Last Updated on July 28, 2025
The Constitutional Court has ruled on the regime that safeguards small businesses established with legislative decree no. 23/2015 for unlawful dismissals served to workers hired after 7 March 2015 (the so-called Contratto a Tutele Crescenti or “increasing protection contract”).
With decision no. 183 of 2022, the Constitutional Court had already examined the current compensation set-up, signalling the urgent need for new regulation. In the absence of any parliamentary initiative, three years later the Court has now ruled directly, replacing the legislator, in partial acceptance of the question raised by the Court of Livorno in its order of 29 November 2024.
With decision no. 118, filed on 21 July 2025, the Constitutional Court has, in fact, ruled on Article 9, first par. of Legislative Decree no. 23/2015, pursuant to which the compensation paid for unlawful dismissals served by employers who do not meet the size requirements set forth in Article 18 of the Italian Workers’ Statute (i.e. more than 15 employees per plant or per municipality, or more than 60 in the whole of Italy), is recognised as half the amount applied to large businesses and, in any case, is capped at six months’ pay.
In the view of the Constitutional Court, a cap of six months’ pay, “fixed and inflexible, irrespective of the seriousness of the unlawfulness of the dismissal”, does not allow a judge to comply with the criteria of personalisation, adequacy and appropriateness of the compensation for the damage suffered by the unlawfully dismissed employee, nor is it suitable for “ensuring that this compensation acts as a deterrent for the employer”.
The Court has, therefore, on this point accepted the observations of the referring Judge, according to which the provision in question, in violation of the constitutional principle of equality, would result in unjustified unequal treatment compared to that of workers employed by medium-large companies, recipients of both reinstatement and indemnity, quantifiable up to thirty-six months’ salary.
On the contrary, the mechanism, similarly censured by this Court in Tuscany, that halves the indemnity for “sub-threshold” companies was considered lawful, as it can be modulated within a sufficiently wide range, from a minimum of three to a maximum of eighteen months’ salary, allowing a judge to adjust compensation to suit the specific details of each individual case.
Finally, the measure once again reiterates the need for legislative intervention inspired by the principle that using the number of employees as the sole parameter for differentiating how remedies are calculated does no longer reflect the real economic strength of a company and the sustainability of the costs associated with unlawful dismissals. This is particularly relevant in a profoundly changed production context, in which even small businesses may have substantial capital and high turnovers.
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