Italy: Definitive cessation of the business activity and the justification of dismissing an employee during the maternity period


published on 30 January 2024 | reading time approx. 4 minutes

The Italian Supreme Court, in its Order No. 35527 dated 19 December 2023, addressed the issue of terminating the employment relationship of an employee during the maternity period indicating the cessation of business activity as a justified reason.

Article 54 par. 3 of the Legislative Decree no. 151 of 26 March 2001, commonly known as the "Consolidated Law on the Protection and Support of Maternity and Paternity," delineates specific circumstances in which the prohibition on dismissing an employee during pregnancy and until the child reaches one year of age does not apply.

Firstly, a justified cause for dismissing an employee during the maternity period is a serious misconduct, constituting just cause for terminating the employment relationship. In this context, it is pertinent to reference the recent Judgment of the Supreme Court no. 35617 dated 20 December 2023. According to this ruling, for the employee's “serious misconduct” to justify the dismissal within the child's first year, it is not sufficient to establish the mere existence of a just cause or justified subjective reason. Instead, it is necessary to verify the actual occurrence of the specific misconduct outlined in Article 54.

Secondly, the dismissal prohibition is not applicable if the activity for which the employee was hired is completed or if a fixed-term employment relationship is terminated due to expiration.

Lastly, both a negative outcome during the trial period -where applicable- and the cessation of the activity of the company constitute justified reasons for dismissing an employee during the maternity period. It is crucial to underline the essential protection our legal system grants female employees against dismissal due to marriage or maternity, aiming to raise awareness among employers and discourage behavior leading to termination in sensitive situations such as maternity.

The recent case before the Italian Supreme Court involved a female employee dismissed due to her employer company's bankruptcy during her mandatory maternity leave. Initially, the Court of Arezzo declared the dismissal null and void and ordered the reinstatement of the employee and the payment of a damage compensation, asserting that the bankruptcy alone was insufficient to be considered as a cessation of business activity for the purpose of exemption from the dismissal prohibition. 

The Court of Appeal of Florence then came to the same conclusion, upholding the aforementioned orientation and declaring the dismissal null and void, since it had not emerged from the documents of the case that a total cessation of the business activity had occurred.

But it is the third and final instance, that leaves no room for misinterpretation: the Italian Supreme Court confirmed the nullity of the dismissal, which was issued shortly after the employee returned from the period of mandatory maternity leave and before the child turned one year old, justified by the employer company by the intervening declaration of bankruptcy of the company.

According to the judges of the Italian Supreme Court, exclusively an actual cessation of the business activity could have been the only reason justifying the dismissal of the employee before the child turned one year old. Moreover, the concept of “cessation of the business activity” must be understood in a substantial and strict sense: in fact, in order to justify the dismissal, “any possibility that entails, in some way, the continuation or persistence of the business, for whatever reason, must be excluded from the operational perimeter of the cessation of business”.

In the case in question, the company was in fact involved in conservative activities rather than undergoing liquidation at the time of the dismissal; therefore, the dismissal must be considered unjustified.
Consequently, the Italian Supreme Court declared the dismissal null and void, dismissing the appeal presented by the company in bankruptcy and affirming the consistent attention that case law accords to the maternity and pregnancy risk factors for female employees.

The argumentation of the judges appears clear and transparent. Dismissing a female employee before the child's first-year anniversary should be a last resort—an ultima ratio—compelled by the dissolution of the legal entity and, consequently, a demonstrable bankruptcy. 

The Italian Supreme Court reminds us that a reading of a provision - in this case of Article 54 of the aforementioned Legislative Decree no. 151 of 26 March 2001 - that privileges the protection of the rights of the working mother over property rights reflects both the constitutional principle enshrined in Article 37 of the Italian Constitution, which recognizes -in working conditions- special and adequate protection for the mother and child for the fulfilment of the essential family function, and the principle of equality and the right to work provided for -respectively- by Articles 3 and 4 of the Constitution. 

In conclusion, it is reasonable to argue that both the socio-economic context and the values deserving protection under the legal system are always pivotal considerations, even when a company is in the situation of considering the cessation of its activity.
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