UNLAWFUL DISMISSALS IN SMALL BUSINESSES: THE SIX-MONTH CAP FOR EMPLOYEES HIRED BEFORE THE JOBS ACT IS REMOVED
With Judgment No. 174 of 22 October 2026, the Italian Constitutional Court declared Article 8 of Law No. 604/1966 unconstitutional insofar as it made the possibility of exceeding the six-month compensation cap conditional upon the size of the employer’s workforce.
The ruling concerns employees hired before 7 March 2015 by smaller employers who are dismissed without just cause or justified reason.
According to the Constitutional Court, the previous compensation range of between 2.5 and 6 months’ salary unduly restricted the protection afforded to employees, preventing compensation from being effectively tailored to the specific circumstances of each case and proving inadequate also in terms of its deterrent effect.
Following the ruling, the workforce-size requirement that prevented small employers from applying the increases already provided for under Article 8 no longer applies.
Compensation may therefore reach up to 10 months’ salary for employees with more than 10 years of service and up to 14 months’ salary for those with more than 20 years of service.
The amount of compensation remains for the court to determine, in accordance with the criteria laid down by law, including the number of employees, the size of the business, length of service, and the conduct and circumstances of the parties.
