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Summary
The Italian Supreme Court has held a collective redundancy to be unfair because the first information notice to the unions was incomplete and did not mention the reasons why the employees to be dismissed could not be assigned to another site of the company.
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Legal background
Law no. 223 of 25 July 1991 regulates, in accordance with Council Directive 98/59/EC relating to collective redundancies, the information and consultation procedure to be followed in case of collective redundancy.
This procedure applies to companies with more than 15 employees, which intend to make redundant more than five employees (including executives) over a period of 120 days in a single unit or in several units located in the same province, grounded on economic reasons linked to the reduction or transformation of activity or work or the termination of activity.
The legal procedure is split into two phases: a union phase and an administrative phase.
To start the union phase the company must send an information notice to the work councils as well as to the respective categories’ unions. The communication must also be sent to the local employment office.
The information notice should include:the reasons for the redundancies and the technical, organisational or production reasons why they cannot be avoided either completely or partially;
the numbers, rank and job descriptions of all the redundant employees and of all the remaining workforce;
the timetable for the redundancy plan;
possible measures to reduce the social impact of the redundancy plan; and
the method of calculation of the additional sums to which the employees are entitled to that are not provided for by law or under a collective agreement.
Any errors in the above-mentioned communication can be settled by an agreement with the unions. This agreement shall be reached during the course of the collective dismissal procedure.
Within seven days of the date of receiving the communication, on the request of the unions, a joint meeting between the parties may be held in order to examine the reasons for the redundancies and to try to find different solutions to reduce the number of redundancies.
The procedure must be completed with an agreement within 45 days from the date of receiving the notice where ten or more redundancies are intended. If there are less than ten redundancies to be made the maximum period is 23 days.
The employer must send a written notice to the regional and provincial employment offices (or to the Ministry of Labour) recording the agreement reached or, in the event of a failure to reach an agreement, the reasons for the failure and the request for the administrative phase.
In the administrative phase, the regional employment office will call the parties (or the Ministry of Labour will call the parties) for an additional examination which could last a maximum of 30 days (15 days if there are less than ten employees to be made redundant).
There is no obligation to reach an agreement, but the employer cannot terminate the employment contracts until the end of the consultation period. -
Facts
Proma S.p.A., a company with different sites in Italy, started a collective redundancy procedure for its site in Pozzilli. In the first information notice sent to the unions to start the information and consultation procedure the company did not mention the reasons why the employees to be dismissed could not be assigned to different sites within the company. Three of the employees dismissed challenged the dismissal holding it to be unfair because the employer did not compare the employees dismissed with other employees of different sites, applying to the entire staff the selection criteria provided for by the law.
According to Italian law, mandatory selection criteria apply to choose the employees to be dismissed; these criteria include length of service in the company (i.e. ‘last in first out’), family circumstances and technical, production and organisational needs. They are applied in the absence of alternative criteria drawn up during the consultation process.
In the case at hand the selection criteria were applied only to the employees of the site to which the dismissed employees belonged, and not to the entire staff of the company. -
Judgment
The Court of Appeal ordered the company to reinstate the employees who challenged the collective dismissal and awarded them with an indemnity equal to salary from the dismissal to the actual reinstatement.
The reasons on which the Court of Appeal grounded the decision were that: (i) the information notice sent by the company to start the information and consultation procedure did not include details of the reasons why, in order to identify the employees to be dismissed, the comparison among employees was limited only to staff of one site and not with employees of all the other sites of the company; (ii) the agreements reached with the unions could not correct the mistakes in the application of the selection criteria in relation to an incomplete information notice that did not allow the unions to be adequately informed about the correctness of the company’s perspective.
The company challenged the decision arguing that the law does not provide any obligation to include in the first notice to the unions information about appropriate measures to avoid the dismissals.
The Supreme Court held that the decision of the Court of Appeal was correct for the following reasons: (i) the indication of the reasons why the employees to be dismissed could not be assigned to other sites fell within the legal requirement to indicate in the first notice information on the reasons why it was not possible to adopt measures to avoid the dismissals; (ii) the lack of indication of the reasons why the employees to be dismissed could not be assigned to other sites also represented a limitation on the number of employees among which the employees to be dismissed must be chosen according to the legal selection criteria.
The first information notice to start the information and consultation procedure with the unions must include all the information specified by law so that the unions can exercise, in a transparent way, actual control over the planned reduction in workforce, and also evaluate possible alternative measures to avoid the dismissals. The inadequacy of the information shared with the unions involves the unfairness of the dismissals for irregularity of the procedure; indeed, the lack of comparison of the employees to be dismissed in a site with other employees of the other sites, in order to identify the employees to be dismissed according to the legal selection criteria, limits a complete consultation with unions, so that the correct joint examination is compromised.
The agreements reached with the unions in the framework of such a consultation cannot be considered adequate to remedy the defects of the procedure. -
Commentary
This decision highlights that it is crucial to pay attention in the drafting of the first information notice by which the information and consultation procedure starts. This notice must be complete and also mention the reasons why the employees to be dismissed cannot be assigned to other sites and why the employees to be dismissed are not comparable to the employees of other sites.
The mistake in this first information notice involves the unfairness of the dismissals that cannot be remedied by any potential agreement reached with the unions during the procedure.
