The reason inherent in the production activity referred to in art. 3 law no. 604 of 1966 is that which determines an effective downsizing of a unit where staff are employed in a clearly identified job, regardless of the existence of unfavorable economic conditions or recession.

Court of Cassation, Employment Section, Judgement no. 1514 of 25 January 2021

The case originates from a ruling of the Court of Appeal, which had declared legitimate the dismissal of an employee of a religious organization for objective reasons, due to the poor financial health of the structures managed by the organization.
In particular, the downward economic trend had forced a reduction in costs and the reorganization of the workforce resulting in the abolition of the employee’s job – and assigning her duties to a religious sister (who worked without pay).
The employee appealed against the ruling, claiming the illegitimacy of the dismissal due to violation and  misapplication of articles 3 and 5 of Law no. 604 of 1966, as well as its nullity given the retaliatory nature of the measure.
The Court of Cassation threw out the appeal and upheld the judgement in first instance. 

As for the existence of a justified objective reason for dismissal, the Court of Cassation cites its orientation that “the reason inherent in the business (art. 3 Law no. 604 of 1966) is the one that determines an actual downsizing of a unit where staff are employed in a well-identified job, regardless of the existence of unfavorable economic conditions or recession”.
And therefore “the change in structure that legitimizes the dismissal for objective reasons can be found in both outsourcing to third parties of the businesses where the employee works, in the abolition of the function to which the worker is assigned or in the reallocation of duties amongst other employees or in technological innovation that automates the job, all in the pursuit of better management or productivity or increased profitability”.
With specific reference to the economic performance, the judgment says that “is not a factual assumption that the employer must necessarily prove, being sufficient that the reasons inherent in the production and organization of work, including those aimed at better management, efficiency or an increase in profitability, determine an actual change in the organizational structure through the abolition of a position”.
For the legitimacy of termination, moreover, is sufficient “that the alleged reasons inherent in the production and organization of work, including those aimed at improving management efficiency or an increase in profitability, determine an actual change in the organization through the abolition of a position, not being the entrepreneurial choice that led to the abolition of the job”.
According to the Judges, in the case in question “The finding of effectiveness has properly concerned the business decision to abolish the employee’s job (Head of the structure) and verifying the link between the abolition of the post and the business reasons given in support of same (use of a religious sister belonging to the Community with the resulting reduction in labour costs and substantial annual savings in order to offset the poor economic situation)”.

Hence confirmation of the decision of the Court of Appeal and on the basis of these conclusions the Court also rejected the claim of a retaliatory dismissal.
On this point, the Court reiterates that “where a dismissal  is void because it is deemed retaliatory, the unlawful reason given pursuant to art. 1345 Civil Code. must be decisive, that is, constitute the only effective reason for withdrawal, and exclusive, in the sense that the lawful reason formally alleged to be insubstantial in the judicial finding”. And as such “the illegal reason can be considered exclusive and decisive when the dismissal would not have been served if it had not existed, and therefore must be the only effective reason for termination, regardless of the reason formally alleged”.
In the case in question, the Supreme Court concludes that the lower court has complied with the principles of law and that once the existence of a justified objective reason for termination has been established, it unnecessary to investigate the retaliatory nature, in that the prerequisites are lacking.