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27 August 2014
The Supreme Court has issued a noteworthy decision (16097/2014) concerning compensation under Article 32 of Law 183/2010 for unlawful fixed-term employment contracts.
The case involved an employee's claim for a declaration of invalidity of the employment contract term for exceptional needs pursuant to the applicable collective agreement. At first instance, the Court of Rome rejected the employee's application.
The Rome Court of Appeal subsequently declared the contract term invalid, finding that the contract in question amounted to a permanent contract of employment. The court ordered the employer to pay compensation equal to the wages accrued during the three-year period starting from the end of the employment relationship.
In accordance with case law under the previous legal system (before the issuance of Decree-Law 368/2001, which set limits on the duration of fixed-term contracts) – whereby the duration of fixed-term contracts was determined under the applicable collective agreement – the Supreme Court held that non-compliance with the duration set by the relevant collective agreement rendered the clause which fixed the contract term invalid.
Moreover, the Supreme Court considered the employee's claim for damages well founded in accordance with Article 32 of Law 183/2010 (Paragraphs 5, 6 and 7). The court stressed the rationale of this provision, which aimed to introduce a standardised and less stringent criterion for the assessment of damages in light of certain objective uncertainties that characterise the proportioning of damages in accordance with the existing legislation.
The court specified that while the law makes no provision for the deduction of income derived from a subsequent job in the calculation of the employee's damages, and that damages are payable even where the employee subsequently finds another job and thus suffers no harm, damages must nonetheless be calculated on a case-by-case basis with regard to multiple factors, including:
Further, the employer is obliged to reinstate the employee and pay the salary due, regardless of the employee's acceptance of the reinstatement.
This decision is particularly relevant, as it affirms (in compliance with Constitutional Court Decision 303/2011) that Article 32 of Law 183/2010 ensures that employees hired under an unlawful fixed-term contract are entitled to a permanent employment relationship and compensation. However, such compensation must not be calculated on an automatic and generalised basis; rather, it should be calculated with regard to the specific characteristics of the case. The regulatory framework also confirms that compensation under Article 32 must be calculated with regard to all economic consequences of the unlawful term. Therefore, in a claim for damages under Article 32, there is no space for additional damages claims linked to the alleged illegality of the term.
For further information on this topic please contact Andrea Stanchi or Annamaria Pedroni at Stanchi Studio Legale by telephone (+39 02 546 9522), fax (+39 02 551 91641) or email (email@example.com, firstname.lastname@example.org or email@example.com).
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