By Enzo Bacciardi and Michele Sacchi – Labor Law Department
With Judgment No. 118 of July 21, 2025, the Constitutional Court declared the partial unconstitutionality of Article 9, paragraph 1, of Legislative Decree No. 23/2015 (the so-called Jobs Act), insofar as it provided for a maximum compensation cap of six months’ salary for employees unlawfully dismissed by employers with fewer than 15 employees.
What changes with this ruling
The Court’s decision has immediate and significant effects: even small or micro employers (including those with only one employee) may now be ordered to pay compensation of up to 18 months’ salary (i.e., half the maximum indemnity threshold provided for employers with more than 15 employees) in cases of unjustified dismissal of workers hired from March 7, 2015, onward.
This ruling does not concern discriminatory or retaliatory dismissals (already covered by stronger protections) but rather unjustified dismissals under Article 3 of the Decree.
The issue was raised by the Labor Judge at the Court of Livorno, who considered the provision in breach of several constitutional articles: 3 (equality), 4 (right to work), 35 (protection of work), 41 (freedom of enterprise), and 117 (compliance with international obligations, with reference to Article 24 of the European Social Charter).
Why the provision was declared unconstitutional
The Court criticized the excessively narrow range (from 3 to 6 months’ salary), which prevented judges from tailoring compensation based on the actual severity of the case. According to the Court, this system violates constitutional principles because it:
- does not ensure adequate reparation in the event of job loss;
- reduces the deterrent effect of the sanction;
- does not consider the true economic capacity of the business, which cannot be measured solely by the number of employees.
Consequences and critical issues
However, in our view, the ruling also gives rise to several issues and contradictions:
- Disparity among workers: An employee hired by a small company before March 7, 2015, who is dismissed on grounds found to be factually correct but still unlawful (e.g., due to the dismissal being deemed disproportionate), may receive a maximum compensation of six months’ salary. An employee hired after that date, however, may receive up to 18 months. Thus, the indemnity treatment differs drastically despite equal levels of unjustifiability.
- Disparity between large and small businesses: A worker from a large company (even one with hundreds of employees) could receive lower compensation than one dismissed by a microenterprise.
- Lack of objective criteria: After the Court previously declared seniority as the sole criterion unconstitutional (Judgment No. 194/2018), judges now have broad discretion in determining compensation. There is no clear regulatory framework, and violations of these criteria cannot even be appealed to the Supreme Court (Corte di Cassazione).
- Risk for microenterprises: For smaller businesses, the obligation to pay up to 18 months’ salary may be an unsustainable burden, potentially causing instability in an already fragile sector.
The call to the legislator: new rules are needed
While the Constitutional Court refrained from deeply rewriting the legislation, it issued a strong call to the legislator to intervene. It suggested that, in addition to the number of employees, other factors such as turnover, company finances, and organizational structure should be considered — in line with European standards.
The Court acknowledged that the balance between adequate compensation and economic sustainability is the responsibility of the legislator, but stressed that further delays are no longer acceptable. A comprehensive and coherent reform of dismissal regulations is necessary to ensure fairness, legal certainty, and sustainability.
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Bacciardi Partners can provide tailored legal assistance in assessing dismissal-related risks, managing employment litigation, and structuring contractual and organizational strategies that safeguard both companies and employees.
We are available to analyze the practical impact of this ruling on your business and to identify the most appropriate legal solutions.