Supreme Court guidance on new fixed-term contract rules

The Supreme Court has issued a report on the consequences of the invalidity of fixed-term contracts as introduced by Law 183/2010, known as the Collegato Lavoro.

The report, which is well structured and articulated, reaches significant conclusions on the penalties set out under the law. Contrary to what has been declared to be the legislature's understanding, the Supreme Court has stated that the law must be construed with the following effect:

• An employment relationship is re-established as a consequence of the invalidity of the fixed term;
• A right to salary accrues from the moment of the offer of performance; and
• The additional compensatory penalty provided by the new law is equal to between 2.5 and 12 times the monthly wage.

This analysis, as adopted by the Court of Busto Arsizio, implies that courts should apply the new rules with the most incisive and punitive consequences that such rules allow. The report urges that particular attention be paid to fixed-term contracts.

Unusually for such a report, it was not issued in an attempt to resolve conflicting decisions in the lower courts; rather, it has been issued prior to such interpretations developing.

In addition, the Supreme Court recently issued an ordinance on the question of the constitutional legitimacy of Article 32 of the law, which it did not reject as groundless. In so doing, it adopted a different interpretation to that of the report, assuming that the rationale of the law is to limit compensation for damages - an interpretation based on the term 'all-inclusive', used to describe the compensation thus provided. Such legislative intention conflicts with Articles 3, 4, 11, 24 and 117 of the Constitution - in the last case on the grounds of a conflict with Article 6 of the European Convention on Human Rights, which protects the right to a fair trial.

For further information on this topic please contact Andrea Stanchi at Stanchi Studio Legale by telephone (+39 02 546 9522), fax (+39 02 551 91641) or email (a.stanchi@stanchilaw.it).