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20.102020

Dismissal due to age limit: obligation to give contractual notice

The Supreme Court of Cassation, under Order no. 18955 published on 11 September 2020, stated that in cases of dismissal due to reaching the age limit, the employee is due notice or related pay in lieu.

Facts

The case facts concern an employee, classified as a manager, to whom the National Collective Labour Agreement (CCNL) for managers in the industrial sector was applied. The manager (who was entitled to an old-age pension from 4 February 2009, the date on which he turned 65) had received an initial employment termination notice on 26 March 2008 with effect from the following 30 June.

On 14 January 2009, the company notified the manager of the employment termination on 4 February 2009, and amending the notice sent on 26 March 2008.

The manager referred the matter to the judicial authorities and, as the losing party , appealed.

The Court of Appeal before which the case was brought  held that there was an employer’s obligation to give notice, noting that art. 2118 of the Italian Civil Code did not place any restrictions, nor did art.  22 of the National Collective Labour Agreement exclude such an obligation for employment termination due to age limits.

As for the quantum, the Court of Appeal observed that the notice received by the employee was only 18 days, from 14 January 2009 to 4 February 2009, not even remotely in line with the collective bargaining agreement, which has consequences in terms of indemnity payment for the period not granted. For this reason, the Court of Appeal ordered the employer to pay the manager the indemnity in lieu of notice referred to the difference between the 12 months due under the national collective bargaining agreement and the 18 days of notice received.

The employer appealed the Court ruling, and the manager replied with a counter-claim.

The Supreme Court of Cassation’s ruling

According to the Supreme Court, the ruling under appeal specified that the employer’s conduct confirmed that reaching an age limit did not exempt it from an obligation to give the employee notice, even though it authorised the company to proceed with the ad nutum dismissal. This was in line with a correct interpretation of art. 22 of the National Collective Labour Agreement.

The same Court stated on several occasions that “the typical and peremptory nature of employment termination reasons excludes automatic termination upon reaching a certain age or the attainment of pension requirements.” This is unlike what happens, for example, for mandatory retirement in the public administration employment.

In the absence of a valid termination measure by the employer, the Court felt that the relationship “continues with the employee’s right to receive wages even after reaching the age of 65. In private employment, relationship termination due to age limits, the employer must give notice.”

Contrary to what was ruled on appeal, the Court considered the employer’s first notice sent to the employee dated 26 March 2008, valid instead of the second notice sent on 14 January 2009. According to the Supreme Court of Cassation’s judges, the second notice did not extinguish the first, as it “was only aimed at bringing forward the originally fixed employment relationship termination date without prejudice to the expressed termination intention.”

However, the deadline applicable in this case (12 months from 26 March 2008) was not fully complied with, with the consequence that the Court of Cassation granted the employee the right to an indemnity in lieu of notice corresponding to the unbenefited period, equal to a month and twenty-two days (from 4 February 2009 to 26 March 2009). This solution was considered consistent with art. 1231 of the Italian Civil Code, which excludes novation (and an extinguishment) if there are modifications concerning the application or cancellation of a term.

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The ruling concludes that in the private employment field when terminating the relationship due to the employee’s age limit, the employer can proceed with an “ad nutum” termination while complying with contractual notice obligation.