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Company transfer and change in flat rate overtime to monthly allowance

The Supreme Court of Cassation, with its ruling no. 24145 of 30 October 2020, confirmed that, in the event of transfer of a company, the worker has the right to maintain the distinctive component of remuneration included in the individual employment contract.

Facts of the case

The Court of Appeal of Catanzaro upheld the appeal filed by a worker, with the qualification of anaesthesiologist, who transferred to employment with another company due to a company transfer.

Specifically, the worker, had claimed his right to maintaining the distinctive component of his remuneration (called “EDAPR”) attributed to him by the transferor and used for more than a decade (from 4 January 2001 to 27 May 2011), asking, based on this, to sentence the transferee to pay the sums due for this purpose during the period from 27 May 2011 to 31 January 2015.

On this point, the District Court had considered that (i) the worker be accredited with the amount for “EDAPR” as a flat rate payment for any overtime work performed (so-called “flat rate overtime”) and (ii) the same if it was transformed, over the course of employment, into an extra allowance constituting an integral part of the worker’s remuneration.  

Thus the local court had recognised the right to maintaining the distinctive component of remuneration and seniority matured by the worker as a correct application of art. 2112 Italian Civil Code, when it provides that the transferor’s employee maintains all of the rights resulting from the original employment, excluding, at the same time, the impossibility of referring to paragraph 4 of the same article as a foundation for unilateral changes of employment by the transferee.

Objecting to the lower court’s ruling, the losing company appealed to the Cassation Court.

The Supreme Court of Cassation’s ruling

The Court of Cassation, in rejecting the company’s appeal, reiterated the particularities contained in art. 2112 of the Italian Civil Code confirming verbatim that it “guarantees in favour of employees of the employer that transfers the company or its business unit the guarantee of maintaining all of the rights resulting from employment with the transferor and aimed at protecting credits the worker already matured and compliance with the treatments in effect”.

Moreover, the Supreme Court also pointed out how in the case in hand the compensation was correctly identified as remuneration functional to the overall job and that “the flat rate compensation of the service rendered beyond normal work hours granted to the worker for a long time, where not correlated to the presumable amount of overtime rendered, is an allowance that, over time, assumes a different function from the original one, typical of overtime compensation, and becomes a monthly component that is part of ordinary remuneration and not unilaterally related to the employer”.

According to the Court, the employer can opt for recognition of a flat rate compensation – all-included and not restricted to the number of hours actually worked beyond normal hours – aimed at paying the worker for services of an overtime nature. The relative amount is not the consequence of a final measurement of the overtime hours performed multiplied by the relative increases. Its measurement is determined beforehand based on an agreement between the parties to compensate a number of overtime hours that are “presumed” to be rendered through constant delivery over time.

This remuneration, thus becomes an ordinary component of the worker’s pay and cannot be unilaterally revoked by the employer.

With these motivations, the Court of Cassation rejected the appeal submitted by the employer, sentencing it to pay court costs.