Under Italian law, employers must provide a reason to legitimately terminate an employment relationship. Dismissals may only be ordered in the presence of one of the following causes:

• Just cause: a behaviour so serious that it undermines the trust relationship with the employer, which constitutes the basis of the employment relationship (“giusta causa”). In this case, dismissal is immediate, without notice.
• Subjective justified reasons: a behaviour that, while less serious than that constituting just cause, still represents a significant breach of contractual obligations (“giustificato motivo soggettivo”). In this case, the employee is entitled to a notice period, the length of which is usually established by the applicable national collective bargaining agreement (NCBA) and indicated in the individual contract. In case of immediate termination, the employee is entitled to a substitute indemnity in lieu of notice.
• Economic reasons: objective needs of the employer related to production activities, work organization, or the regular functioning of the company structure; in this case, dismissal does not depend on the employee’s behaviour, who will still be entitled to the notice period or the corresponding indemnity (“giustificato motivo oggettivo”).

In addition to the provisions mentioned above, the Italian legal system provides for specific cases in which the employer may proceed with a dismissal without the presence of just cause, subjective justified reason, or objective justified reason. These cases include dismissal due to failure to pass the probationary period and dismissal following the completion of the three-year apprenticeship period.

Regarding managers, special rules apply due to their senior position and the high intensity of the fiduciary bond that connects them to the employer. For this reason, the legislator deemed it appropriate not to excessively limit the employer’s discretion in deciding to terminate the managerial employment relationship.

Collective agreements further define the concept of “justifiability” of dismissal for executives, providing interpretative criteria and defining the limits of its application within the context of collective agreements.

When an employer with more than 15 employees intends to dismiss at least 5 workers within a 120-day period due to a reduction or transformation of activities or work, or when the employer intends to cease operations, the collective dismissal procedure applies.

In such cases, the employer must follow a specific procedure provided by law (Law n. 223/1991), informing in advance the company trade union representatives and the most representative trade unions. The information must cover the reasons preventing the adoption of alternative measures to dismissal and any measures planned to reduce its social impact.

At the union’s request, the information must be followed by a joint examination, after which the parties may reach an agreement identifying – among other things – the criteria for selecting employees to be dismissed differently from those established by law (e.g., family responsibilities, seniority, business needs).

Under Italian law, the transfer of a business cannot in itself constitute a valid reason for dismissal. Any dismissal based solely on the transfer is null and void.

In such cases, the employee is entitled to continue the employment relationship with the transferee and to reinstatement, together with compensation which may not be less than five months’ salary. Alternatively, the employee may opt for an indemnity in lieu of reinstatement equal to fifteen months’ remuneration.

However, both before and after the transfer, dismissals may still be lawfully carried out for just cause, subjective justified reason or objective justified reason, provided that they are based on grounds independent of the transfer and that all statutory requirements are met.

Under Italian law, there is no minimum period of service with an employer required to benefit from the protections and rights provided by law in the event of dismissal. However, length of service affects the notice period to be observed. In general, the longer the length of service, the longer the notice period that the employer must give the employee in the event of dismissal (except in cases of dismissal for just cause) and, consequently, higher compensation in lieu of notice.

Length of service also constitutes a relevant criterion for determining the amount of any compensation payable to the employee if the dismissal is declared unlawful.

The minimum notice period for the termination of employment is not uniformly set by law but is determined by the applicable national collective bargaining agreements, considering the employee’s position (executive, manager, employee, worker) and length of service. Generally, according to the most common collective bargaining agreements, the notice period ranges from a minimum of fifteen days to a maximum of six months. However, there are categories of employees – in particular executives or senior managers – for whom it is common practice, through individual agreements, to establish a longer notice period than that provided for in the NCBA, both for organisational reasons and due to the specific responsibilities of the position held.

The employer may, at its own discretion, terminate the employment relationship without requiring the employee to work during the notice period, in which case a substitute indemnity must be paid.

The payment in lieu of notice to be paid to the employee must be calculated considering the employee’s gross annual salary, as well as any additional monthly payments provided for under the applicable collective bargaining agreement, all fringe benefits granted during the employment relationship, and the average bonuses received by the employee over the last three years.

Garden leave is not expressly regulated under Italian law.

During the notice period, the employer may either require the employee to continue working or unilaterally exempt the employee from performing duties while continuing to pay remuneration.

Alternatively, the employer may terminate the employment relationship with immediate effect by paying an indemnity in lieu of notice.

