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With decision No. 118 rendered on 21 July 2025, the Constitutional Court intervened in the matter related to the regime of protections applicable in cases of dismissal by a “small” employer, declaring unconstitutional Article 9, paragraph 1, of Legislative Decree No. 23 of 2015, insofar as it provides a rigid and non-modifiable cap for the compensation due to employees in the event of unlawful dismissal, equal to six months' salary.
According to the Court, imposing a rigid cap on the indemnity without allowing the Tribunale any room for further evaluation of the specifics of the case undermines the effectiveness of the protection afforded to employees and does not serve as a deterrent against unlawful terminations.
The ruling does not challenge the legitimacy of a system that, for smaller companies, provides a differentiated regime based on reduced indemnity. That choice by the legislator is not questioned per se; rather, it is the rigidity of the upper limit that is deemed incompatible with constitutional principles, as it prevents any real assessment of the damage based on the peculiarities of the case.
As a result of the unconstitutionality of Article 9(1), limited to the words "and may not in any case exceed the limit of six months' salary", the indemnity in the case of smaller companies may now be adjusted by a judge between 3 and 18 months’ salary—i.e., half of the range provided for companies that exceed the numerical threshold.
The decision also notes that the number of employees is no longer a reliable indicator of a company’s real economic strength in the current economic scenario. As a result, the Court invites the legislator, in the event of a review of the applicable laws, to consider the introduction of additional parameters to calibrate the size of compensation in a manner more consistent with the actual characteristics of the employer.
The Constitutional Court had already raised concerns on the matter with decision No. 183 in 2022 and emphasized the existing misalignment between the rules applicable to smaller employers and constitutional principles. At that time, however, the Court decided not to intervene with a ruling and instead called for a reform of the matter, which has not been implemented.
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