On July 21, 2025, the Constitutional Court, with Judgment No. 118/2025, declared the constitutional illegitimacy of Article 9, paragraph 1 of Legislative Decree 23/2015.
With this decision, the court deleted the strict six-month limit on compensation for employees unlawfully terminated by small businesses, allowing for a fairer and more personalized assessment of the damage suffered.
From now on, therefore, employees in companies with fewer than 15 employees will also be able to benefit from compensation deemed more appropriate, with a range of compensation that can be up to 18 months' salary, in line with the constitutional principles of equality and effective protection of rights.
Background
Legislative Decree 23/2015, implementing the Jobs Act, applies exclusively to employment relationships established after March 7, 2015. It provided in Article 9, paragraph 1, that in cases of unlawful termination by an employer with fewer than 15 employees per production unit or 60 employees in total throughout national territory, the compensation due to the employee would be halved compared to that provided for companies above this threshold (i.e., beyond the cases of reinstatement, the payment of compensation of between six and 36 months' salary).
It also provided that, in any case, compensation could not exceed the maximum limit of six months of the last salary used to calculate the severance pay. This maximum limit of six months' salary was struck down as unconstitutional by the Constitutional Court, which had already intervened previously, demolishing other provisions of the Jobs Act.
A revolutionary decision
The Labor Court of Livorno, in a dispute concerning the challenge of a termination of employment, had therefore raised a question of constitutional legitimacy regarding the provisions of Article 9, paragraph 1 of Legislative Decree 23/2015.
The Constitutional Court partially upheld the question raised, declaring the maximum limit on compensation unconstitutional, as it prevents the judge from adjusting the compensation according to the seriousness of the specific case. This thereby violates the principle of adequate compensation and the right to effective protection of the dignity of employees, as well as the principle of equality.
On the other hand, the court considered legitimate the criterion of halving the compensation compared to that provided for larger companies, provided that it is included in a sufficiently wide range to allow for a personalized assessment on a case-by-case basis.
The court also ruled on the quantitative criterion consisting of the number of employees, calling for the inclusion of additional criteria for calculating compensation, such as turnover and balance sheet, which are more in line with European legislation.
Main implications
In concrete terms, this decision leaves unchanged the criteria for determining compensation for unlawful termination for larger companies. However, for small companies with up to 15 employees, without prejudice to the rule of halving the monthly salary, there is now a wider range, with compensation ranging from a minimum of three to a maximum of 18 months' salary, compared to the previous maximum limit of six months' salary.
This decision marks a major shift in how employment termination is handled. It ends a long-standing inequality (that, in any event, had come unscathed through many constitutional judgments and, more recently, also a referendum) and paves the way for more detailed criteria for calculating compensation that, in theory, reflects the actual economic situation of companies.
Moreover, although this decision does not formally affect relationships governed by the pre-Jobs Act legal framework (i.e., those started before March 2015), it will have, at a certain point, some effects on those too.
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