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Early termination of fixed-term employment contracts

According to the case law predominant position, neither dismissal for organizational economic reasons nor early termination for reasons other than just cause can be applied in fixed-term employment contracts.

The case law holds that dismissal for organizational economic reasons is not reconcilable with fixed-term contracts because this type of contracts responds to the need for the employer to react to situations that make it objectively no longer convenient to keep the employment relationship alive.

As regards early termination, this is allowed only in the presence of a just cause, i.e., a fact of such seriousness as not to allow the continuation, not even temporary, of the employment relationship. Therefore, the employer can withdraw from the fixed-term contract only when the employee is in breach of the contractual obligation by adopting a conduct that irreparably compromises the fiduciary relation. Similarly, the employee can withdraw from the fixed-term contract only in the presence of a situation that makes resignation justifiable (resignation for just cause, such as those determined by mobbing situations or due to non-payment of monthly salaries).

The consistent case law believes that, in the event of employer’s withdrawal, the employee has the right to receive the monthly salaries that the employee would be entitled to receive until the initial expiry date (Court of Rome, 28 September 2020, No. 4817). In this case, the judges take the monthly salaries that the employee would have received as a useful parameter to compensate both the actual damage and the loss of profit (Court of Chieti, 14 July 2020, No. 132).

On the other hand, when the employee withdraws prior to the initial expiry date without just cause, the case law is more rigid when has to decide on the request - quite widespread -made by the employer to receive, as damage compensation, an amount equal to the monthly salaries that the employee would have earned if the employee had not resigned. In these cases, in order for the claim for compensation to be accepted, the case law asks the employer to demonstrate that the sudden withdrawal from the employment relationship has caused damage to the production organization. Otherwise, the employee owes nothing to the employer, although, as mentioned, early termination from a fixed-term contract is not allowed except for just cause.

However, assuming that the employer is able to prove the existence of a damage, for the quantification of said damage, the case law, instead of applying the same criterion used for the early withdrawal of the employer (monthly salaries due until the expiry date of the contract), is aimed at making recourse to the equitable assessment of damage compensation, ordering the employee to pay a sum equal to the indemnity in lieu of notice payable by the same. In principle, therefore, although in the fixed-term relationship the indemnity in lieu of notice is not due, if the employee withdraws without just cause, the employer can claim damage compensation, asking for the quantification of the same on an equitable basis, which judges, tendentially, award in an amount equal to the indemnity in lieu of notice (Court of Perugia, 27 January 2016, No. 28).

Avv. Guido Brocchieri

The content of this article does not constitute legal advice, but has an informative function. For personalized legal advice, contact the firm by e-mail or by phone +39 06 916505710. © Dong & Partners International Law Firm, All rights reserved

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