What is Collective Dismissal?
Collective dismissal, as defined by Italian law under Law 223 of July 23, 1991, is a procedure that applies to companies with more than 15 employees needing to downsize. This reduction can occur for technical, organizational, or productive reasons, necessitating the termination of employment for a significant number of employees. The law outlines two main types of collective dismissal: staff reduction and dismissal of workers under Extraordinary Wage Guarantee Fund (Cassa Integrazione Guadagni Straordinaria – CIGS).
Staff Reduction
Article 24, paragraph 1, of Law 223/1991 regulates collective dismissal due to staff reduction. This applies to companies that, due to a reduction or transformation of activity, intend to lay off at least five workers in a 120-day period, in one or more production units within the same province. It is important to note that the 15 employee requirement refers to the overall number of workers employed by the company in the six months prior to the start of the dismissal process.The reduction in activity must be definitive and not transitory, such as to require a permanent reduction in the workforce.
Extraordinary Wage Guarantee Fund (CIGS)
Article 4, paragraph 1, addresses collective dismissal for workers in CIGS.
This provision applies to companies that, during a reorganization program or corporate crisis, cannot guarantee the reemployment of suspended workers, even with alternative relocation measures.
In these cases, the company may initiate the collective dismissal procedure to terminate the employment relationships of surplus employees.
The Collective Dismissal Procedure
The collective dismissal procedure begins with a written communication that the company must send to the company union representatives and the respective trade associations. In the absence of union representatives, the communication must be sent to the trade unions of the category adhering to the most representative confederations at the national level.
The communication must include:
- Reasons for the excess personnel situation
- Technical, organizational, or productive reasons preventing alternative measures
- Number, company location, and professional profiles of the surplus staff
- Implementation timeline for the staff reduction program
- Possible measures to address the social consequences of the reduction
- Calculation method of financial compensation other than those already provided by law and collective agreements
- A copy of the communication must be sent to the competent Provincial Labor Office.
Joint Examination
Within seven days of receiving the communication, the company union representatives and the respective trade associations may request a joint examination with the company.
The purpose of the joint examination is to analyze the causes of the staff surplus and evaluate possible alternatives to dismissal. The joint examination can occur in two phases:
- Union Level: This phase must conclude within 45 days of receiving the communication. During the meetings, the parties discuss the causes of the surplus and seek alternative solutions, such as solidarity contracts and other flexible forms of work time management.
- Administrative Level: If no agreement is reached at the union level, the procedure continues at the administrative level, at the Provincial Labor Office. This phase must conclude within 30 days of receiving the communication. The joint examination period is cut in half if the number of workers to be dismissed is less than ten.
Selection Criteria
The company must adhere to the selection criteria established by national collective agreements made with the most representative unions or, in the absence of such agreements, to the criteria set forth in Article 5 of Law 223/1991. These criteria are:
- Family responsibilities: Priority for workers with greater family responsibilities
- Length of service: Preference for workers with longer service
- Technical-productive and organizational needs: Consideration of the company’s technical-productive needs
These criteria must be applied in an integrated and balanced manner, considering the company’s needs and protected categories, such as disabled workers and working mothers, who can only be dismissed in the event of the company’s cessation of activity.
Outcome and Costs
Once a union agreement is reached or the joint examination procedure is exhausted, the company can proceed with the dismissals. Each dismissed worker must receive a written notice of termination, respecting the legal notice periods. Within seven days of the termination notices, the list of dismissed workers must be sent to the Regional Labor Office, the Regional Employment Commission, and the trade associations. The list must include the personal data of the dismissed workers, their qualifications, the level of employment, age, family responsibilities, and the applied selection criteria.
The employer is required to pay a termination contribution for each dismissed worker . This contribution is increased in cases where the dismissal procedure is concluded without a union agreement.
For further information or legal assistance on collective dismissals, contact AL Assistenza Legale , the network of expert lawyers who can guide you through every stage of the procedure.
