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End of employment

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End-of-employment-1General principles

Dismissal should always be provided by written notice. Individual dismissals of employees are subject to certain restrictions

Open ended contracts can be terminated without any compensation or additional sanction where there is just cause ("giusta causa") or objective or subjective justified grounds ("giustificato motivo").

Just cause means a very serious breach (e.g. theft, serious insubordination) or any other employees behavior that seriously undermines the trust relationship on which employment relationship is based. Justified grounds means either:

•subjective justified grounds, consisting of a less serious breach of the employee (e.g. failure to follow important instructions, willful misconduct, repeated non-justified absences from work);

•objective justified grounds, consisting of an objective reason related to the employers need to reor- ganize its production activities or workforce setting.

Termination of fixed-term contracts

If one of the parties terminates the contract before its expiration date and without just cause, the other party may be awarded a proper compensation.

 In the event of early termination by the employer, compensation would customarily amount to that which the employee would have accrued up to the contract expiration date.

 

Resignations

Generally, resignations do not need to take any specific form, however most collective agreements require that this be in writing. According to certain NCAs, in case of resignation, the length of the notice period may be shorter than in the case of dismissal.

Notice and termination payments

Upon termination of employment relationship, employees are entitled to:

•the payment of deferred wages (TFR);
•the payment of some minor termination indemnities (payment in lieu of unused holidays and leave, accrued pro-rata 1^ and 14^ monthly installments and so on);
•a notice period of termination, the duration of which varies according to the employees' seniority and professional level and as established by national collective agreements.

The payments under points (i) and (ii) above are always due in the case of dismissal, while the notice period (or the relevant indemnity in lieu) would not be due in the case of dismissal for just cause.

With respect to point (iii) above, it is worth noting that the employer is anyway entitled to exempt the employee from working during the notice period. In such case, the employee would be entitled to receive the correspon- ding indemnity in lieu, which would be equal to the normal salary (plus social security contributions) that would have been due during the notice period.

 

Unfair dismissals

Jobs Act has introduced a new regime for individual and collective unfair dismissal, remarkably reducing the instances of reinstatement and establishing a transparent framework for possible disputes. The new provisions apply to:

•employees hired on an open-ended basis from 7th March 2015;
•employees hired before 7th March 2015 on a fixed-term basis whose contracts were converted into an open-ended contract after 7th March 2015;
•apprentices hired before 7th March 2015 whose contracts were converted into an open-ended con- tract after 7th March 2015.

(a) Dismissals before enforcement of Jobs Act

Should the dismissal be deemed unfair by a Court, the employer would be required to do either of the following two actions:

1.if the reasons for the dismissal are considered totally unlawful: reinstatement and payment of a compensation equivalent to maximum 12 months for non-worked period (plus social security con- tributions). The employee may waive the right to reinstatement, opting to receive an additional com- pensation equal to 15 monthly wages;

2.if the reasons for the dismissal are considered concrete, but insufficient to justify the dismissal: pay- ment to the dismissed employee of an indemnity ranging from 12 and 24 monthly wages of the last annual salary.

Employees of small firms (less than 15 employees) are entitled to receive a compensation ranging from 2.5 to 6 months

wages.

In case of discriminatory and void (e.g. oral) dismissals, regardless from the number of employees, point (i) above applies.

 

(b)Dismissals after enforcement of Jobs Act

In the event of termination for economic or disciplinary reasons the Court finds to be unfair, employees are en- titled to an indemnity equal to 2 monthly wages for each year of employment, with a minimum of 4 months up to a maximum of 24 months.

The Court may require reinstatement of the employee only in the case of void and discriminatory termination or should the Court find that the allegation for dismissal on subjective reasons was not based on fact.

In smaller firms (less than 15 employees) the indemnities will be halved and cannot in any case exceed 6 months wages. Reinstatement is foreseen only for void and discriminatory dismissals.

In order to prevent possible disputes, a fast and convenient extra-judicial settlement procedure has been esta- blished, allowing the employer to offer the worker an indemnity equal to 1 month's wage per year of service, for a minimum amount equivalent to 2 months wages up to a maximum of 18 months wages. Acceptance of this transaction prevents any further appeal by the employee. The sum paid is not subject to social security contri- bution or to fiscal taxation.

 

Dismissal of executives

Though similar principles apply, dismissal of executives is not regulated by the same statutory provisions go- verning termination of lower-level employees. Given the high level engagement, fairness of an executives' di- smissal is normally assessed unless it is shown to be a violation of correctness and good faith principles. The High Court (Corte di Cassazione) has indeed repeatedly confirmed that concept of "fairness" of an executive’s termination does not coincide with the notion of "just cause" and "justified reason" (applicable to normal em- ployees), but that it includes any reasonable ground for termination not limited to a breach of the correctness and good faith rules which underpin an employment relationship.

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