Jobs Act

Jobs Act: the Constitutional Court declares the illegitimacy of the provision on allowance provided for in case of unjustified dismissal

In a press release issued yesterday - and awaiting the publication of the decision - the Constitutional Court declared the unlawfulness of Article 3, paragraph I, of Legislative Decree no. 23/2015, approved by the Renzi’s government, better known as the “Jobs Act”, in the part where it has introduced the provision of an increasing compensation by sole reason of the length of service to be paid to the worker hired with a permanent contract and dismissed without just cause.

The constitutional illegitimacy originates from the contrast of the provision with the principles of reasonableness and equality, in addition to the right and protection to work enshrined by Articles 4 and 35 of the Constitution.

The original provision stated: “(...) in cases where it is ascertained that the requirements for the dismissal for objective just reason  or subjective just reason or just cause do not recur, the judge declares the employment relationship terminated on the date of dismissal and convicts the employer to pay an allowance equal to two months of the last reference salary for the calculation of the severance pay for each year of service, to an extent in any case not less than four and not more than twenty-four months”.

The Legislative Decree no. 87/2018 (“Decreto Dignità”), approved by the current government, has modified the allowance's quantum - from six to thirty-six months - without however scratching the logic of increasing-protection.

The decision originates from the judgement of July 26th, 2017, with whom the Court of Rome had raised before the Constitutional Court the question of constitutional legality of Article 1, paragraph VII, letter c) and of the Articles 2, 4 and 10 of the Legislative Decree no. 23/2015, in contrast with Articles 3, 4, 76 and 117, paragraph I, of the Constitution, read independently and also in correlation between them.

It should be noted that the Court of Rome, did not identify the constitutional illegitimacy of the provision by reason of the elimination of the reinstatement protection - which, due to the case of law of the Constitutional Court, does not constitute the only criterion of implementation of the Articles 4 and 35 of the Constitution -, but rather because of the discipline of compensation and, in particular, the criteria to be followed for quantifying the allowance.

More specifically, with regard to the contrast with the principles of equality and reasonableness referred to in Article 3 of the Constitution, the provision of a fixed and increasing allowance calculated only on the basis of length of service, would seem not to constitute - in the opinion of the Court of Rome - an adequate parameter for workers hired after the entry into force of the Jobs Act (07.03.2015), and unjustly dismissed; emblematic and paradoxical would be the discriminatory situation that would be created even within the same company organization where, by virtue of  the drafting of an identical employment contract and the same need to reduce staff, the company would be incentivized to privilege the less costly and problematic expulsion of workers to which would apply the Jobs Act’s provisions.

From the point of view of the difference in treatment, the date of starting employment relationship would appear as an accidental and extrinsic information to each employment relationship, in nothing suitable to differentiate one relationship from another in which the substantial contents are equal.

Moreover, the application of an arithmetic criterion, implying the total elimination of the judge's discretionary power, would end up treating in same way very dissimilar cases among them.

Added to this, there would be the lack of the deterrent nature of the sanction, since the employer could benefit from a 36-month contribution relief - provided for by Law no. 190/2014 - of a much larger amount than the conviction who the same would be forced to pay in a fixed amount in case of dismissal.

The “liberalization of the dismissals” and the annulment of the “binding” effect enacted by the Jobs Act, would be contrary to the Articles 4 and 35, paragraph I of the Constitution, which represent the constitutional principles of right to work, understood as an instrument of realization of the person and means of social and economic emancipation.

Furthermore, the dismissals protection would end up to make weaken the employee’s contractual strength in their daily workplace relationship, causing unavoidable effects on other constitutionally workers' rights (freedom of expression and disagreement, defence of dignity before to abuses, trade union rights and freedoms etc.).

It is precisely by virtue of the presumable acceptance of the above-mentioned profiles of constitutional illegitimacy - the dubitative formula is inevitable awaiting to better understand the details of the decision, soon to be published - that the Constitutional Court has censored the mechanism of the allowance increasing in reason for only length of service.

At this point, the prospect seems to be that to go back to the previous calculation criteria for allowance established by “Legge Fornero”, which entrusted judges with the assessment case-by-case (taking into account the duration of the employment relationship, but also the size of the company and the behaviour of the parties) within the same range of minimum and maximum.

Awaiting the corrections that will be made by law, the decision sounds like a rejection for the rising-protection employment contract, cornerstone of the Renzi’s reform, which already in the aftermath of its entry into force had been harshly criticized from several sides.