Disciplinary Dismissals and procedure.

Disciplinary dismissals, whether for just cause (“giusta causa”) or for a subjective justified reason (“giustificato motivo soggettivo”), require a specific procedure. The employer must promptly provide the employee with a written notice specifying the conduct in question that is relevant for disciplinary purposes.

The employee has the right to present their explanations within five days (or a longer period if provided by the applicable NCBA), either in writing or orally. When giving oral explanations, the employee may be assisted by the trade union.

After this period, if the employee has not provided explanations, or if the explanations are deemed unacceptable, the employer may proceed with the dismissal; the NCBA may set a deadline within which the dismissal must be communicated by the employer.

Dismissals for economic reason

Dismissals based on economic reasons

The procedure for dismissals due to economic or productive reasons requires a specific process, except for employees hired after March 7, 2015, for dismissals due to the expiration of job retention following illness, and for employees in small and medium-sized enterprises, i.e., companies with up to 60 employees in Italy or up to 15 per operational unit.

In cases of dismissal for economic reasons for employees hired before March 7, 2015, in large companies, it is necessary to follow the procedure governed by article 7 of law no. 604 of July 15, 1966.

The letter of dismissal must be preceded by a notification from the employer to the local Labor Office of the place where the employee works and it must also be sent to the employee.

The procedure must be completed within twenty days. The parties may mutually agree to continue negotiations even after the twenty-day period, in order to reach an agreement.

If the conciliation attempt fails and, in any case, after the above-mentioned deadline has expired, the employer may proceed with the dismissal of the employee, the effects of which will be retroactive to the day on which the Labor Office received notification of the employer’s intention to dismiss the employee.

Collective Dismissal

When an employer with more than 15 employees intends to dismiss at least 5 workers within a 120-day period due to a reduction or transformation of activities or work, or when the employer intends to cease operations, the collective dismissal procedure applies.

Collective dismissal is carried out in multiple stages, regulated by law n. 223/1991. The company must send a written communication to the trade unions and to the Labor Office, indicating the reasons for the dismissal – which must necessarily be economic reasons, company crisis, restructuring, or closure – the number of employees involved, the measures to be adopted, and the criteria for selecting the employees to be dismissed.

Within the following seven days, the trade unions may request a meeting to evaluate alternatives to dismissal. For example, it is possible to consider a reduction in working hours or the use of wage guarantee funds (“cassa integrazione”) to retain employees in the company during the crisis.

The procedure with the trade unions must be completed within 45 days, reduced by half if the procedure involves fewer than 10 employees, and may conclude with the signing of a trade union agreement.

If the union negotiations fail, the Labor Office has thirty days to attempt mediation, which, if unsuccessful, leads definitively to the dismissals.

In selecting the employees to be dismissed in the collective dismissal procedure, the employer is required to consider length of service, favouring employees with greater experience; family responsibilities, favouring employees with greater family obligations; and the organizational needs of the company.

Contestation and Legal Challenge

In any case of dismissal, the employee may challenge the dismissal within 60 days from receipt of the dismissal notice. Within the following 180 days, the employee must either file a claim before the competent court or initiate conciliation or arbitration proceedings before the Provincial Labour Office.

Failure to contest within the deadlines results in loss of the right to reinstatement, if applicable; loss of compensation protections under Article 18 of law no. 300/1970 or legislative decree no. 23/2015.

Under Italian employment law, the consequences of failing to comply with the procedural requirements governing dismissals depend on the nature of the violation and on several relevant factors, including the type of dismissal (individual or collective), the employee’s professional classification, the date of hiring and the size of the employer.

A specific rule applies where the dismissal is communicated orally. In this case, the dismissal is legally null and void. The employee is therefore entitled to reinstatement in their previous position, irrespective of their job classification, hiring date or the size of the employer. Alternatively, the employee may opt for compensation in lieu of reinstatement equal to 15 months of overall remuneration. In addition, the employer must pay compensation corresponding to the wages that would have accrued from the date of dismissal until reinstatement, subject to a minimum threshold of five months of remuneration. The same consequences apply where an oral dismissal occurs in the context of a collective redundancy procedure.

In situations where the dismissal is considered substantively justified but the employer has failed to comply with the statutory procedural requirements, the available remedies generally consist of financial compensation. The amount of compensation varies depending on the employee’s status, the date of hiring and the size of the employer.

Individual dismissals

For middle-managers (“quadri”), white-collar and blue-collar employees hired before 7 March 2015, a procedural breach generally results in compensation ranging from 6 to 12 months of total remuneration.

