Employment Update, Italy - June 2007


Case Law

The Italian Court of Cassation (judgment 30 March 2007, n. 7880, united sections) established that the guarantees provided under paragraph 7, law number 300/ 1970 (workers' statute of rights) also apply in cases where executives’ (dirigenti) employment contracts are terminated (for disciplinary reasons).

The application to executives of the guarantees provided under paragraph 7 has been a controversial point for quite some time due to the peculiar nature of executives’ employment relationships and to the fact that this relationship was considered as based on trust and - as such - exempted from the employer’s disciplinary power.

Sect 7 of law 300 of 1970 sets out the mandatory disciplinary procedure to be followed by the employer in order to apply a valid disciplinary measure (including dismissal) to any employee. Such disciplinary procedure is mainly aimed at guaranteeing the employee a right of defence and preventing the employer from misusing his disciplinary powers.

Before adopting a disciplinary measure the employer shall:

  1. Draft a disciplinary code defining the employer’s actions which are to be considered in breach of the employment relationship;

  2. Display such disciplinary code in its offices;

  3. Raise any breach of duty directly with the employee, in writing;

  4. Allow the employee time (5 days) to defend himself by providing justification for his actions.

In this specific case, an executive contested his dismissal, claiming it was unfair, because he considered his employers’ failure to provide written notification to the executive of the facts to constitute a breach of his duties, meant that his right to defend himself had been breached.

The Court of Cassation allowed the petition filed by the manager, considering that the rules set under paragraph 7, law no. 300/1970 should be applied to every employee independently from duties assigned to them, or their position inside the company.

In particular, the Supreme Court said that the assignment of managerial duties to an executive and his position in the company did not involve nor require the exclusion of the rights provided by paragraph 7 l. n. 300/1970.

As a consequence of this decision (which was followed by the Court of Cassation at “united sections” i.e. in order to solve a controversial case on which different decisions had been taken by the Court itself), the employer is under an obligation to comply with the rules set out by sect. 7 of law 300 of 1970 where the employer seeks to apply a disciplinary sanction to an executive (Dirigente), such rules must be complied before any such disciplinary measures are initiated.

It is therefore highly recommended, that before adopting any dismissal procedures for disciplinary reasons (i.e. not for economic reasons), all provisions of sect. 7 of law 300 of 1970 should be checked to ensure that they have been complied with. Failure to comply may result in the obligation to pay the so called “additional severance” (indennità supplementare), as occurred in this case. In the manufacturing industry collective agreement such additional severance could amount to up to 22 months salary. This would be paid in addition to any notice period indemnity payments.