When can a company suppress a job position?

In the context of the broader principle of freedom of economic initiative recognized to the entrepreneur by Article 41 of the Constitution, an employer may be forced to suppress a job position that is no longer functional to the changed needs of the company, from an economic or organizational point of view.

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  1. Role suppression as a hypothesis of dismissal for justified objective reason

Dismissal for justified objective reason (‘giustificato motivo oggettivo’) is a type of dismissal that is related to the business activity and may be the result of technical productive changes or reorganization initiatives inherent to the management of the company, oriented to cost containment and therefore also – in some cases – to increasing profits.

The case law has had the opportunity to specify that any change in the organizational structure, including thsopprimere una posizione lavorativa, suppress a job positione hypothesis of organizational reorganization, also implemented for a more economical management of the company, resulting in the suppression of an identified job position, falls within the concept of justified objective reason for dismissal.

That being said, the requirements for a potential dismissal on objective grounds for suppression of the job position are:

  • The suppression of the position to which the employee was employed, without the need for the suppression of all the duties previously assigned to the same, which may be redistributed among the personnel already employed by the company;
  • The effectiveness and unpretentiousness of the reasons underlying the dismissal;
  • The impossibility of reemployment of the worker in different tasks (so-called ‘repechage’ obligation);
  • The good faith and fairness underlying the decision to suppress precisely a particular job position (e.g., if the company decides to dismiss an employee assigned to the HR role, it must demonstrate the objective criteria that led to that decision);
  • The failure to hire a new employee for the same role in the period immediately preceding the layoff and for a reasonable period following the layoff.

The decision of a company to carry out a dismissal for justified objective reason for suppression of the job position, if effective and not pretextual, can be considered legitimate, and the court cannot enter into the merits of the company’s management criteria, given that such a choice is an expression of the freedom of economic initiative protected by Art. No. 41 of the Constitution.

 

  1. Suppression of job position and redistribution of duties

Precisely on the subject of dismissal for suppression of the job position, the Supreme Court has recently stated that “In the event of reduction of activity aimed at achieving a decrease in costs and an improvement in profits, it is legitimate to dismiss an employee, following the suppression of the job with the distribution of duties among the staff in service” (Civil Cassation labour division, November 30, 2022, no. 35225).

Therefore, according to more than well-established case law, for the legitimacy of dismissal for justified objective reason for job suppression, it is not necessary that all the duties previously assigned to the dismissed employee be suppressed, since the same may well only be redistributed among the personnel already employed by the company.

Lastly, it is pointed out that a company’s decision to proceed with dismissal for justified objective reason for the suppression of the job position, according to the establlished case law, does not necessarily have to be linked to a need to reduce costs, but may simply be related to corporate organizational choices that determine that a particular role is no longer useful.

 

Conclusions

LDP’s team is available to provide assistance and advice to its clients who need to evaluate the reorganization of their teams, including – but not limited to – cost containment, and who are therefore considering making a layoff for justified objective reason for position suppression.

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