The financial crisis had an huge impact not only on the economic system of EU Member States, but also on their legal framework, even if this aspect of it is usually unnoticed. The labour law field is one of the sector that has been stricken the most by the legal changes required to boost the Eurozone economy. The clearest example is provided by the fact that three Member States (namely Greece, Ireland and Portugal) were required to sign Memoranda of Understanding to receive bail-outs. These austerity measures wanted by the Troika compelled the abovementioned countries to dismantle progressively guarantees in the fields of industrial relations and of protections of individual workers, as freezing collective agreement in the public sector (Greece) or introducing a minimum wage under the level of poverty (Portugal and Greece). Nevertheless, the Troika has managed to put some pressure also on countries that had not received any financial aid, even if it did it in an indirect way (1). The most evident case is the Italian one: the Monti Government approved an act (the so – called “Fornero Reform”, Act no 92/2012) striking at the roots of the pension system and the range of guarantees provided in case of unjustified dismissal. Unlike legislation in some other countries where it was founded in obvious breach of international parameters (2), the modifications introduced in the “Statute of Workers” (Act no 300/70) cannot be regarded as in direct breach of the European and international standards. Nevertheless, in my opinion the unlawfulness of the new rules on dismissal can be argued in the light of the Italian Constitution and, by that means, the indirect breach of the right to an effective remedy and not to be dismissed without justification can be proved.
The right to work: is compensation effective enough?
The new reform modifies the art. 18 of the “Statute of Workers” and limits the cases in which a worker can claim reinstatement for unjustified dismissal in large and medium undertakings. Before the reform, a worker could obtain reinstatement in case of dismissal without a “fair reason” (3) or without a “justified subjective (4) or objective reason” and compensation was available only on request of the worker. After the enforcement of the reform, the reinstatement has become compulsory only in case of discriminatory dismissal; otherwise, it is up to the judge to decide if, “whenever the fact attributed to the worker does not exist (art. 18, par. 4 St. Workers )”, reinstatement can be applied. In all other cases of unjustified dismissal, only compensation can be claimed.
As it is known, no international or European instrument protects the right of workers to be reinstated: art. 30 of the EU Charter of Fundamental Rights and art. 24 of the Revised European Social Charter provide respectively protection in case of unjustified dismissal and in case of termination of employment contract; the ILO Convention no 158 on Termination of Employment and the ILO Recommendation no 166 grant only a general protection in case of dismissal, but they do not mention the remedy of reinstatement as the favourable one to adopt. Theoretically the remedy of compensation is effective as much as the remedy of reinstatement ; according to some scholars (5) a too high-level protection in case of unjustified dismissal also blocks the turnover in the labour market. Nevertheless, it is easy to see that in such a period of crisis, job loss carries so numerous bad consequences that cannot be compensated only by repayment: the uncertainty about finding a new job opportunity, the loss of a regular income, the impossibility to develop their own skills and abilities during the period of unemployment. This can be, in my opinion, the cornerstone of the argument of the breach of right to an effective remedy as recognised in art. 47 of the EU Charter of Fundamental Rights.
To assess whether a general right to be reinstated is provided in the Italian legal system, we must first analyse the articles of the Italian Constitution. No part of it provides for a general right to be reinstated, nor the Constitutional Court has ever ruled out an interpretation of “social rights” endorsing such a point of view (6). Nevertheless, the combined reading of the constitutional provisions with the interpretation of general private law principles shows how the breach of the right to an effective remedy occurs after the enforcement of the new legislation.
The right to work is recognised in three provisions of the Italian Constitution: art. 1, art. 4 and art 35, para 1. These articles are all general statements that need to be interpreted according to the contingent economic situation. Art. 1 provides that “the Italian Republic is founded on labour”, recognising work as a supreme value, while art. 4 and art. 35 describe the right to work as “a right belonging to all citizens” and compel the Italian Republic to “promote all the conditions in order to make this right effective” and “to protect work in any of its form and application”. In addition, the Constitutional Court ruled that art. 2, compelling the Republic to “recognise and protect human rights, as a person and in the social group where the individual develops his personality”, includes the workplace as one of the categories to which the abovementioned article refers. Hence, a general right to work does exist in the Italian legal system, and it has to be protected and made effective. Let me look at a worker who is lawfully entitled to his position at his workplace and has been unlawfully deprived of it. How can he have his right to work wholly protected? How can he develop his skills and personality if he is not allowed to go back to carry on his job as before? The right to work cannot be simply regarded as the right to an amount of money: the payment of compensation cannot make up for the lack of a job and even if it can help the worker to bear the negative consequences of unemployment, it will not have the same function of reinstatement. The repayment is unfit to put the worker in the same situation than before his right was breached, especially in a situation of economic crisis. Compensation is not enough in the long term, as in a situation of economic stagnation, to help an unemployed person to stand the lack of a regular income, the effort to look for a new job, the possibility to earn a lower income, the moral damage deriving from carrying on de-qualifying mansions, the frustration not to know whether is possible to find a new job.
