismissal, on the basis of essentially the same reasoning as in the preceding judgment No. 194. Here too, the Constitutional Court substitutes its own view for that of the legislature, holding that the damage arising from loss of employment must be individualised even where the dismissal is substantively justified but suffers only from a formal or procedural defect.
Nor were the two judgments (No. 59/21 and No. 125/22) amending Article 18(7) of the Workers’ Statute any less significant, concerning unjustified dismissal for objective reasons affecting employees hired before 7 March 2015. The Court effectively eliminated the possibility of applying the compensatory remedy, restoring the broader scope of the reinstatement remedy; this outcome was again achieved through the technique of ablative excision of individual words from the statutory text, removing two safeguards that the legislature had introduced to limit its scope, namely the requirement that the absence of the factual basis for dismissal be “manifest”, and the judge’s discretion as to whether to apply reinstatement or the compensatory remedy, which in any event rested with the judge.
3. Once this first “mini-cycle” of 2018-2022, which was predominantly dismantling in character, had come to an end, 2024 saw the opening of another cycle of five judgments (rendered under a different President and rapporteur), concerning Legislative Decree No. 23/15 (and hence employees hired from 7 March 2015 onward), more oriented toward an overall systematisation of the subject matter, yet still strongly manipulative/creative with respect to the legislative intent and the wording of the provisions.
It began with a judgment dismissing the constitutional challenge, No. 7, which declared constitutional the lesser protections afforded against unjustified dismissal for employees hired from 7 March 2015, holding rational the legislature’s intentions—also expressed in the enabling Act—of encouraging permanent employment, particularly among young workers, and facilitating exit from precarious employment, by limiting the reinstatement remedy and excluding it entirely, in particular, for dismissals on economic grounds. The Court would revisit this total exclusion some months later in judgment No. 128, this time declaring it partially unconstitutional with respect to employees hired from 7 March 2015 onward.
In judgment No. 7, moreover, the Court endorsed—if not effectively constitutionalised—one of the guiding principles of the reforms, namely that not all unlawful dismissals are equal, thereby justifying differentiated sanctions; this graduated approach would, however, later be partially curtailed by the Court itself in the subsequent judgments No. 128 and No. 129.
Judgment No. 44/24 follows the same line as its predecessor, having dismissed the constitutional challenge to the provision applying Legislative Decree No. 23/15 equally to employees already hired as at 7 March 2015, where the employer subsequently exceeds the threshold of 15 employees after that date. Here too, the Court relies on the reasonableness of the legislature’s intent not to discourage new hiring above the critical fifteen-employee threshold, ensuring that employers, once that size threshold is exceeded, can rely on a dismissal regime that is, overall, more favourable than that under Article 18 of the Workers’ Statute.
While judgments No. 7 and No. 44 appear to mark a shift toward a more “conservative”, or more “deferential”, approach by the Constitutional Court toward the legislature’s choices, the same cannot be said of the other three, in which the manipulative/additive tendency resumed—this time aimed at narrowing precisely the gap in protections under Legislative Decree No. 23/15 affecting employees hired from 7 March 2015 onward, a gap which the very same Court had deemed constitutionally legitimate in judgment No. 7/24.
Thus, in judgment No. 22, the Constitutional Court held unconstitutional the legislature’s choice to apply the full compensatory reinstatement remedy only in cases of nullity expressly provided for by law, on the ground that this violated the guiding criterion laid down by the enabling Act, which, on the contrary, recognised the reinstatement remedy for null dismissals without drawing any such distinction.
But the most creative judgments of 2024 are the last two. In judgment No. 128 of 16 July 2024, the Constitutional Court, by way of an additive ruling, declared Article 3(2) of Legislative Decree No. 23 of 2015 (and hence applicable to employees hired from 7 March 2015 onward) unconstitutional insofar as it fails to provide for application of the reinstatement remedy in cases of unlawful dismissal for objective reasons where the underlying material fact does not exist. Here too, therefore, the Constitutional Court introduces a new rule into the legal system, structured around an important distinction drawn by the Court: the reinstatement remedy continues to be excluded only where the unjustified nature of the dismissal stems from a breach of the duty to explore alternative redeployment (repêchage), in which case the compensatory remedy applies; conversely, where the material fact underlying the objective ground for dismissal does not exist—that is, in practice, where it is not established in proceedings that the position held by the dismissed employee was actually eliminated—the failure of Article 3 to provide for reinstatement is, according to the Court, in violation of Articles 3, 4 and 35 of the Constitution, giving rise to an unreasonable difference in treatment compared with the parallel case in which the alleged fact underlying just cause or a subjective justified reason does not exist. This is because, in the Court’s view, where the material fact alleged by the employer as the basis for the dismissal does not exist, the principle that dismissal must necessarily be causally justified is breached, whether the dismissal is disciplinary or based on objective grounds. The material fact is, however, as noted, defined in a manner that excludes any assessment of the employee’s potential redeployment.
This approach adopts a view held by part of legal scholarship (including by the very judge acting as rapporteur, in one of his own monographs), in contrast to the differing position taken by the Court of Cassation, which instead holds the reinstatement remedy applicable even where the employer proves that the position was eliminated but fails to prove that the employee could not have been redeployed. It is true that this latter line of case law developed in relation to Article 18(7) of the Workers’ Statute, but following judgment No. 128 of the Constitutional Court, there is now, in practice, no longer any difference with Article 3(1) of Legislative Decree No. 23/15 insofar as it concerns dismissal on economic grounds. Hence the convergence of the two regimes brought about by the constitutional case law, provided, of course, that the Court of Cassation revises its position to align, also with respect to Article 18 of the Workers’ Statute, with the systematic distinction drawn by the Constitutional Court.
