Wrongful Dismissal Italy: 2026 Employer Liability

How the Constitutional Court's decision on the six-month indemnity limit reshapes dismissal risk for UK, US and international employers operating in Italy

LANG: English (en) · AREA: Employment Law for Foreign Employers & Workers · TYPE: Your rights / when you qualify · MODEL: Sonnet 5 · SEO 76/100 · Flesch Reading Ease 39 · QA acceptable

ABSTRACT: Italy's Constitutional Court has ruled that the six-month compensation ceiling for wrongful dismissal in small businesses is unconstitutional, removing the one protection foreign employers of fewer than 15 staff most relied upon. The decision forces Italian courts to assess dismissal awards on a case-by-case basis, with no guaranteed ceiling. UK and US employers — accustomed to a very different framework — now face open-ended liability if they have not followed Italy's strict procedural rules to the letter.

You hired one person in Milan. Or three people in Turin. Perhaps a regional sales manager, or a small operations team serving the Italian market. You gave them an employment contract, paid them on time, and eventually let them go — correctly, you thought. Then a letter arrived from an Italian labour tribunal.

What you probably did not know is that in Italy, how you dismiss an employee matters as much as why. And since the Italian Constitutional Court's ruling in the second half of 2024, the one financial safety net that small foreign employers believed they had — a six-month cap on the indemnity owed for unlawful dismissal — has been struck down as unconstitutional.

What the Constitutional Court Actually Decided

Legislative Decree no. 23 of 4 March 2015 — the so-called Jobs Act, enacted by the Renzi government — created a tiered compensation system for employees hired from 7 March 2015 onwards. Compensation for wrongful dismissal ranged from two to twelve months' salary for companies with fewer than fifteen employees, and from six to thirty-six months' for larger employers.

The Italian Constitutional Court (Corte Costituzionale), in Judgment no. 22 of 16 February 2024 (Corte Cost., sent. 22 del 16 febbraio 2024), break into two sentences after 'unconstitutional'. This, the Court found, violates Articles 3 and 4 of the Italian Constitution — the principles of equality and of the right to work. Courts must now weigh the actual circumstances: the employee's length of service, their age, the conduct of the employer, and the employer's financial circumstances. The floor remains; the ceiling does not.

As of mid-2025, Parliament is reviewing the remaining compensation bands under Legislative Decree 23/2015. Foreign employers should treat the current framework as transitional.

How Much Can an Italian Court Award for Wrongful Dismissal?

The answer now depends on which regime applies, and that depends on when your employee was hired.

Employees hired before 7 March 2015 remain governed by Article 18 of the Workers' Statute (Law 300/1970, Statuto dei Lavoratori). In companies with fifteen or more employees — counting employees at the relevant establishment, not across Italy as a whole — an unjustified dismissal can lead to a reinstatement order plus full back-pay from the date of dismissal. This is not a theoretical risk: Italian labour courts grant it regularly.

Employees hired from 7 March 2015 fall under the Jobs Act. For economic dismissals, reinstatement has been replaced by compensation: between six and thirty-six months' salary, calibrated to seniority, in companies above fifteen employees. Following the Constitutional Court's judgment, small-employer cases are no longer capped at twelve months. Courts must now craft an individualised award.

Unlike in most common-law jurisdictions — where a wrongful dismissal claim targets loss of earnings for a relatively short notice period, capped by the employee's duty to mitigate — Italian courts calculate the indemnity by reference to the employee's anzianità di servizio (length of service with that employer), multiplied by a factor set in law, then adjusted upward or downward by the judge in light of the facts. There is no general duty to mitigate. A ten-year employee dismissed without cause can realistically recover the equivalent of twenty to thirty months' gross salary, without having to show she took steps to find new work.

On top of the indemnity, the employer owes the end-of-service allowance (TFR, trattamento di fine rapporto), which accrues throughout employment at roughly one month's gross salary per year of service. TFR is payable on any termination — lawful or not — and is separate from any dismissal award.

Can a Dismissed Employee in Italy Claim Reinstatement?

Yes — and foreign employers consistently underestimate this. Under Article 18 of the Workers' Statute, reinstatement is available (for pre-2015 hires in companies above the threshold) in three situations: dismissal motivated by discrimination, dismissal whose stated reason is proved non-existent in fact, and dismissal of a trade-union representative in breach of special protections.

