On 4 September 2024, the Italian Council of Ministers definitively approved the draft legislative decree no. 136/2024 (the so-called “Correttivo-ter”) amending the Code for Business Crisis and Insolvency (legislative decree no. 14/2019).


Amongst the most significant changes to the Code for Business Crisis and Insolvency referred to employment related matters: It is confirmed the elimination in the said legislative decree of the first sentence of Article 189, subsection 1, according to which “the commencement of judicial liquidation proceedings against the employer does not constitute grounds for dismissal.” This is, on the other hand, incompatible with the general rule pursuant to which the commencement of judicial liquidation only determines the suspension of employment relationships.


The following subsection 2 of Article 189, regarding the date of the effectiveness of withdrawal by the insolvency administrator (“curatore”) from the suspended employment relationships and of the taking over in those relationships, no longer mentions the insolvency administrator’s duty to communicate to the Territorial Labour Inspectorate (“Ispettorato Territoriale del Lavoro”) the list of the employees in force at the time of the commencement of the judicial liquidation, a duty from which, in any event, the law provisions did not trigger any practical consequence.


The said “Correttivo-ter” was also confirmed where it introduced a new provision in Article 189, Subsection 7. According to which, the application of the procedures set forth in Article 1, Subsections from 224 to 238, of Law no. 234/2021 (the so-called “anti-delocalization” legislation) is expressly excluded in the event that the insolvency administrator decides to proceed with a collective dismissal. In other words, it is definitively clarified that the insolvency administrator is not required to go through the procedure of prior information and consultation with trade unions, in the case of ceasing of business activities due to the closure of offices, branches or production units in companies staffed with at least two hundred and fifty employees in the previous year and resulting in the dismissal of at least fifty employees, a proceeding which is extremely burdensome if compared to the “standard” one provided by Law no. 223/1991 applicable to collective dismissals. This is consistent with the derogation to the said procedure as set forth pursuant to the “anti-delocalization” law (Article 1, Subsection 226) for companies that are in a situation of imbalance in assets or financial position that makes their crisis or insolvency likely and that can access the negotiated settlement procedure for the solution of the business crisis pursuant to the law decree no. 118/2021. Hence, the appropriateness of the amendment of Article 189, Subsection 7, in the meaning of expressly relieving also insolvent companies, against which judicial liquidation was opened, from the fulfilments prescribed by “anti-delocalization” provisions, as well as from the serious sanctions connected thereto. This reduces both the burdens on insolvency administrators and the time to manage redundancies in such companies where the crisis is more than evident. This is a further step towards a more streamlined and functional legal framework.


Key Action Points for Human Resources and In-House Counsel


Practical Points

  • The commencement of judicial liquidation proceedings against the employer does not constitute grounds for dismissal, as judicial liquidation only determines the suspension of employment relationships.
  • The procedure of prior information and consultation with trade unions, in the case of ceasing of business activities due to the closure of offices, branches or production units in companies staffed with at least two hundred and fifty employees in the previous year and resulting in the dismissal of at least fifty employees, is not required in the event that the insolvency administrator decides to proceed with a collective dismissal.


The full article is available here: https://leglobal.law/2024/10/29/italy-employment-relationships-suspended-with-the-opening-of-judicial-liquidation-and-redundancies-without-prior-consultation/