On June 23, 2025, the Italian Constitutional Court ruled that a provision limiting severance pay to six months’ salary for employees unlawfully terminated from small businesses violated the constitutional requirement that compensation reflect the personalized harm suffered by employees in each specific case.
Decision No. 118 of 2025 thus declared article 9, paragraph 1 of Legislative Decree No. 23 of March 4, 2015 (L.D. No. 23), which implemented Law No. 183 of December 10, 2014, unconstitutional with respect to the limit on severance pay.
Constitutional Challenge
The Ordinary Tribunal of Livorno asked the Constitutional Court to review article 9, para. 1 of L.D. No. 23 with respect to the compensation for unlawful dismissals by small employers that do not meet the size requirements set by the Workers’ Statute, Law No. 300 of May 20, 1970, namely employers with no more than 15 employees at single facility or municipality or 60 employees total. The law limited severance pay for improperly dismissed employees of such small companies to six months’ salary. The referring court proposed that the statute was contrary to several provisions of the Italian Constitution, specifically article 3, paragraphs 1 and 2 (equality before the law); article 4, paragraph 1 (right to work); article 35, paragraph 1 (protection of work in all its forms and modalities); article 41, paragraph 2 (harm to freedom and human dignity); and article 117, paragraph 1 (legislative powers). (Considerations of Fact, Nos. 1, 1.2.)
Underlying Case
In the underlying case, a former employee of a small company sued seeking a declaration that she was unlawfully dismissed from her job, demanding reinstatement and compensation. (No. 1.1, para. 1.) The employer argued that the plaintiff’s requested remedies should be rejected because as a firm with 14 employees, it was below the size threshold for the relief the plaintiff sought. (No. 1.1, para. 2.)
In referring the question to the Constitutional Court, the Livorno tribunal questioned the provision’s constitutionally given its differential treatment of employees terminated by small employers compared with those dismissed from larger firms. It noted employees of firms above the size threshold may be entitled to reinstatement and compensation up to 36 months’ salary, while those of below-threshold firms are not entitled to reinstatement and are limited to compensation of from three to six months’ salary. The referring tribunal suggested such different treatment based only on the employer’s size prevented courts from adjudicating personalized compensation reflecting the specific circumstances of the termination. (No. 1.2.)
Reasoning
The Constitutional Court noted that it has long recognized protections against unfair dismissals based on the constitutional right to work as a “fundamental right of freedom of the human person,” requiring the legislature to establish guarantees to prevent unjust or unreasonable dismissals by employers. (Considerations of Law, No. 2.1, para. 1.) Such protection must allow judges to modulate remedies based on a variety of factors (e.g. company size, length of the employee’s service, behavior of the parties) to personalize the compensation, consistent with the principle of equality. (No. 2.1, para. 5.)
Prior rulings of the court have established that in promulgating compensation schemes for unlawful dismissals, the legislature must allow remedies to reflect the specificity of the case and the vast range of variables directly involving the worker, and thus a rigid and uniform mechanism is impermissible. (No. 2.1, paras. 6, 7.)
The court concluded that the challenged provision’s limit on severance pay for unlawful dismissals by small businesses to six month’s salary conflicts with these constitutional principles, in that it is incompatible with the necessary personalization to compensate for the harm suffered and guarantee workers’ dignity in accordance with the principle of equality. (No. 2.2.3, paras. 3, 4.)
Holding
The court thus declared the unconstitutionality of article 9, paragraph 1 of Legislative Decree No. 23 of 2015 insofar as it restricted compensation for improperly dismissed workers of small businesses to six months’ salary. (No. 2.2.3, para. 5 and Holding.)
Dante Figueroa, Law Library of Congress
December 23, 2025
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