The Italian Supreme Court also recognised the reinstatement as the most effective remedy to be applied in employment relationship (7). Art. 2058 of the Civil Code provides the possibility for the damaged person always to claim specific redress instead of repayment and it was endorsed by the Supreme Court not only as a pillar of Italian legal system (8), but also as the normal rule to be applied in the labour law sector. In case of a dismissal, the payment of compensation has to be considered only as an alternative remedy, while priority must always be given to the specific performance of the obligation of the employer, which means that he has the duty to reinstate the worker in his job.
This reasoning is even more well – grounded if the worker has to face an economic crisis with all its consequences, as in the scenario described above. It clearly appears from it the unfitness of compensation to remedy effectively to the breach of right to work.
Practical implications of the reform: breaching the art. 20 and 30 of the EU Charter of Fundamental Rights
In my opinion, the new Italian legislation breaches the equality principles, as established in art. 20 of the EU Charter of Fundamental Rights, but it does not contravene directly to the right not be unfairly dismissed, as stated in art. 30 of the Charter. Nevertheless, it will be shown how the infringement of the equal treatment principle in practical situations could lead to a breach of art. 30. I will limit my analysis to an overview of the problem, as there is still not enough case law to question the practical aspects of this issue. (9)
The new art. 18 of the Statute of Worker allows workers to ask for reinstatement only in case of discriminatory dismissal and where the fact on which it is based does not exist; in the latter case, the choice whether to apply compensation or reinstatement is up to the judge. In all other cases, compensation applies. The application of this rule gives rise to two questions.
Firstly: what does it mean that “the fact does not exist?” (10) According to the new reform, in almost all the cases in which a fair or a justified subjective reason is missing, the remedy of compensation applies. So what are the cases in which there is no reason grounding the dismissal, but it cannot be said that the fact “does not exist?” The lines are blurring in this situation and it has to be seen how tribunals will interpret these concepts; the real risk is that the idea of “non – existing” fact will not be interpret in an uniform way by judges and in so doing that would lead to a breach of the equality principle.
The same conclusion can be drawn as an answer to the second question: how can a judge decide, when he comes to the conclusion that the fact does not exist, whether he has to apply reinstatement or not? The reform does not provide any guidelines for tribunals to decide, nor is it possible to see how to come to the conclusion that two situations have to be treated differently, even if they both lack of an existing fact grounding the dismissal. The wording of art. 18 creates a paradoxical scenario, that allows same situations to be treated in different ways, which contravenes, again, to art. 20 of the Charter. But what about art. 30? As a matter of fact, the infringement of the equality principle is not, per se, a breach of the right to be protected in case of unjustified dismissal. Nevertheless, it is easy to argue that the possibility to sanction differently same behaviours fragments the concept of justification which is at the very basis of unfair dismissal. This creates uncertainty for workers on which kind of remedy they can expect and on which conducts are justified or not. Moreover, it gives employers more discretion in deciding on which facts to ground dismissal. Even if art. 30 of the Charter provides that the protection in the event of an unjustified dismissal has to be given in accordance with national law, this kind of legislation will actually render the protection provided by the Charter ineffective. In the end it affects not only art. 20 and art. 30, but also the right to an effective remedy, though in a different way from the one described before.
The reform of the regulation on unjustified dismissal in Italy is clearly in breach of art. 47 of the Charter. The unlawfulness of the act does not seem so obvious at first sight, but it becomes clearer when the provisions of the Charter are read in combination with infringed articles of the Italian Constitution. The breach of the right to an effective remedy derives from two different aspects of the act. Firstly, the remedy of compensation is unfit to restore the right of the worker, especially in a scenario of economic crisis as the one we are facing nowadays. Secondly, the uncertainty of the wording of the act leaves too much discretion to the judge on which remedy he applies and when. In addition, the uncertainty in the choice of remedy also creates the risk that the practical application of the law by tribunals will jeopardize the protection of workers, infringing the right to an equal treatment and the right to be protected in the event of unjustified dismissal.
Alessandra Maceroni, LL.M. student at KCL
(1) For a more detailed analysis, see C. Barnard “The Financial Crisis and the Euro Plus Pact: A labour Lawyer’s Perspective”, (2012) ILJ 41(1)
(2) ILO Report on the High Level Mission to Greece (19-23 September 2011)
(3) “A behaviour of the worker that does not permit the employment relationship to continue not even temporarily” ( art. 2119 Italian Civil Code, translation by the author )
(4) “A clear breach of the workers’ contractual duties” or “A reason concerning the production of the undertaking, the organization of the work and its regular functioning” ( art. 3 Act no 604/1996)
(5) See P. Ichino “La riforma dei licenziamenti e i diritti fondamentali dei lavoratori” (The reform of dismissal and the fundamental rights of workers) – in Italian (Paper from the Convention at the National Centre of Labour Law Studies “Domenico Napoletano” – Pescara, 11 may 2012)
(6) Italian Constitutional Court case no 46/2000
(7) On the same conclusion, see V. Speziale “La riforma del licenziamento individuale tra diritto e economia” (The reform of individual dismissal between law and economics) Rivista Italiana di Diritto del Lavoro, fasc.3, 2012, p. 521
(8) S.U. Cass. 141/2006
(9) For a similar point of view on the breach of the equality principle (art. 3 of the Italian Constitution) see the interview to U. Romagnoli in “Rassegna Sindacale” , no. 11, 5 – 11 April 2012 by E. Galantini
(10) Art. 18, para 4 St. Workers