Italy: Unfair dismissal in small businesses

Devina Songra
Devina Songra
  • 1m read
  • July 25, 2025

What’s new?

Up until 21st July 2025, unfair dismissal awards for non-dirigenti (i.e. non-senior / executive) employees hired after March 7, 2015 at small businesses (those with less than 15 employees in the single business unit or in the same town, and less than 60 overall in Italy) were capped at 6 months’ salary in damages (save in cases where the termination was discriminatory/retaliatory).

The Italian Constitutional Court has now declared this cap as unconstitutional, and the cap has been raised from 6 to 18 months.

 

What does this mean for small businesses?

Small businesses need to consider the following:

  • Greater Risk Management: Employers will need to be more diligent in managing dismissals to avoid costly claims / expensive settlement payouts. This might involve more thorough documentation and adherence to fair dismissal procedures.
  • Increased Financial Liability: With increased liability for successful unfair dismissal claims, employees’ expectations / demands around potential settlement packages (if offered by the employer) will in turn be higher.
Devina Songra Devina Songra
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