Italy: New Intervention by the Constitutional Court Against the Jobs Act on the Maximum Cap of Six Months’ Salary in Cases of Unlawful Dismissals for Employers with Fewer than Fifteen Employees

The Constitutional Court – with ruling no. 118 of 2025 – declared that Article 9, paragraph 1 of Legislative Decree No. 23/2015 is unconstitutional where it provides that compensation for unlawful dismissal in smaller companies “may not in any case exceed the limit of six months’ salary.” The differentiated regime applicable to undertakings under the threshold of fifteen employees – i.e. indemnity reduced in respect to those applying to companies with more than fifteen employees – does not preclude the judge from assessing the specific circumstances of each individual case, while the statutory ceiling of six months’ salary does not ensure “effective deterrence,” is not proportionate to the harm suffered by the employee and does not give proper consideration of the particular features of each case.

With ruling no. 118 of 2025 partially confirming the issue raised by the Livorno Court, the Constitutional Court has returned to rule on the Jobs Act, and in particular on Article 9, paragraph 1, of Legislative Decree No. 23/2015, which for unlawful dismissals ordered by employers with less than fifteen employees provided compensation protection reduced compared to the ordinary indemnities and up to a maximum of six months’ salary. With the latest intervention by the Constitutional Court on the Job Acts provisions, the statutory “maximum cap” of six months’ salary has been declared unconstitutional.

Specifically, deciding on the dismissal of an employee, hired in April 2015, by a company with a maximum of fourteen employees, the referring Court held that the indemnity “constrained within a very narrow range, from three to six months’ salary” conflicted, among other things, with the fundamental constitutional principles of equality and reasonableness. According to the Livorno Court, this provision not only created an unjustified disparity in treatment compared to workers employed by bigger companies – who are entitled to either reinstatement and compensation protection, or compensation protection alone for up to thirty-six months’ salary – but also created a “standardised protection” that precluded any “personalisation of compensation” and, because it was too small, was unsuitable to “guarantee its adequacy and fairness, as well as its deterrent role.”

The Constitutional Court highlights that the most recent ISTAT data (2023 Yearbook) reinforces the urgency of the requested intervention, showing that this regulation concerns “almost all national businesses” (805 thousand units, equal to 78.9% of the total companies studied, are micro-businesses).

The Constitutional Court, in its ruling no. 183 of 2022, had already identified Article 9, paragraph 1, as “infringing” the aforementioned constitutional principles, considers that a differentiated regulation for companies below the threshold of fifteen employees does not prevent the judge from taking into account, within a “sufficiently broad and flexible” range (3-18 months’ salary, or 1-6 months for formal defects), the specificities of each individual case. However, regarding the provision for a maximum of six months’ salary, the Court noted that such a limit results in a sort of automatic lump sum, incapable of ensuring “effective deterrence” and effective compensation proportionate to the damage suffered by the worker nor of taking into account the specific nature of each individual case. Therefore, while maintaining the provision for halving the indemnity, the Constitutional Court declared Article 9, paragraph 1, of Legislative Decree 23/2015 unconstitutional, limited to the words “and may not in any case exceed the limit of six months’ salary.”

The floor, therefore, could now be returned to the legislator: the Court, in closing, expressed its hope for such intervention, taking into account the principle according to which the number of employees cannot constitute the exclusive indicator of the economic strength of the employer “and therefore of the sustainability of the costs associated with unlawful dismissals.”

Key Action Points for Human Resources and In-House Counsel

Practical Points

• Although unlawful dismissals in companies with less than fifteen employees remain sanctioned with indemnities reduced by half in respect to those established for bigger companies, the statutory cap of maximum six month’ salary is not applicable after the Constitutional Court declaration of unconstitutionality.
• Pending a legislative action, for smaller companies the indemnity in case of unlawful dismissal then ranges between 3-18 months’ salary, or 1-6 months for formal defects.