Layoffs in the COVID-19 emergency

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COVID

Redundancies for economic reasons due to COVID prohibited for sixty days from the entry into force of the Italian cure decree and collective redundancies

The Government, through the publication of the D.L. March 17, 2020 n. 18 (the so-called “Cura Italia“ decree) intervened to modify the regulations regarding employment contracts. In particular, a real ban on redundancies for economic reasons has been introduced for a period of 60 days following the entry into force of the decree. Furthermore, the decree has extended the possibilities for entrepreneurs to resort to social safety nets, even by way of derogation. This is to avoid the risk of staff reductions.

For this reason, it may be interesting to retrace the discipline linked to the dismissals of employees in relation to the changes made by the D.L. March 17, 2020 n. 18. In particular, we will go and see, without any claim to be exhaustive, how the Italian care decree suspended the dismissal procedures, but with one exception, company managers.

So let’s see the suspension of individual dismissals for economic reasons and the suspension of collective redundancies.

Situation in Covid :

Closure of “non-essential” activities and reduction in turnover for the covid-19 emergency
The reduction in consumption linked to the closure of economic activities issued by the Prime Minister’s Decree of 11 March 2020 and the Prime Minister’s Decree of 22 March 2020 led to a reduction in work activities. The closure of retail businesses, with the exception of the sale of food and basic necessities, resulted in a net reduction in productivity.

COVID

This situation, should it persist, could force entrepreneurs to adopt organizational measures aimed at compensating for the decrease in turnover by reducing the staff employed therein, which could result in redundancy.

To give an example, just think of the industrial sector, the manufacturing sector, or the retail sector (except for food and basic necessities that have remained open).

Of course, we can only hope for all this, but it is necessary to have a picture of the situation, also to understand the possible consequences for employees. For this reason, we resume below the effects of the D.L. March 17, 2020 n. 18 with regard to dismissals for justified objective reasons (so-called “dismissals for economic reasons“) and collective dismissal procedures.

SOP’s

Ban on layoffs for 60 days in the Italian cure decree
The situation outlined above, that is, a reduction in turnover that leads to a production reorganization for needs not dependent on the company is what in jargon is called “justified objective reason” for dismissal.

The definition of justified objective reason for dismissal derives from art. 3 of Law no. 604/66, according to which it derives from:

reasons inherent in the production activity, from the organization of work and its functioning rule

This motivation is the one that can lead the employer to initiate collective dismissal procedures (which we see below). These are dismissals due to economic reasons on which the Government intervened with the D.L. March 17, 2020 n. 18.

COVID

With this decree, the Government prohibited employers, regardless of the number of employees employed, from withdrawing from the employment contract for a justified objective reason (Article 3 of Law No. 604/66). In these cases, the Government has offered the possibility of initiating the procedures pursuant to art. 4, 5 and 24 of Law no. 223/91, for a period of 60 days starting from last March 17 (date of entry into force of the Italian Care Decree).

Dismissal of employees in the covid-19 emergency: conclusions
What we can say is that the Government has intervened to block the possible need for dismissal by companies that are in situations of closure. Of course, a 60-day period cannot be a permanent solution to the matter. In fact, in the opinion of the writer, even if in this period of time – as we hope – the emergency from Covid-19 had passed, it is unlikely that companies could restart – especially those in the industrial sector – at full production.

This means that, most likely, the measures aimed not so much at the prohibition of dismissal, but rather at the provision of social safety nets, will have to be strengthened and prolonged over time. We hope that the attentive eye of the legislator will understand in time and intervene promptly. In the meantime, we will continue to keep you updated on our portal.

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