In judgment No. 129, also of 16 July 2024, the Constitutional Court held unfounded the challenges to the constitutionality of Article 3(2) of Legislative Decree No. 23 of 2015 insofar as it fails to provide for application of the reinstatement remedy also where dismissal is imposed for a breach for which the applicable collective agreement provides only for a conservative sanction. This is, however, an interpretative judgment dismissing the challenge, meaning that the finding of no merit applies only within the limits set out in the judgment itself, which in substance also has additive content.
Here too, as in judgment No. 128, the Court draws the following important systematic distinction: Article 3(2) of Legislative Decree No. 23/15 must be interpreted, in order to be constitutionally compliant, as equating—for sanction purposes, and hence triggering application of the reinstatement remedy—the absence of the material fact with the case of a disciplinary dismissal where the fact exists but has been classified by the applicable collective agreement as a specific, defined breach warranting only a conservative sanction; this must be distinguished from the case in which the conservative sanction is provided for by the collective bargaining parties only by reference to general or vague categories of misconduct. In this latter case, according to the Constitutional Court, the provision in Article 3(1), under which “any assessment as to the proportionality of the dismissal remains extraneous” to the inquiry, does not permit application of the reinstatement remedy; only the compensatory remedy applies, since what is at issue is a proportionality assessment concerning a fact that does, in fact, exist.
This distinction produces a twofold systemic effect, entirely similar to that produced by judgment No. 128 with respect to the other route to the reinstatement remedy (absence of the material fact): here too, the scope of application of the reinstatement remedy is broadened beyond what was originally envisaged under Legislative Decree No. 23/15; at the same time, and consequently, the so-called “dual-track” system is rendered more uniform as regards protections for employees hired from 7 March 2015 onward, bringing it closer to the regime under Article 18 of the Workers’ Statute; this is achieved, however, by adopting the more restrictive interpretation of this alternative route to reinstatement, which, according to part of legal scholarship, was also the interpretation most faithful to the legislative intent. In doing so, this judgment too places the Constitutional Court substantially at odds with a recent line of Court of Cassation case law, which instead recognises the reinstatement remedy even where the ground for dismissal falls within an elastic, generic or vague category provided for by the disciplinary code for which the collective agreement establishes only a conservative sanction. It is true that Article 3(2), unlike Article 18(4), expressly provides that “any assessment as to the disproportionality of the dismissal remains extraneous” to the absence-of-material-fact inquiry; this, however, may readily be inferred by way of interpretation also from Article 18(4), since the underlying rationale is identical, such that the maxim ubi eadem legis ratio, eadem legis dispositio applies; this is also because it is well known that the 2015 legislature was prompted to include this express clarification following the earliest judicial applications of the 2012 statute, which tended to fold proportionality assessments into the absence-of-material-fact inquiry.
In conclusion, in these last two judgments the Constitutional Court attempts an effort at systematisation, recovering the reinstatement remedy and broadening its scope of application also for employees hired from 7 March 2015 onward, in keeping with the principle—emphasised in its first judgment of this second 2024 mini-cycle (judgment No. 7)—of graduating sanctions according to the differing severity of the defect. In doing so, it achieves the result of narrowing the difference in protection arising from the so-called “dual-track” system, while remaining consistent with the fundamental criterion that not all unlawful dismissals are equal.
Unlike the earlier 2018-2022 cycle of judgments, in its 2024 rulings the Court seeks to provide a systematic rationale consistent with the underlying principles that inspired the legislative reforms of the remedial framework.
But the real question is this: does this amount to an encroachment on legislative power, an improper substitution of judicial for legislative judgment, or does it fall within the Constitutional Court’s proper role?
4. In recent years, the issue of constitutional courts overstepping their role has resurfaced in connection with a series of much-discussed rulings concerning various areas of the legal system. In particular, given its proximity to the critical issues highlighted in relation to judgment No. 194/18, one may recall the ruling in which the Court rewrote the measure of the administrative sanction connected with the offence of fraudulent bankruptcy (Constitutional Court judgment No. 222/2018). Here too, the Constitutional Court introduced, in place of the provision then in force, a wholly rewritten rule; moreover, here too the Court appears to make a series of argumentative leaps in order to construct a different, more individualised sanction regime, but one lacking any objective and consistent point of reference.
It is therefore worth asking whether the mission the Court appears to have assigned itself in the area of dismissal protections stems from one of the most remarkable concentrations of unconstitutional provisions ever recorded in the history of the Italian Republic, or whether, instead, there has been an impulse to act as legislator, allowing the Court’s own value judgments to prevail over the legislature’s choice to alter the uniform reinstatement regime—thereby displaying, on this view, the hallmarks of an anomalous overstepping of its role as an impartial institutional safeguard and supreme guardian of the legal system’s rationality.
The moment is particularly opportune in the wake of the two most recent judgments of 16 July, which may have completed the picture of interventions in the remedial framework—always, of course, subject to the ingenuity of the referring courts.
It is therefore possible to begin drawing up a balance sheet of this “micro-system” developed by the Constitutional Court, both from a strictly labour-law perspective and from a broader standpoint concerning the very role and function of constitutional adjudication within our legal system.