With judgment no. 118 of 21 July 2025, the Italian Constitutional Court declared the partial unconstitutionality of Article 9, paragraph 1, of Legislative Decree no. 23 of 2015 (Jobs Act), insofar as it limits compensation for unlawful dismissals in small businesses to only six months’ salary[1].
Therefore, following the ruling, small and micro employers (even those with only one employee) face the risk of being ordered to pay up to 18 months’ salary in compensation for a dismissal — issued in respect of employees hired from 7 March 2015 onwards — that is declared unjustified (i.e., not discriminatory, retaliatory, etc.).
The issue was raised by the Labour Division of the Court of Livorno,[2] which deemed Article 9 of the Jobs Act to be in contrast with Articles 3, 4, 35, 41, and 117 of the Constitution.
The Court found it unconstitutional to set “a compensation bound within such a narrow range (e.g., from three to six months’ salary in cases of unlawful dismissals under Article 3, paragraph 1, of the aforementioned legislative decree).”
As a result of the ruling, Article 9 now merely states that in cases of unjustified dismissal (Art. 3, para. 1), procedural/formal flaws (Art. 4, para. 1), or conciliation offers (Art. 6, para. 1), the amount of compensation is to be halved compared to what applies to larger employers (i.e., above the statutory size threshold).
With this ruling, the Constitutional Court introduces potential contradictions and inequalities, as well as a deep uncertainty for micro employers.
Firstly, the decision appears to contradict previous rulings in which the Court had upheld the constitutionality of both the compensation cap and the range provided in Article 8 of Law no. 604/1966.
This is because the grounds for unconstitutionality do not concern the use of the employer’s size as the sole criterion for determining different dismissal protections. On this point, the Court explicitly states it does not wish to make a highly manipulative intervention to reshape the special protection regime for small employers but merely hopes the legislator will intervene, “considering also other equally significant factors, such as turnover or balance sheet total, which have long been identified by both EU and national legislation as necessary additional elements.”
Moreover, the judge’s discretion is now very wide in determining compensation within the minimum and maximum limits, since no statutory criteria are provided. As is well known, Article 9 of Legislative Decree 23/2015 refers to Article 3 of the same Decree for the relevant criteria; however, the only criterion provided there (length of service) was declared unconstitutional by Judgment no. 194/2018.
Although that ruling suggests other possible criteria (referring to Article 18, para. 5 of the Workers’ Statute and Article 8 of Law no. 604/1966), it is highly doubtful whether these are binding; in any case, failure to apply them is not subject to review by the Court of Cassation. Therefore, the judge’s discretion remains extremely broad.
Another consequence is a clear disparity in treatment with employees hired before 7 March 2015 by the same small employers. Despite identical unjustified dismissals, these workers can receive at most six months’ salary, within a compensation range that is just as narrow as the one struck down by the current judgment.
Additionally, this may even create disparities and contradictions with employees of large employers (with hundreds of employees). In fact, the latter, in cases of unjustified dismissal (where the facts are established), might receive only six months’ salary, while an employee of a micro employer (with one employee) might be awarded three times that amount.
In conclusion, Judgment no. 118/2025 risks having destabilizing effects on the most vulnerable segment of SMEs, namely microenterprises, which may not withstand the impact of paying 18 months’ salary in compensation, especially in the absence of ex ante criteria.
Thus, the Constitutional Court carries out a balancing exercise between the adequacy of redress and the need for predictability and cost sustainability—a task that, in a system based on separation of powers, should be reserved to politics and the legislature, which remains free to implement the Constitution as to the when, the whether, and even the how[3].
There was a time when the Constitutional Court showed greater awareness of the macroeconomic consequences of its rulings. One can only hope that Parliament will reclaim its role.
[1] Employers who, in each establishment, branch, office, or autonomous department where the dismissal took place, or within the same municipality, employ up to fifteen employees (or up to five, in the case of agricultural undertakings).
[2] Cfr. C. Pisani “Il licenziamento nelle piccole imprese: dal “supermonito” di Corte cost. n. 183/2022 alla nuova rimessione del Tribunale di Livorno”, in Il Lavoro nella giurisprudenza, n. 1/2025.
[3] A. Morrone, Suprematismo giudiziario. Su sconfinamenti e legittimazione politica della Corte costituzionale, in Quaderni Costituzionali, 2, 2019.
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