International Labor & Employment Law Committee Newsletter

Issue: November 2012

Editor: Tim Darby | Africa and Middle East Editor: Karen Seigel | Asia and Oceania Editor: Ute Krudewagen | Canada Editor: Gilles Touchette | European Editor: Paul Callaghan | Latin America Editor: Juan Carlos Varela | Law Student Editor: Irene Lehne, Earle Mack School of Law at Drexel University

Italy

Court of Milan (Labor Division) Delivers First Decision Regarding New Fast Track Trial Procedure for Dismissals, Disallowing Its Use

Angelo Zambelli, Grimaldi Studio Legale, Milan

The new fast track trial procedure for employment disputes does not apply, according to the Court of Milan (Labor Division), in situations including (allegedly) unlawful temporary employment contracts, unlawful service agreements and illegitimate secondments (i.e., secondments ordered without the necessary legitimate interest of the employer or for an indefinite period).

The Court was asked to determine the case of a worker, outsourced by a temporary employment agency for a short-term role. The worker claimed the existence of a direct employment relationship with the end-user company and unlawful termination of employment, on grounds of the violation of the temporary work and dismissal rules.

In filing a claim, the employee decided to apply the new fast track proceeding for dismissals, recently introduced by the Labor Market Reform (entered into force on 18 July 2012) (the Reforms). However, the Court of Milan stated that such proceeding cannot apply to this kind of dispute.

The Court's decision is important, given the speed of the decision that the fast track procedure was intended to introduce (Italian civil courts take an average of seven years for a decision and the labor courts take an average of three years), as the slow process in civil and labor courts is detrimental to all parties, particularly the employer, since any compensation it may be sentenced to pay to the employee is calculated for the time between termination and actual enforcement of the ruling.

Whilst it is likely that the Court of Milan will keep interpreting the statutory provision in this restrictive way, it is worth noting that other courts in Italy are not bound by the decision and may decide differently.

The Reform

The recent Italian Labor Market Reform (Law no. 92/2012) aims, on the one side, to make the termination phase of employment less costly for entrepreneurs1 and, on the other, to quicken the decision-making process for dismissals.

With specific regard to this second purpose, the Reform introduced a 'fast track' trial, concerning termination of employment--by companies staffed with more than 15 employees--applicable "even when matters concerning the qualification of the relationship need to be decided first" (article 1, paragraph 47).

This new proceeding is characterized by two main phases:

  • One provides for the scheduling of the first hearing within 40 days of the submission of the brief of summons before the Court. The defendant must submit its defense at least 5 days before such hearing and the judge can proceed to investigate the case, ideally deciding the dispute at the end of the same first hearing to deliver an enforceable court order.
  • The second, merely optional, phase consists of any opposition to the court order, which creates an ordinary employment trial before the same Court.

The Court of Milan Decision

The decision of the Court of Milan, issued on 25 October 2012, apparently the first to pronounce on the topic, clarifies an aspect that had raised doubts among experts since the approval of the Reform: being the meaning of "matters concerning the qualification of the relationship" that can be decided with the new fast trial. If granted a wide definition, such a provision would entail that most disputes connected to the performance and termination of an employment relationship are open to this 'quick justice'.

Certainly, as commentators have pointed out from the outset, among these matters are consultancy agreements, project contracts and other independent contracts, which fall within the definition of self-employment but actually cover genuine employment relationships. In such cases, termination of the agreement is considered as a dismissal (subject, as such, to all the consequences of this type of termination2 as well as the new procedure).

The Court of Milan interpreted the statutory provision restrictively. Indeed, after having acknowledged the issue regarded temporary employment contract, the Court stated that every time the Court is required to ascertain the existence of an employment relationship with a third party, the new procedure should not apply and such a claim was inadmissible.

The reasoning behind this decision is important as the law specifically refers to disputes "concerning the qualification of the relationship" and not to matters regarding the title of the relationship, leading to the Court's literal statutory interpretation.

Further, according to the Court, determining the existence of an employment relationship with a subject that is not the formal employer requires thorough investigation of the circumstances and is unsuited to the 'quick' procedure set out above.

1With regard to this, see http://www.americanbar.org/content/newsletter/groups/labor_law/int_newsletter/ilel_news20121/june2012.html

2See link at note no. 1

 

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