Termination by the employee

Termination by the employee, which can be considered unproblematic under German employment law, is governed by strict formal requirements in Italy. A simply signed letter is not sufficient. The aim is to prevent the employer from hoarding blank signed notices of termination, which he has obtained as a condition for signing the employment contract, and then retrieving and postdating them at the appropriate time; the notice of termination must therefore show a “certain date”.
This is only guaranteed if the notice of termination is signed in a union hall in the presence of a union secretary or online on a platform of the labor administration.

German employers should therefore exercise caution if a notice of termination or a termination agreement is signed in writing without any further form. The risk that these are initially not binding must always be taken into account.

Termination by the employer

The employer can terminate the employment relationship, with or without notice. Extraordinary termination is permissible for good cause, such as a criminal offense.

The following explanations refer to ordinary termination: 

Probationary period

Under Italian employment law, an employee can also be dismissed without further justification during the probationary period. A special feature compared to German law, however, is that an agreed probationary period cannot be waived. The employer has promised the employee a trial period and must keep this promise. Termination before the start of the employment relationship, which is not uncommon in Germany, would be risky in Italy because it would expose the employer to claims for damages. The employee can then rightly argue that he was deprived of the opportunity to test himself.

Termination in small businesses

From a labor law perspective, small businesses in Italy are considered to be businesses with fewer than 15 full-time employees. Dismissed employees in small companies are generally not entitled to continued employment. In the case of unjustified dismissals (see below), they are entitled to severance pay based on the collective agreements that are practically universally applicable in Italy.

Behavioral and operational reasons

The employer can terminate the employment relationship for reasons of conduct (motivi soggettivi) and for operational reasons (motivi oggettivi). In the case of conduct-related reasons, the employer must observe a detailed disciplinary procedure; a breach of a formal requirement alone can render the termination invalid. In the case of operational reasons, the employer must demonstrate the operational necessity of the termination, for example due to a decline in orders or in the course of restructuring.

Termination due to illness

In Italy, it is generally not permissible to serve a notice of termination during an employee's illness. However, notice of termination is permitted without further ado once a continuous period of incapacity for work (“periodo di comporto”) has been exceeded. The periods are agreed in the applicable collective agreements.

Invalid termination

Even under Italian employment law, a dismissal cannot trigger any rights and effects if it is void from the beginning. This is the case, for example, if it was given verbally or if it is clearly contrary to public decency, i.e. if it is clearly discriminatory.

Notice periods

The notice periods are generally determined by the collective agreements ccnl. They are also extended in Italy depending on the length of service. Unlike in Germany, it is permissible in Italy to compensate the notice period with a compensation payment. This means that the employer can terminate the employment relationship immediately, but must pay the employee the corresponding salary payments that would have been due up to the end of the notice period in a total amount.

Severance payments and compensation payments – TFR

By law, every Italian employee is entitled to the payment of a sum at the end of the employment relationship, which the employer must have saved for them. It corresponds to approximately one gross monthly salary per year of employment and can either be left in the company until the end of the employment contract or invested in certain funds, at the employee's discretion. Payment is made regardless of the reason for termination. A disloyal employee who has been dismissed without notice is also entitled to this severance payment (Trattamento di fine rapporto = TFR).

In addition, some collective agreements provide for severance payments, particularly for senior executives. These are paid as compensation for unjustified dismissal and can amount to more than two years' salary, depending on the length of service and age of the employee.

Further claims

In Italian employment law, non-material claims for damages (compensation for pain and suffering) are easier to enforce than in German law. For example, employees who were not employed in accordance with their contract and had to carry out work that did not correspond to their training are generally awarded such compensation for pain and suffering. The amount of compensation for pain and suffering is also higher than in Germany and can reach six-figure amounts.

Action against dismissal

The employee can contest a dismissal and appeal to the labor court. The time limits for this are 60 days to contest the dismissal with the employer and 180 days to file a complaint with the court.

Termination agreements

Termination agreements, which generally provide for severance pay, are also a suitable means of terminating an employment relationship in Italy. However, care must be taken here too that the employee signs in a trade union office, otherwise they can later contest their agreement and thus the entire agreement.