For employees in the same categories hired on or after 7 March 2015, the applicable compensation ranges between 2 and 12 months of total remuneration.

Where employees hired before 7 March 2015 work for employers with up to 60 employees overall in Italy, or with no more than 15 employees per production unit or municipality, the indemnity ranges between 2.5 and 6 months of remuneration. In certain circumstances, particularly where the employee has significant seniority and the employer employs at least 16 employees overall in Italy, the compensation may increase up to 10 or 14 months.

For employees hired from 7 March 2015 onwards and employed by undertakings within the same size thresholds, the compensation ranges between 1 and 6 months of total remuneration.

For executives (“dirigenti”), the applicable remedy consists of the supplementary indemnity established by the relevant national collective bargaining agreement. The amount typically increases according to the executive’s length of service and usually falls within a range of approximately 4 to 24 months of remuneration. Some agreements also provide additional increases depending on the executive’s age.

Collective dismissals

For middle-managers, white-collar and blue-collar employees hired before 7 March 2015, a breach of the statutory selection criteria used to determine which employees are to be dismissed results in reinstatement together with compensation of up to 12 months of remuneration.

If the employer breaches other aspects of the statutory collective dismissal procedure, employees in the same categories are instead entitled to financial compensation ranging between 12 and 24 months of remuneration.

For employees hired on or after 7 March 2015, violations of either the selection criteria or the statutory collective dismissal procedure led to compensation ranging from 6 to 36 months of total remuneration.

For executives, protection in the context of unlawful collective dismissals is generally governed by the relevant national collective bargaining agreement, which may provide for a specific indemnity. In the absence of such provisions, the statutory indemnity applies and ranges between twelve and twenty-four months of remuneration.

Finally, it should be noted that different remedies may apply where a dismissal is considered unlawful for substantive reasons rather than for procedural violations. In such cases, depending on the circumstances and the applicable legal framework, the remedies may also include reinstatement together with financial compensation.

National collective bargaining agreements play a significant role in regulating the termination of employment relationships. They contribute to defining both procedural and substantive aspects relating to dismissals as well as resignations.

First, NCBA determines the length of the notice period that the employer must observe in the event of a dismissal without just cause. Similarly, they also regulate the notice period that employees are required to comply with when resigning without just cause, which is generally shorter than the one applicable to the employer in the event of dismissal.

Collective agreements may also affect the disciplinary procedure that precedes a possible dismissal for just cause or subjective justified reasons. They may establish the time limit within which the employee must submit the explanations in response to the disciplinary complaint, sometimes providing for a period longer than the legal minimum of five days. They may also set a time limit within which the employer must adopt the disciplinary dismissal after receiving the employee’s explanations, an aspect that is not expressly regulated under Italian law.

Another element often included in NCBA consists of catalogues or lists of disciplinary offences, which identify the types of behaviour considered relevant from a disciplinary point of view and the corresponding applicable sanctions. These lists generally indicate, for each type of misconduct, the disciplinary measure normally applicable, ranging from a written warning to dismissal.

It has been clarified that, with specific reference to the grounds that may justify dismissal, the NCBA lists should be considered illustrative. This means that the absence of a particular behaviour from the contractual list does not automatically exclude the possibility that such behaviour may constitute grounds for dismissal, provided that it is sufficiently serious. However, when an employer dismisses an employee for conduct which, under the applicable collective agreement, should have resulted in a less severe disciplinary sanction, the dismissal is considered unfair.

Under Italian law, an employer who intends to dismiss an employee is not normally required to give prior notice to third parties or to obtain prior authorisation from any external authority.

However, there are specific situations in which the law requires certain additional procedural measures to be taken before the dismissal can be implemented.

Firstly, in the case of collective dismissals, the employer must initiate the procedure provided for by law, which involves a phase of information and consultation with trade unions and union representatives at company level. This procedure must be conducted in accordance with the relevant legal provisions and may also include additional requirements or steps provided for in the applicable NCBA, also involving the Labor Office.

Further regulations are contained in Article 7 of Law No. 604/1966, which applies to employees hired before 7 March 2015 in large companies. In these cases, when the employer intends to proceed with dismissal for economic reasons, a specific preliminary procedure must be followed. This involves prior notification to the Labor Office, after which a meeting is scheduled to verify whether it is possible to find an alternative solution to dismissal, including the possibility of reaching a conciliation agreement between the parties.

