Fixed-term contracts: permanent employment does not remedy the abuse

A landmark ruling by the Court of Cassation concerning the remedial effect of the recent regularisation of public-sector workers on temporary contracts, and concerning damages arising from the unlawful repeated use of fixed-term contracts.

Having reviewed the case-law that has developed since the 2016 judgement of the Joint Divisions, which introduced the concept of so-called ‘community damage’ to penalise the unlawful repetition of fixed-term contracts in the public sector – and predominantly in the education sector – the Court, in a judgement handed down following the hearing on 22 September, has ‘adjusted its approach’ in light of a recent legislative change that has altered the criteria for awarding damages.

The new Article 36 of the Consolidated Act on Public Employment, as amended in 2024, has in fact provided for a doubling of the amount of compensation for damages, which now ranges from a minimum of 4 to a maximum of 24 months’ salary based on the last reference salary used to calculate severance pay, to be quantified taking into account the seriousness of the breach, based on the number of successive contracts and the total duration of the employment relationship.

The Court began by examining the established case-law on the abusive renewal of fixed-term contracts, according to which subsequent appointment to a permanent post would constitute an appropriate remedial measure to redress the prejudicial consequences of such abuse, provided that the appointment to a permanent post takes place either pursuant to specific legislative provisions aimed at stabilising the employment status of temporary workers who have been victims of such abuse, or through procedures expressly reserved for such staff, and not simply because it is facilitated by the experience gained during previous fixed-term appointments.

The legislature’s amendment to Article 36 of the Tupi Act, as set out above, has, however, led the Supreme Court to review its previous position, or rather, to openly depart from it, holding that the new wording of the provision ensures an adequate level of compensation – deemed proportionate and effective – in all cases of damage resulting from the unlawful use of fixed-term contracts, in accordance with the guidance of the Court of Justice of the European Union and EU principles.