Real World Questions
Q. Can we reduce the salary of our employees during the Covid-19 emergency?
A. No, an employer cannot unilaterally reduce an employee’s salary. Even a temporary salary reduction would require the employee’s consent and would need to be formalized before the Labor Office or the Trade Unions.
Q. Law by Decree No. 18/2020 prohibited terminations for a period of 5 months starting March 17, 2020 (the “Prohibition Period”). In which cases does such prohibition apply?
A. Pursuant to Law by Decree No. 18/2020, as subsequently amended, collective redundancy procedures cannot be initiated during the Prohibition Period and pending procedures started after February 23, 2020 are suspended during the Prohibition Period.
During the Prohibition Period, employers may not carry out individual terminations for objective reasons (i.e., dismissals related to the organization and management of the business).
The prohibition does not apply to the termination of executives (i.e., Dirigenti), to disciplinary dismissals or to dismissal for exceeding the period of “comporto” (i.e. the maximum permitted absence for illness).
The prohibition does not apply to the expiration of employment agreements with a limited term either.
1. Governmental salary integration: it is possible to use the additional 4 weeks immediately
While Law by Decree No. 34/2020 provided that Governmental salary integrations could be granted for a total of 18 weeks, of which:
- 14 weeks should be used from February 23 to August 31; and
- 4 weeks should be used from September 1, 2020 to October 31, 2020,
pursuant to Law by Decree No. 52/2020, in force as at June 17, 2020, companies that used the first 14 weeks of salary integration can use the remaining 4 weeks before September 1, 2020.
2. Simplification Decree: public administrations shall allow employees to connect remotely
Pursuant to the Simplification Decree, which was approved by the Italian Government on July 7 and that will be published soon on the Official Gazette, all public administrations shall develop their IT systems to enable employees to connect remotely.
Such provision has the goal of encouraging smart working.
Unlawful dismissal for violation of the procedure: it is unconstitutional to calculate the severance indemnity only on the basis of the employee seniority.
Pursuant to article 4 of Legislative Decree No. 23/2015, if a dismissal is judged unlawful for a violation of the procedure set forth under Italian law, the employee is entitled to an indemnity equal to one month of salary for each year of seniority.
Even though the grounds of the decision will be published in the coming weeks, the Constitutional Court’s press office has announced that, on June 24, 2020, the Italian Constitutional Court declared unconstitutional to calculate the abovementioned indemnity only on the basis of the seniority.
Court of Cassation No. 10535/2020: the clause allowing the employer to unilaterally terminate a non-compete agreement is null and void
Pursuant to Court of Cassation decision No. 10535/2020, the clause that allows an employer to unilaterally withdraw from a post-termination non-compete agreement is null and void, even if the employer withdraws from the agreement before the termination of the employment relationship.
In fact, pursuant to Italian law, a non-compete agreement is valid provided that a compensation is paid to the employee. It is not possible for the employer to withdraw from the non-compete agreement before the termination to avoid paying the compensation, because the employee has already suffered a limitation on his freedom to plan his own future and therefore he is already entitled to receive compensation.