A company trade union agreement, as a result of a collective redundancy procedure, which grants the indemnity in lieu of notice at a lower figure than that established by the NCLA is lawful

Prepared by Francesca Tironi, Lorenzo Vassalli and Paola Dell’Utri

Through the Order No. 16917/2021, the Court of Cassation, Labour Section, has dealt with the matter of the validity of the second-level collective agreement and the waiver, provided for therein, of part of the indemnity in lieu of notice of a group of employees involved in a procedure of collective dismissal, stating that (i) the obligation of the withdrawing party to pay the indemnity in lieu of notice surely can be the subject of agreement and waiver; and (ii) the indemnity in lieu of notice period is eligible to be the subject of an agreed settlement between the social parties whenever those are called upon to operate at the level of the so-called “proximity” collective bargaining, i.e. in the context of a company crisis, with the aim of mediating in order to ensure the continuation of the business activity and the preservation of the relevant occupational levels, under the procedure set out in Art. No. 8 of Law Decree 138/2011, as converted by Law No. 148/2011.

As regards the facts of the case, an employee dismissed under a collective dismissal procedure received a sum equal to three months’ salary by way of indemnity in lieu of notice on the basis of the trade union agreement reached at the end of such procedure, whereas the applicable NCLA provided for six months’ salary in such cases. He therefore proposed a claim against the employer for the payment of the difference due under the NCLA, on the grounds that the agreement with the trade unions could not derogate in pejorative terms from the provisions of the national collective labour agreement regarding economic and regulatory treatments, including the indemnity in lieu of notice.

Both the Court of First Instance and the Court of Appeal of Florence (see Court of Appeal of Florence, Judgment no. 907/2017), accepting the grievances of the employee, ruled that the decentralised agreement was not suitable for modifying the provisions of the CCNL with reference to the economic and regulatory treatments provided for therein. They ruled out the applicability in this case of Article 8 of Decree Law 138/2011 on proximity collective agreements, deeming it impossible to include the company agreement reducing the number of months’ wages to be paid to employees dismissed through the collective procedure among the collective agreements (so-called proximity agreements) to which the law attributes the capability to derogate from the provisions of the law and national collective bargaining.

The employer then appealed to the Supreme Court, which handed down the order in comment. In its Order No. 16917/21, the Court of Cassation overturned the decision of the lower court, indicating that the procedure at issue fell within the scope of the proximity collective bargaining agreement pursuant to Law Decree No. 138/2011, as subsequently amended, and was therefore fully capable of having a worsening effect on the provisions of the law and national collective bargaining agreements.

The innovative element of interest consists in the fact that while the Court of Appeal has recalled that the list of topics in which proximity bargaining may derogate from the provisions of the law and collective bargaining agreements, contained in paragraph 2 of Article 8, is compulsory (in line with the Constitutional Court’s Judgment no. 221/2012), it must be remembered that the cases covered by this paragraph include the “management of business and employment crises“. In the context of this legislative phrase, according to the reasoning of the Judges of the Court of Cassation, a collective agreement, such as the one under examination, and provided always the compliance – to be verified case by case – with the requirements of representativeness provided for by the same Article 8 of Law Decree No. 138/2011, cannot be considered excluded, especially where such agreement regulates the consequences of termination of employment in the context of a severe and well-known situation of corporate and occupational crisis (more so where it is not disputed that such an agreement operates in the perspective of greater protection of employees, being aimed at ensuring a lower social cost of the whole operation as well as safeguarding the continuation of the business activity and the relevant occupational levels, in line with the purposes to which both the legislation on proximity bargaining and that on collective dismissal are oriented).

Let’s Talk

For a deeper discussion, please contact:

Francesca Tironi

PwC TLS Avvocati e Commercialisti