Under Italian law, any dismissal motivated by discriminatory reasons is strictly prohibited and considered null and void because it violates mandatory provisions designed to protect equality and the employee’s fundamental rights.

A dismissal is deemed discriminatory when it is based, directly or indirectly, on factors such as political opinions, religious beliefs, race or ethnic origin, nationality, citizenship, language, sex, gender, disability, age, sexual orientation, personal beliefs, trade union membership or activity, or participation in a lawful strike.

Where a dismissal is found to be discriminatory, the sanction is the most stringent form of protection provided by the legal system, namely full reinstatement. The employee is therefore entitled to be reinstated in the position previously held, with the employment relationship deemed to have continued uninterrupted.

In addition, the employer is required to pay compensation corresponding to all remuneration that would have accrued from the date of dismissal until the effective reinstatement, with a statutory minimum equal to five months’ salary, together with the payment of the related social security contributions.

Alternatively, the employee may choose not to return to work and instead opt for a compensatory indemnity equal to fifteen months of the last actual overall remuneration received.

According to Italian law, if a dismissal is deemed null and void  on the grounds that it is discriminatory, even if based on political opinions, religious beliefs, race, nationality, citizenship, language, sex or gender, disability, age, sexual orientation, personal opinions, trade union membership or activity, or participation in a strike by the employee, or if it constitutes unlawful retaliation against an employee who has reported harassment in the workplace, the labour court is required to apply the full reinstatement protection regime.

In such cases, the court orders the employer to:

• reinstate the employee to their previous position, with full restoration of the employment relationship without interruption, unless the employee decides to opt, in lieu of reinstatement, for compensation equal to 15 months’ salary based on their last total actual remuneration; and
• pay damages corresponding to all remuneration that would have accrued from the date of dismissal until the date of actual reinstatement, with a legal minimum of five months’ total remuneration, in addition to the payment of the related social security contributions.

Under Italian employment law, certain categories of employees are afforded enhanced statutory protection against dismissal. These protections operate in addition to the general prohibition of discriminatory or retaliatory dismissals and, in many cases, a dismissal in breach of such rules is deemed null and void. The consequence is the application of the strongest remedy provided by the system, namely reinstatement together with compensation.

A first area of protection concerns dismissals connected with marriage. The law establishes a presumption that a dismissal is linked to marriage if it is served between the publication of the marriage banns and one year after the wedding. In such circumstances the dismissal is void, unless the employer proves that it was justified by serious misconduct (just cause), the closure of the business, or the expiry of a fixed-term contract.

Particularly strong safeguards are also granted to pregnant employees and to employees on maternity or paternity leave. Any dismissal served from the beginning of pregnancy until the child reaches one year of age is considered null and void. Comparable protection applies in cases of adoption or foster care, where the prohibition generally operates for one year from the relevant event. The prohibition may be derogated from only in limited circumstances, such as serious misconduct, the definitive closure of the business, the expiry of a fixed-term contract, or the negative outcome of a probationary period.

Dismissals are likewise considered void when they are based on the employee’s exercise of statutory rights related to family care, such as parental leave or leave due to a child’s illness, as well as where the dismissal is motivated by an unlawful or retaliatory reason.

Specific safeguards also apply to employees with disabilities, particularly those employed under the mandatory quota system established by Law No. 68/1999. In this context, dismissals. including those carried out for economic reasons or within collective redundancy procedures. may be deemed unlawful where they result in the employer falling below the statutory quota of disabled workers.

Where a dismissal is declared null and void, the employee is generally entitled to reinstatement in the previous position. Alternatively, the employee may choose to receive an indemnity in lieu of reinstatement equal to fifteen months of the last actual overall remuneration, in addition to compensation corresponding to the wages accrued from the date of dismissal until reinstatement, with a statutory minimum equal to five months’ salary.

Under Italian law, employees who report unlawful conduct or irregularities in the public interest benefit from specific protection against retaliatory measures, including dismissal. The relevant framework is provided by Legislative Decree No. 24 of 10 March 2023, which implemented Directive (EU) 2019/1937 on the protection of whistleblowers.

The legislation applies to reports concerning breaches of EU law or violations of national provisions affecting the public interest that arise in a work-related context. Protection is primarily granted to employees, but it may also extend to other persons connected to the reporting process, such as former employees, self-employed workers, consultants, trainees, shareholders and facilitators, namely persons assisting the reporting employee during the disclosure procedure. Safeguards may also apply to individuals closely linked to the whistleblower who could be exposed to retaliation because of the report.

