Constitutional Court declares Article 3 of Jobs Act unlawful

In November 2018 the Constitutional Court filed Decision 194/2018, which declared that Article 3 of Legislative Decree 23/2015 (the Jobs Act) was partially unlawful. Article 3 of the Jobs Act provides the formula to calculate damages for the unlawful dismissal of employees hired after March 2015 (for further details please see "Criterion under Jobs Act to determine indemnity in case of dismissal deemed unlawful").

The Constitutional Court found that said provision breached Article 3 of the Constitution and, in particular, violated the principles of equality and reasonableness, as the formula to calculate damages is predetermined and bound to an employee's length of service. Therefore, the formula does not allow for the necessary and opportune customisation of damages based on the specific details of each case of unlawful dismissal.

The court specified that judges should determine employee compensation for unlawful dismissal based not only on their length of service, but also on other parameters such as:

• the size of the employer's company;
• the number of workers employed; and
• the behaviour and economic conditions of the parties (ie, employers and employees).

These criteria are used to assess the dismissal of employees hired before March 2015.

In this context, the court emphasised the fact that a payment based only on an employee's seniority cannot guarantee adequate compensation for damages caused to them by their dismissal. As a result, this could reduce excessively an employee's right to fair compensation and fail to dissuade employers from implementing unlawful and specious dismissals.

By allowing the courts discretion to decide damages in the case of the unlawful dismissal of an employee hired under the Jobs Act (which in certain cases can be higher than that provided for the dismissal of employees hired before March 2015), the Constitutional Court's decision has created uncertainty for employers and reduces their ability to assess the consequences and costs associated with redundancies, which was one of the Job Act's real benefits.

For further information on this topic please contact Francesco Pedroni at Stanchi Studio Legale by telephone (+39 02 546 9522) or email (francesco.pedroni@stanchilaw.it).