Failure to set a fixed-term contract deadline: the relationship is open-ended ab origine (Andrea Di Nino, Sintesi – Ordine dei Consulenti del Lavoro, February 2022)

28 February 2022

In its ruling no. 37905 of 2 December 2021, the Court of Cassation ruled on the sanctions provided for cases where there is a failure to include a deadline in a fixed-term employment contract.

In this case an employee appealed to the Court of Pescara, suing his former employer. The appeal aimed to confirm that the employment relationship between the parties from 28 February 2013 to 30 March 2013 was open-ended, that an oral dismissal served on the employee by the employer in April 2013 was ineffective, and an order that the employer pay compensation in lieu of reinstatement of 15 months of the employee’s last salary, and damages of one month’s salary from the notice of default date until the proceeding’s start.

The court hearing the case, by order of 17 July 2017, partly upheld the appeal. It was found that the employment relationship was open-ended, and that the oral dismissal was ineffective. The employer was ordered to pay the employee indemnity in lieu of reinstatement of 15 months’ salary, in addition to compensation for damages quantified at six months’ salary.

The local court partly upheld the employer’s appeal against the first instance ruling and partially reformed the ruling under appeal, after verifying the existence between the parties of an open-ended employment relationship ab origine, ordered the employer to reinstate the employee and pay damages for 2.5 months’ salary from the last salary.

The dispute moved to the Court of Cassation, where the parties appealed to have their rights protected. The employer complained of breach or misapplication of art. 1, paragraph 2 of Legislative Decree no. no. 368/2001 (which provides for the nullity of fixed-term employment relationships in the absence of a written document) and Art. 32, paragraph 5, of Law no. 183/10 (which laid down the criteria for determining the compensation owed to the employee in cases of a fixed-term contract conversion), in that the local court erred in finding that a non-written fixed-term contract was punishable by the indemnity referred to in Art. 32 paragraph 5.

The Supreme Court held that this ground of appeal was well-founded, since “an unsigned fixed-term contract cannot be considered to exist (before being valid), under Art. 1, paragraph 2, Legislative Decree no. 368/01 (in this case, the alleged employment contract was not signed by either party).” According to the court, this is recognised by the ruling appealed against, which verified the “ab origine” existence of an open-ended employment contract, “the termination of which is not sanctioned by Art. 32, paragraph 5 Law no. 183/10 (which presupposes the conversion of a temporary employment relationship, even though unlawful).”

The Court of Cassation noted that the relevant indemnity is subject to interest and monetary revaluation from the date of the ruling converting the employment relationship – which, in this case, never occurred.

According to the Supreme Court, “the challenged ruling is affected by an irremediable flaw of reasoning (absolutely contradictory).” It stated that the employment relationship had to be considered an open-ended employment contract from the beginning, however, it sanctioned the employer termination with the compensation scheme under Art. 32, paragraph 5, for cases of conversion of an unlawful fixed-term contract into an open-ended contract. The ruling under appeal was revoked since there was an ab origine open-ended employment contract.
The case was referred to the relevant Court of Appeal with a different composition.

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