The cornerstone of the system is the prohibition of retaliatory measures. Any action taken because of a protected disclosure is unlawful if it places the reporting employee at a disadvantage. Retaliation may take different forms and expressly includes dismissal, suspension, demotion, failure to promote, changes in duties or workplace, reductions in remuneration, negative performance evaluations, disciplinary sanctions, harassment, discrimination, or any other measure capable of adversely affecting working conditions.

Where an employee is dismissed after making a protected disclosure, the law establishes a presumption that the measure is retaliatory. In such cases the employer bears the burden of demonstrating that the dismissal was based on legitimate reasons unrelated to the report.

If a dismissal is found to be retaliatory, it is considered null and void. The employee is therefore entitled to reinstatement in the previous position. Alternatively, the employee may choose to receive an indemnity in lieu of reinstatement equal to fifteen months of the last actual overall remuneration. In addition, the employer must pay compensation corresponding to the remuneration that would have accrued from the date of dismissal until reinstatement, subject to a statutory minimum of five months’ salary.

The decree also introduced organisational obligations for employers. Companies employing at least fifty employees must establish internal reporting channels that guarantee confidentiality and ensure the proper management of whistleblowing reports. The new regulatory framework entered into force on 15 July 2023, while for private sector companies employing fewer than 250 employees the relevant obligations became applicable from 17 December 2023.

Under Italian employment law, an employer cannot lawfully terminate an employee’s contract solely to offer re-engagement on less favourable terms.

Changes to the employee’s duties, job classification or remuneration may only be agreed through an individual agreement executed in a protected venue before authorities designated by law, such as trade union bodies, the Labour Office or certification commissions. These procedures are intended to ensure that the employee’s consent is genuine and informed, particularly where the agreed terms are less favourable.

Conversely, a dismissal for economic or organisational reasons followed by an offer of re-employment under less favourable conditions is generally unlawful. To justify such a dismissal, the employer must demonstrate that the employee’s position has genuinely been eliminated as part of a business reorganisation and must also comply with the so-called repechage obligation, namely verifying whether the employee may be reassigned to any other available position within the organisation, including positions involving lower-level duties

In Italy there is no specific legislation governing the application of artificial intelligence in employment relationships. However, its use is framed and limited through existing legal provisions. In this scenario, artificial intelligence (AI) is increasingly playing a role in the management processes of Italian companies, including sensitive areas such as recruitment, performance evaluation, and the management of dismissals, enhancing efficiency and supporting employers in organizational decisions, while also entailing concrete legal risks, particularly when such systems affect fundamental rights of workers.

It is important to emphasize that AI does not constitute a cause for dismissal. The lawfulness of termination remains anchored to traditional legal criteria, in particular those concerning economic reasons under Article 3 of Law no. 604/1966. In this context, the use of technological tools, while relevant from an organizational standpoint, does not create automatic validity of dismissals.

From a regulatory perspective, Legislative Decree no. 104/2022 (the so-called “Transparency Decree”) established information obligations for employers when automated decision-making or monitoring systems are employed that:

• influence decisions regarding hiring, management, termination of employment, or assignment of duties.
• affect supervision, performance evaluation, or compliance with employees’ contractual obligations.

These obligations concern information on the purposes and functioning of the systems, control measures adopted, any correction procedures for automated decisions, cybersecurity, and the data used. Decree-Law no. 48/2023, converted into Law no. 85/2023, subsequently limited the information obligation to fully automated systems, i.e., those lacking human intervention in the final stage of decision-making or monitoring.

From a jurisprudential standpoint, Article 22 of the GDPR has been cited by the courts to reaffirm the prohibition of decisions based solely on automated processing and the right of employees to obtain human intervention or challenge such decisions. The Court of Rome, with judgment no. 9135 of 19 November 2025, confirmed the lawfulness of a dismissal for economic reasons in the context of internal reorganization. The use of AI tools had rendered the role of a graphic designer redundant, without AI constituting an autonomous cause of termination. The decision highlighted that the use of AI may affect work organization but does not alter the legal requirements necessary for the elimination of a position.

The main risks associated with the use of AI in hiring or dismissal processes arise from the potential violation of workers’ fundamental rights, especially in the absence of transparency and human oversight over automated decisions. Current Italian jurisprudence confirms that the lawfulness of dismissals remains subject to traditional criteria, while allowing the use of AI as an organizational tool.

