23/10/2017

Termination of Employment

Termination of an individual employment agreement - individual dismissals

Employees

The dismissal of an employee is valid only when there is a true and just cause (gross misconduct of the employee, involving the immediate termination of the working relationship without any notice period) or a justified reason (less serious misconduct of an employee, or business reasons such as the company’s winding-up, reorganization, etc.). In the case of dismissal for a justified reason a notice period must be given.

If the dismissal of an employee is not based on one of the above grounds, and the employee obtains a declaratory judgment of unlawful dismissal, the economic consequences depend on the size of the employer:

Employers with more than 15 employees working in the production unit, or 60 employees nationwide, are obliged to take back the employee and pay him the remuneration that he would have earned from the date of dismissal to the date that he goes back and, in any case, not less than five months’ pay. If the employee does not wish to go back, he is entitled to ask the employer to pay an indemnity equivalent to 15 monthly salaries instead (plus his remuneration from the date of dismissal, which in any case, is not less than five months’ pay).

Employers with less than 15 employees are not obliged to take back the dismissed employee. They can confirm the dismissal and pay an indemnity ranging from two and a half to six monthly salaries.
Notice period. When an employee is dismissed for a justified reason, the employer must give the employee notice, the length of which is established by the CCNL according to the employee’s job title and years of work.

If there is   true   and   just   cause, the   employment relationship can   be   terminated immediately.

Executives

The rules described above are not applicable to executives. CCNLs for executives (which are different for each  sector) generally  state that there must be good grounds for the dismissal of an executive. Therefore, an executive may contest his dismissal and seek damages if the dismissal is not supported by any valid reason.

CCNLs for executives in the  trade  sector state that  an  executive who  has  been  unfairly dismissed has  the  right to receive an additional  indemnity of 18 months’ salary (plus other  indemnities based on the executive’s age), plus the notice period.

Notice period. CCNLs for executives specify  that  the  length  of the  notice  period (from six to 12 months) depends on the seniority  of the executive.

A collective dismissal is when an employer with more than 15 employees intends to dismiss more than five employees within 120 days.

When a company intends to start a collective dismissal, it must follow a particular redundancy procedure. This procedure also applies  when a company is closed down.  Law no. 223 of 23
July 1991 establishes the steps to be taken:

 

Within seven days of receiving  the notice,  the trade  unions  can request a meeting with the company’s management in order to examine the reasons for the decision and evaluate possible alternative solutions. This first phase expires within 45 days of receipt of the notice

 

Should the two parties not come to an agreement, another attempt has to be made by the manager of the local office of the Ministry of Labour. This phase expires within 30 days of the date  of the notice  given by the company to that authority,  informing it of the results of the consultation with the trade  unions and the reasons for the negative outcome

 

Once  an agreement with the trade  unions  has been reached, or the procedure has been completed, the company’s management has to inform the employees of their dismissal in writing, in accordance with the terms and conditions communicated beforehand to the trade  unions.

   

On receipt of their dismissal indemnity the  employees normally sign an official settlement agreement at  the  Provincial  Office  of  the  Ministry  of  Labour  (Direzione  Provinciale  del Lavoro). This is to avoid any future  disputes and claims against the company.
The trade unions usually ask for additional amounts, which may range from six to 24 monthly  salaries (or even  more).

The sole  purpose of the  sum  distributed to the  employees as  a dismissal indemnity is to avoid any disputes and claims against the company before the judicial authorities.

The  company will also  have  to  pay  the  dismissed employees all the  other  indemnities provided  for by Italian law and by their CCNL, such  as an indemnity in lieu of notice,  TFR, additional  monthly  instalments, and  outstanding  holiday leave.  Such  payments cannot be considered or treated as a leaving incentive.

This procedure applies  to all employees, excluding executives.

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