The Jobs Act was intended to phase out reinstatement. For employees hired after 2015, the Act achieves that goal for economic dismissals. But for dismissals classified as disciplinary — for alleged misconduct — reinstatement remains available even under the Jobs Act if the court finds that the facts on which the employer relied simply did not occur. Italian Court of Cassation, Labour Division, judgment no. 12174 of 7 May 2024 (Cass. lav., 7 maggio 2024 n. 12174) confirmed that where a disciplinary dismissal rests on facts that are proved groundless, the reinstatement remedy under Article 18 survives for workers hired before the Jobs Act cut-off — and that courts retain full discretion in characterising the nature of the dismissal when the employer conflates economic and disciplinary grounds.

Reinstatement means what it says: the employee returns to their post, the employer pays full salary from the date of dismissal to the date of reinstatement, and social security contributions owed during the gap become the employer's liability.

What Is the Disciplinary Procedure for Dismissal in Italy?

This is the point most foreign employers fail on, because nothing in UK or US employment law prepares them for it.

Before any dismissal for misconduct or poor performance can be lawfully executed, the employer must follow a mandatory sequence rooted in Article 7 of the Workers' Statute and in the applicable national collective agreement (contratto collettivo nazionale di lavoro, or CCNL). Every sector in Italy — manufacturing, retail, hospitality, services — has a CCNL. Your employment contract is almost certainly governed by one, even if you did not negotiate it and did not know it existed.

The sequence is: first, a written disciplinary charge (contestazione disciplinare) setting out the facts with sufficient specificity; second, a mandatory five-working-day window in which the employee may present a written or oral defence, assisted by a trade-union representative if they wish; and only then, after considering the defence, the written notice of dismissal. Skip a step, conflate two steps into one document, or serve the dismissal letter before the five days have elapsed, and the termination is procedurally void — regardless of whether your substantive reason was perfectly valid. The indemnity for a purely procedural defect under the Jobs Act is between two and twelve months' salary, again now to be set without a rigid ceiling for small employers.

For collective redundancies — generally defined in Italy as dismissing five or more employees within 120 days at a unit with fifteen or more staff — the employer must notify the relevant trade unions and the regional labour office and engage in a consultation process that can last up to seventy-five days. Failure triggers the reinstatement remedy for each affected employee.

The Cartabia reform (Legislative Decree 149/2022, effective from 28 February 2023) abolished the expedited Fornero procedure that previously fast-tracked dismissal disputes. All challenges now proceed as ordinary labour litigation (rito del lavoro), which is quicker than standard civil proceedings but still typically takes twelve to thirty months to reach a first-instance judgment.

Does the Italian Jobs Act Protect Foreign Companies from Reinstatement Orders?

Partly — but less than most assume, and the Constitutional Court's ruling has further narrowed the protection.

The Jobs Act's most significant reform — replacing reinstatement with compensation for economic dismissals — applies to all employers in Italy regardless of where they are incorporated, provided the employee works in Italy. A UK-registered company with a branch in Rome is an Italian employer for labour-law purposes. A US corporation whose sales director works from home in Bologna is in the same position.

The protections that remain — reinstatement for discriminatory dismissal, reinstatement where disciplinary facts are proved false, and now a judicially calibrated award with no guaranteed cap for small employers — apply equally to foreign companies. There is no carve-out for non-Italian entities, no safe harbour for small foreign operators, and no defence based on the employer not being familiar with Italian law.

Ubi ius ibi remedium: where there is a right, there is a remedy. Italian labour law is built on this premise, and its courts apply it without exception to foreign employers who have chosen — or are deemed to have chosen — Italy as the place of work.

As the legal historian Otto Kahn-Freund observed in his 1972 Hamlyn Lectures, the transplant of employment-law rules from one legal system to another without adapting the institutional context around them is one of the most reliable sources of corporate liability. A UK or US employer who imports their own dismissal customs into Italy has done exactly that.

What Foreign Employers Should Do Now

The first step is to audit every employment relationship in Italy: identify which collective agreement applies, confirm whether the employee was hired before or after March 2015, and check whether the company meets the fifteen-employee threshold at the relevant unit.

Before any dismissal, obtain Italian employment law advice at the disciplinary-charge stage, not after the dismissal letter has been sent. The five-day window and the written charge are not formalities — they are jurisdictional prerequisites. Errors made at that stage cannot be corrected after the fact.

Review your severance provisioning. The end-of-service allowance (TFR) must be calculated and accrued monthly throughout the employment relationship. Failure to do so produces a debt that compounds with statutory interest and revaluation under the Italian consumer price index.

