Six years ago, on 7 March 2015, the Jobs Act came into force, providing innovative protection if there is an unlawful dismissal for new employees under permanent contracts. At the time, this measure was considered revolutionary for the principles governing the existing protections. It intended to regulate the consequences of unlawful dismissal automatically and based on a mathematical formula. It was an ambitious project of overcoming the uncertainties of a system that had hinged on the judge’s discretion.

Based on the new rules, the scope of the debated right to reinstatement was redefined for companies with more than 15 employees. This was relegated to a residual hypothesis applicable only to the most severe cases (lack of evidence against the employee, or discriminatory dismissal or otherwise radically null and void). It gave way to compensation protection, from a minimum of four to a maximum of 24 monthly salary, which was rather low for the applicable criteria, especially in the first years of service.

At least in its intentions, the reform should have encouraged new employment and reduced the regulatory obstacles to attracting Italy’s investment.

A few years later, however, it can be said with a degree of certainty that the increasing protection had a short and troubled life.

The real economy, which is the engine of all employment development and growth forms, has not seen the hoped-for trend. It had to face the pandemic, which was unimaginable in 2015, making it impossible to see the expansive impact of increasing protection from an employment point of view over time. Regulatory measures by successive governments and, soon after by the Constitutional Court, were not long in coming, and they distorted the reform’s features, leaving little of what was initially envisaged.

The first blow to the increasing protections system was dealt with by the Dignity Decree (Decree Law no. 87/2018), which, without changing the formula for calculating the compensation due based on two months salary for each year of service, increased the compensation range from six to 36 monthly salary.

With surprising timing, a few days later, the Constitutional Court, no. 194/2018, declared the legislation unconstitutional insofar as it provided for a “rigid and automatic criterion, based on length of service” to identify the compensation due to an employee unjustly dismissed. In the Court’s view, the protection against damages required a quantification based on multiple factors (such as the parties’ behaviour and “conditions”) to be assessed at the judge’s discretion in adequately valuating compensation for the prejudice suffered by the worker.

In the space of a few weeks, the system designed to overcome discretion once again became centred on it.

Continue reading the full version published in Norme & Tributi of Il Sole 24 Ore.