Unlawful dismissal: pay is due even if employees do not work

If the Court of Appeal overturns a first-instance judgment finding a dismissal unlawful and ordering the employees’ reinstatement, the reinstatement order is revoked and the employees may be required to repay the sums they received after reinstatement. However, according to the Supreme Court, where the employer has exercised its managerial and disciplinary powers over the employees, it remains obliged to pay them wages, even if they did not work.

 

The Court of Rome ruled that a collective dismissal was unlawful and ordered the employees’ reinstatement. The company, in compliance with the reinstatement order, recalled the employees and reestablished their employment relationships. At the same time, however, the company transferred them to the office sited in Catania, where employees never reported for duty; consequently, no actual work was performed.

Subsequently, the transfers were declared unlawful, as the employees’ failure to report to the newly assigned office was deemed a legitimate response to the employer’s unlawful conduct. Meanwhile, the Court of Appeal of Rome, overturning the first‑instance ruling, upheld the lawfulness of the dismissals, revoked the reinstatement order and ordered the employees to return the sums received in the meantime, including their wages. However, according to the Supreme Court (Order no. 23919/2026), the wages do not have to be returned.

As a preliminary matter, the Supreme Court confirmed the principle that the reversal of a judgment, which has found a dismissal to be unlawful and ordered the reinstatement of the employee, produces the external expansive effect provided for in Article 336 of the Code of Civil Procedure, according to which, in addition to the lapse of the finding and the reinstatement order, the reestablishment of the employment relationship also ceases, and thus the dismissal will regain its terminating effect as of the date of its notification. Furthermore, it is undisputed that the sums paid in compliance with the first‑instance judgment are justified by the obligation to pay compensation arising from the unlawfulness of the dismissal and, as a result, must be considered recoverable as of the date of the reversal.

However, the Supreme Court clarified that the right to recover such sums is precluded if the reinstatement order is followed by the actual resumption of work, since in such a case the general provision of Article 2126 of the Civil Code, which safeguards the right to retain wages in all instances of work performed in violation of the law, applies.

In the case at hand, in fact, the court of merits, whose findings of fact are considered final and non‑appealable before the Supreme Court, had determined that the company, after recalling the employees, had exercised its typical managerial and disciplinary powers over them by ordering their transfers and taking disciplinary action against them for unjustified absences. This conduct by the employer, pursuant to Articles 2094 and 2126 of the Civil Code, gave rise to an obligation to pay wages under the mandatory rules governing the employment relationship.

Consequently, the external expansive effect in the event of a reversal of a judgment declaring the dismissal unlawful is limited to the consequences that directly arise from the declaration of the dismissal’s unlawfulness, namely the obligation to reinstate the employment relationship and the obligation to pay compensation, but it does not extend to acts of actual management of the employment relationship being reinstated, even temporarily, in compliance with the court order for reinstatement, as these acts are only “indirectly” linked to the initial declaration of the unlawfulness of the termination.

 

Practical Points

• The Court of Rome ruled that a collective dismissal was unlawful and ordered employees’ reinstatement. The company reinstated the employees, but at the same time transferred them to the office sited in Catania, where employees never reported for duty and consequently no actual work was performed. Meanwhile, the Court of Appeal of Rome, overturning the first‑instance ruling, upheld the lawfulness of the dismissals, revoked the reinstatement order and ordered the employees to return the sums received in the meantime, including their wages.
• According to the Supreme Court (Order no. 23919/2026), the wages do not have to be returned, as the exercise by the employer of the typical managerial and disciplinary powers over employees, by ordering their transfers and taking disciplinary action against them for unjustified absences, gave rise to an obligation to pay wages under the mandatory rules governing the employment relationship, despite the employees not working because of the unlawful transfers.