Entitlement to damages if the extraordinary redundancy fund (CIGS) rotation is unlawful (Andrea Di Nino, Sintesi – Ordine dei Consulenti del Lavoro, February 2023)

21 February 2023

With its order no. 37021 of 16 December 2022, the Court of Cassation stated that a worker is entitled to compensation for damages if, under an extraordinary redundancy fund (CIGS) procedure, the employer decides discretionally and without defined criteria to suspend work without adequate rotation.

The case involved an employer’s appeal after the suspension of a female worker under the “zero hours” extraordinary redundancy fund was held unlawful at first instance. The employer was ordered to pay the difference in wages to the worker for the extraordinary redundancy fund periods. These differences consisted in the company integrating the INPS payment up to the full salary that the worker should have received if she had worked for the entire period of the “zero hours” suspension.

Given the Court of Appeal’s confirmation of the first instance ruling, the employer asked for its annulment on several grounds of appeal. These were rejected by the Court of Cassation based on the following.

The employer claimed a short statute of limitations of the sums claimed by the worker based on Art. 2948 of the Italian Civil Code. The Supreme Court held that “under case law, the worker’s claim for damages for the unlawful suspension following the extraordinary redundancy fund allocation is based on a claim for contractual breach (consisting of relationship management which does not conform with the rules), subject to the ordinary ten-year statute of limitations.”

The Court of Cassation stated that the agreements for starting each extraordinary redundancy fund period referred to “technical and organisational needs related to a re-organisation plan but did not specify the criteria used to identify those who were to be suspended.” The employer’s criterion was “completely discretionary, not agreed, not inferable from the generic reference to technical-production requirements and arbitrary.” 

The employer “autonomously identified the workers to be suspended without complying with predetermined criteria establishing the priorities within the following parameters – seniority, burdens, production needs. Additionally, it needed criteria application methods, identification of the workers’ group based on their qualifications and duties as part of the company reorganisation and restructuring objectives ”.

The Supreme Court ruling showed that during corporate reorganisation and restructuring that involves access to the extraordinary redundancy fund, specific obligations are imposed on the employer including notifying the trade unions of the criteria for the choice of personnel subject to wage subsidy. This must guarantee adequate rotation. If this is not implemented, the extraordinary redundancy fund measure is unlawful, as the employer is not allowed to arbitrarily choose the workers to be suspended.

The selection criteria to be considered are related to company seniority, family burdens and organisational needs. They must be an integral part of the notifications and joint examination under the law and paragraph 7 of Article 1 of Law 223/1991. If these criteria are not followed or defined by an agreement, the extraordinary redundancy fund measure is unlawful. According to the Court of Cassation, the worker suspended without the employer having implemented the criteria laid down in the union agreement is entitled to claim the employer’s compensation liability for breach of the “rotation” clause. In this case, the employer is liable according to the “debtor’s default” principle under Art. 1218 of the Italian Civil Code, unless it proves that this was not due to force majeure or organisational reasons beyond its control.

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