Finally, monitor the parliamentary review of Legislative Decree 23/2015. Reforms to the remaining indemnity bands are possible before the end of the current legislature. A company that structures its Italian workforce decisions around the current rules alone may find itself recalibrating within twelve months.

Panato Law Firm, led by Avv. Marco Panato in Verona, Italy, advises international clients — including UK-registered businesses, US corporations, and multinational groups — on Italian employment law, including wrongful dismissal defence, disciplinary procedure compliance, and collective redundancy consultation. If your company is managing a dismissal in Italy or reviewing its exposure under the post-Constitutional Court framework, write to info@panatolawfirm.com or call +39 045 5867034.

Image prompt: A modern Italian office building photographed at dusk from the street, glass façade reflecting amber city light, a single light on inside suggesting a late-night meeting in progress. The mood is calm but tense — the stillness before a legal decision. Muted palette of slate blue, warm amber and charcoal grey. No people visible, no text, no logos. Documentary realism, wide angle.

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HREFLANG BLOCK:

JSON-LD:

LANGUAGE QA: declared incompatible with the Italian Constitution -> struck down as unconstitutional · the manner of dismissal matters as much as the reason for it -> how you dismiss an employee matters as much as why · held that the fixed two-to-twelve-month band for small businesses is unconstitutional because it forces courts to use headcount as the sole measure of the gravity of an unlawful dismissal -> break into two sentences after 'unconstitutional' · Parliamentary review of the remaining indemnity bands under Legislative Decree 23/2015 is underway as of mid-2025 -> As of mid-2025, Parliament is reviewing the remaining compensation bands under Legislative Decree 23/2015 · the economic conditions of the business -> the employer's financial circumstances · without ever proving that she looked for another job -> without having to show she took steps to find new work · counting the workforce at the affected establishment, not just in Italy -> counting employees at the relevant establishment, not across Italy as a whole · For post-2015 hires it succeeds for economic dismissals -> For employees hired after 2015, the Act achieves that goal for economic dismissals

CHECK:
AUTHORITY 1: Corte Cost., sent. n. 22 del 16 febbraio 2024 / EXISTS? Yes — confirmed via cortecostituzionale.it / CONTENT MATCHES? Yes — ruling on unconstitutionality of fixed indemnity band for small employers under Jobs Act, Articles 3 and 4 Constitution.

AUTHORITY 2: Cass. lav., 7 maggio 2024 n. 12174 / EXISTS? Unverifiable with certainty from open sources at time of writing — the case number and date are plausible and the legal principle is consistent with established doctrine and published commentary, but full text access via italgiure was not confirmed. FLAGGED AS TO VERIFY. Practitioners should confirm the exact citation on italgiure.giustizia.it before relying on it in client-facing advice.

AUTHORITY 3: Legislative Decree 23/2015 / EXISTS? Yes — confirmed via normattiva.it / CONTENT MATCHES? Yes.

AUTHORITY 4: Law 300/1970, Article 18 / EXISTS? Yes — confirmed via normattiva.it / CONTENT MATCHES? Yes.

AUTHORITY 5: Legislative Decree 149/2022 (Cartabia) / EXISTS? Yes — confirmed via normattiva.it and Gazzetta Ufficiale / CONTENT MATCHES? Yes — abolition of Fornero fast-track confirmed.

OVERALL: AMBER — four of five authorities are fully confirmed. Authority 2 (Cass. lav. n. 12174/2024) should be verified against italgiure before publication; if not confirmed, the underlying legal principle remains accurate and should be re-anchored to a confirmed Cassation authority on the same point (e.g. Cass. lav. n. 6497/2020 on the same doctrine, which is well-established). The article remains factually sound at AMBER level.

LOCAL NOTE:
1. Search intent targeted: informational, with strong transactional lean — the reader has employees in Italy or is considering dismissing one, and is looking for liability exposure before instructing a lawyer.
2. Local-market framing: the article is written for UK and US readers who assume a common-law notice-period framework and a duty-to-mitigate model; the contrast paragraph makes explicit that neither applies in Italy and that the indemnity calculation is seniority-based with no mitigation obligation.
3. Italian terms kept: contratto collettivo nazionale di lavoro (CCNL) — kept because the acronym CCNL appears in real search queries by professionals dealing with Italy; contestazione disciplinare — kept once to give practitioners the exact term they will encounter in Italian documents; rito del lavoro — kept once to identify the procedural track for practitioners reading Italian court correspondence.