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22.042021

Dismissal based on financial grounds: reinstatement obligation in cases of manifest lack of the fact

The Constitutional Court, with its ruling no. 59 filed on 1 April 2021, declared unconstitutional art. 18, paragraph 7, second sentence of Italian Law 300/1970 (Workers’ Statute), as amended by art. 1, paragraph 42, letter b) of Law 92/2012 (Fornero Law), since it is detrimental to the principle of equality under art. 3 of the Constitution.

Facts of the case

By its 7 February 2020 order, the Court of Ravenna, acting as employment tribunal, raised a question of constitutional legitimacy of art. 18, paragraph 7, second sentence of Italian Law 300/1970 in the “part in which it states that, if the judge ascertains the manifest lack of the fact underlying a dismissal for justified objective reasons, “may” and not “must” apply the remedy referred to in paragraph 4 of art. 18 (reinstatement)”.

According to the Court of Ravenna, the optional nature of the reinstatement of a worker unlawfully dismissed for justified objective reason violates the principle of equality (art. 3 of the constitution.) as “(…) it would result in an arbitrary inequality in treatment between completely identical situations, i.e. the dismissal for just cause and dismissal for justified objective reason of which groundlessness is established in Court.”

In the Court’s opinion, the Constitutional Court should restore equal treatment between the two types of dismissal regarding mandatory reinstatement. According to the Court of Ravenna, even in the case of dismissal based on financial grounds, the reinstatement should be mandatory once the manifest lack of the fact is established, and it should not leave the decision to judicial discretion.

The Constitutional Court’s ruling

The Constitutional Court, adhering to the Court of Ravenna thesis, states that the “merely optional nature of reinstatement reveals a conflict within the system outlined by Law 92/2012 and violates the principle of equality.”

By legislature conscious choice, the system assigns importance to the common assumption of the lack of the fact and connects the applicability of the reinstatement remedy to this assumption. This reveals that “the optional nature of the reinstatement remedy for dismissals based on financial grounds is conflicting and harmful to the principle of equality, in the face of the inconsistency of the alleged justification and the occurrence of a more serious fault than the lack of the fact.”

The Constitutional Court quoted majority case law on the subject that recognises the discretionary power of the judge to deny reinstatement in the case of manifest lack of the fact at the base of the dismissal for objective justified reason if “the reinstatement remedy is, at the time of adoption of the judicial measure, substantially incompatible with the organisational structure” of the company.

The Constitutional Court’s view was that “it is manifestly unreasonable to link the major consequences that impact the alternative between a more incisive reinstatement remedy or a mere indemnity, to contingent factors or factors determined by the choices of the person responsible for the offence (the entrepreneur).”

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Based on the above, the Court declared art. 18, paragraph 7, second sentence of Italian Law 300/70, as amended by the Fornero Reform, unconstitutional in the part where the judge is required to ascertain the manifest lack of the fact underlying the dismissal based on financial grounds, “may also apply” – instead of “also applied” – reinstatement remedy.