This decision is even more important in light of the new information and consultation procedure introduced by the Budget Law for 2022. According to this new piece of legislation, employers that have employed on average at least 250 employees (including apprentices and executives) in the past year and that intend to proceed with the closure of a plant, branch or local office, with closure of the related activity, involving the dismissal of at least 50 employees, must follow a special information and consultation procedure with unions and authorities, in addition to the already existing mandatory legal procedure for all types of collective redundancy.
The new mandatory procedure provides that, at least 90 days before the beginning of the collective redundancy procedure, employers must notify their intention to proceed with the closure and the reasons for it, including expected timing and the number and type of redundancies, to trade unions (local unions and works councils), the regions involved and the labour authorities.
The employer must then draw up a plan to limit the employment and economic impact of the envisaged closure and redundancies, which will then be discussed with all the authorities listed above.
If the consultation ends without an agreement being reached or in the event the plan is not presented or is incorrect, the employer will face increased costs compared to those of the regular redundancy procedure. More precisely, if the plan is not drawn up or if it does not contain the required information and items or the commitments set forth in the plan are not complied with by the employer, the company must pay the double of the so-called dismissal ticket (already multiplied by three, as provided for collective dismissals).
Before the end of the consultation period redundancies cannot be implemented. If the already existing legal collective redundancy procedure is started after the end of the consultation set out above, the first 45-day phase does not apply. In addition, the procedure does not apply to companies that are in a situation of likely crisis or insolvency.
This new law introduces formalities and complications when an employer proceeds with a collective dismissal which are to be considered in addition to the already existing formalities. -
Comment from other jurisdiction
Germany (Hannah Vierk, Luther Rechtsanwaltsgesellschaft mbH): In Germany, Directive 98/59/EC was implemented by Section 17 of the German Protection against Dismissal Act (Kündigungsschutzgesetz, ‘KSchG’). Section 17 regulates the conditions which the employer must observe in the case of collective redundancies. Section 17(1) KSchG specifies the ratio of the number of employees to be laid off to the size of the company in order for a dismissal to be notifiable. Section 17(2) KSchG then regulates the involvement of the works council, stating the minimum content of the written notification. Accordingly, the information notice must contain:
the reasons for the planned dismissals;
the number and occupational groups of the employees to be dismissed;
the number and occupational groups of employees regularly employed;
the period of time over which these dismissals are to take place;
the intended criteria for the selection of the employees to be dismissed; and
the criteria for calculating any severance payments.
The criteria provided for the selection of the employees to be dismissed shall include professional, personal, social and operational aspects. The employer can refer to the aspects mentioned in Section 1(3) KSchG, which include age, length of service, maintenance obligations and any severe disability. Up to now, an understanding closely oriented to the wording of the law has been advocated and it has been assumed that the mere naming of the above-mentioned criteria for the selection is sufficient. According to a decision of the Düsseldorf Regional Labour Court (Landesarbeitsgericht Düsseldorf, ‘LAG Düsseldorf’) however, with regard to the specification of the ‘criteria for the selection’ of the employees to be dismissed, it is not sufficient to merely name the criteria. It must also be evident which criteria were used and how they were applied in order to arrive at the result of the social selection (LAG Düsseldorf, judgment of 26 September 2013 – 5 Sa 530/13). However, the ruling only states that the information notice must contain information on how the criteria were applied but not with regard to which group of employees. Therefore, even based on the case law of the Regional Labour Court, in German law the information notice should be sufficient in the case at hand. The Federal Labour Court, as the highest labour jurisdiction, has not yet ruled on this issue.
Under German law, the information notice does not have to contain any information on the possibility of continued employment. From this point of view too the notification would therefore not be incorrect. An incorrect social selection due to its restriction to employees of a business unit would become significant in the context of an action for protection against dismissal. In this case, it would also be examined whether the employee could have continued to be employed in another job in the same business or company.
As a result, under German law, the information notice for the works council would have been correct. However, an incorrect social selection due to restriction to employees of a part of the company or a possibility of further employment would come into play in the context of an action for protection against dismissal.Subject: Collective Redundancies
Parties: Proma S.p.A. – v – Adamo Riccardo; Proma S.p.A. – v – Prete Alessandro and Imbriglio Angelo
Court: Corte di Cassazione (Supreme Court)
Dates: 2 March 2022; 8 March 2022
Case numbers: 6881; 7472
DOI: 10.5553/EELC/187791072022007002004
European Employment Law Cases |
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Case Reports | 2022/14 Initial incomplete notice to unions renders collective redundancy unfair (IT) |
Keywords | Collective Redundancies |
Authors | Ornella Patanè |
DOI | 10.5553/EELC/187791072022007002004 |
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Suggested citation
Ornella Patanè, "2022/14 Initial incomplete notice to unions renders collective redundancy unfair (IT)", European Employment Law Cases, 2, (2022):82-84
Ornella Patanè, "2022/14 Initial incomplete notice to unions renders collective redundancy unfair (IT)", European Employment Law Cases, 2, (2022):82-84
The Italian Supreme Court has held a collective redundancy to be unfair because the first information notice to the unions was incomplete and did not mention the reasons why the employees to be dismissed could not be assigned to another site of the company. |