Dismissal for economic reasons: a new Italian Constitutional Court judgement 2021

Updated: Apr 30


With judgement No. 59, filed on 1 April 2021, the Italian Constitutional Court declared the unconstitutionality of Article 18, seventh paragraph, second sentence, of Italian Law. No. 300 dated May 20, 1970 (i.e., the so-called “Workers' Chart”) in that portion in which it provides that the judge - having ascertained the manifest non-existence of the fact on which the dismissal for justified objective (economic) reason is based - "can" and not "must" apply the softer reinstatement protection (“tutela reintegratoria attenuata”, in the Italian parlance, i.e., reinstatement in the previous job position with payment of an allowance not exceeding 12 months, less the money that dismissed employee has in meantime earned from other jobs as well as the money that the dismissed employee could have earned if he/she had diligently looked for a new job).


The softer reinstatement protection is the same that, pursuant to Article 18, fourth paragraph, of the Workers' Charter, the judge must apply in the case of disciplinary dismissal (just cause or subjective justified reason) in which the disputed fact is non-existent (i.e., if the fact on which the disciplinary dismissal is based falls within the conduct punishable with a conservative sanction according to the applicable collective bargaining agreement).


The reasoning of the Constitutional Court can be summarized as follows.


According to the Constitutional Court, the reinstatement option provided for by the mentioned second sentence of seventh paragraph reveals an internal disharmony in the system of protections and violates the principle of equality. Furthermore, formulated in this way, the law provision provides for a discretionary power to the Judge by not clarifying the application criteria suitable for circumscribing judicial discretion.


The disharmony of the protection system lies in the fact that the legislator, in this way, has foreseen unjustifiably diversified remedies (i.e., one mandatory provided for in the case of disciplinary dismissal, the other one purely optional in the event of dismissal for economic reasons) in the analogous hypothesis of manifest non-existence of the fact on which the dismissal is based.


The Constitutional Court is aware of the difference between disciplinary dismissals (just cause or subjective justified reason), where the employer violates the employment contractual obligations and the dismissal for objective reasons due to the employer’s economic, technical and organizational choices, but nevertheless believes that the conceptual and intrinsic difference between the two types of dismissals does not justify a diversification as to the mandatory or optional reinstatement, once that the judge deems the non-existence of the fact worthy of the reinstatement remedy and that, with regard to the economic dismissal for economic reasons, even the most pregnant assumption of manifest non-existence is required.


According to the Constitutional Court, however, there is also a profile of intrinsic unreasonableness of the distinctive criterion adopted since, thus formulated, the law provides for a discretionary power to the Judge but does not clarify the application criteria suitable for circumscribing judicial discretion.


Avv. Guido Brocchieri


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