Dismissals: the revenge of judicial discretion and the urgency of reform

The great promise of the Jobs Act - that of an employment law with predictable and quantifiable compensation even at the pathological moment of the termination of the relationship - rested on the idea of an indemnity calculated according to objective criteria. The increasing compensation indemnity was anchored to the worker's seniority in the company, with a mathematical formula that established the amount between a minimum and a maximum number of months' salary. This mechanism aimed to ensure legal certainty, contain litigation and make the costs of dismissals more predictable for companies, in line with other European legal systems.

That intention, however, gradually clashed with case law. As early as 2018, the Consulta had rejected the constraint of compensation calculated solely on the basis of length of service, requiring instead a more articulated and personalised assessment of the injury suffered by the worker. The Court of Cassation has subsequently brought back into the sphere of judicial discretion an increasingly large share of the sanctioning apparatus in the case of unfair dismissal, expanding by way of interpretation the hypotheses of reinstatement in the workplace.

The most recent pronouncement of the Constitutional Court (no. 118/2025 filed on 21 July) focused instead on the Jobs Act provision referring to companies with fewer than 15 employees, which, in addition to halving the compensation provided for larger companies, limited it to a maximum of six months' pay. The Court declared the latter provision unconstitutional, holding that such a rigid ceiling prevents an adequate assessment of the damage suffered by the dismissed worker and violates the principles of equality and labour protection. Even in the presence of company size limits, the Constitutional Court observed, compensation for unjustified dismissal must be able to take into account the concrete circumstances.

In this way, the system of protections outlined by the Jobs Act (but the differences between small and large companies already existed before) loses yet another piece and is even more reduced to the logic of discretionary jurisdictional assessment. But the system that emerges from this latest pronouncement is still too jagged, and the Constitutional Court itself recognises that the matter should be reviewed in overall terms.

Let us imagine a dismissal for reasons that are not arbitrary, but technically complex (e.g. related to reorganisations, or the employee's poor performance), and as such interpretable. The penalty risk for the entrepreneur is today largely uncertain. In the first place, the risk of reinstatement can never be ruled out: failure to relocate the redundant employee to an alternative position, or a finding that the dismissal is disproportionate to the misconduct committed can also lead to this extreme remedy. But even remaining in the field of pure compensatory remedy, the employer's potential economic liability can range from 6 to 36 monthly payments (or 3 to 18 for smaller companies) without any certain parameter fixed by law providing elements to make reliable predictions. All this, moreover, only applies to employees hired from 7 March 2015 onwards. Older ones retain, in case of dismissal, the partly different rights provided by the Fornero Law of 2012.