In any case, according to Article 11 of Law No. 132/2025, artificial intelligence must be used to improve working conditions, protect the physical and mental well-being of employees, improve the quality of work performance and increase individual productivity in accordance with European Union law. The use of artificial intelligence in the workplace must therefore be instrumental, as well as safe, reliable and transparent, and must not conflict with human dignity or violate the confidentiality of personal data. Particularly relevant in this regard is the obligation imposed on employers to inform employees about the use of artificial intelligence. Artificial intelligence in the organisation and management of the employment relationship must ensure respect for the inviolable rights of workers without discrimination based on sex, age, ethnic origin, religious belief, sexual orientation, political opinions or personal, social and economic conditions, in accordance with European Union law.

Under Italian employment law, the termination of an employment relationship gives rise to several statutory payments that must be granted to the employee, irrespective of the reasons underlying the termination.

Among these payments, the most relevant is the end-of-service allowance (Trattamento di Fine Rapporto – TFR). This entitlement constitutes a form of deferred remuneration that accrues throughout the entire duration of the employment relationship. Its amount is determined by calculating, for each year of service, a portion of the employee’s total annual remuneration equal to one thirteenth and a half of such remuneration. In practical terms, this corresponds to approximately 7.41 percent of the overall compensation paid to the employee over time. As for its allocation, employees may elect to have the accrued TFR transferred to a supplementary pension fund. Where no choice is made, the amount is generally directed to the pension fund provided for under the applicable NCBA. In companies employing up to 50 employees, the TFR is typically accrued within the employer’s financial statements and revalued annually according to statutory criteria. In larger companies, instead, it must be transferred to a dedicated fund administered by the Italian Social Security Authority (INPS)

Upon termination, employees are also entitled to receive payment in lieu of any accrued and unused holidays or leaves. The number of such days depends on the provisions contained in the applicable NCBA.

In addition, the employee is entitled to the pro rate of any additional monthly salaries, such as the thirteenth- or fourteenth-month’s salary, where these are provided under the applicable NCBA.

Furthermore, if the employment relationship ends through dismissal that does not qualify as dismissal for just cause and the employee is released from performing work during the notice period, the employer is required to pay the corresponding indemnity in lieu of notice. The amount of this indemnity is determined by considering not only the employee’s base gross annual salary but also any additional monthly salaries established by the applicable collective agreement, the variable remuneration received during the three years preceding termination, as well as the economic value of any fringe benefits granted to the employee.

Italian law provides the possibility of signing settlement agreements whereby the employee waives rights or claims arising from the employment relationship and its termination. However, it should be noted that if such agreements involve the waiver or settlement of rights recognized by mandatory provisions of law or applicable collective bargaining agreements, such as the right to challenge a dismissal, they are subject to specific validity requirements.

In particular, pursuant to Article 2113 of the Civil Code and Articles 410 et seq. of the Code of Civil Procedure, waivers and settlement agreements are not subject to challenge only if they are executed before a statutorily protected conciliation body, namely: the Labour Court; the Conciliation Commission established at the Territorial Labour Office; a trade union office; a certification commission, including those established at universities; or in the context of formal arbitration proceedings. The agreement must be set out in writing and signed by the employee, employer, and union representative or the person in charge of the mentioned statutorily protected conciliation body.

For the agreement to be considered valid, the representative of the statutorily protected conciliation body must provide the employee with complete and clear information about the extent, nature, and legal consequences of their waivers, to provide the employee with full assistance in forming their decision to waive their rights. At the same time, for the agreement to be valid and effective, the employer must pay the employee a sum as compensation for the waivers made by the employee. The agreement concluded before the statutorily protected conciliation body in compliance with the above conditions is considered final and unchallengeable.

If, on the other hand, the settlement is not concluded before a statutorily protected conciliation body, the employee retains the right to challenge the waiver within six months of the date of termination of employment or the date of signing the agreement, whichever is later. In this case, the waiver is not automatically void but remains subject to challenge within the time limit provided for by law. The parties may also include confidentiality or non-disclosure clauses concerning both the content of the settlement agreement and confidential information of the employer that the employee has become aware of during the employment relationship, provided that such clauses do not violate mandatory rules.

Lastly, it should be noted that, with effect from February 28^th, 2023, the parties’ lawyers have been granted the right to activate a specific assisted negotiation procedure in this matter, without the need for the intervention or formal supervision of a third party, subject to compliance with the requirements of the law on assisted negotiation.

In this case, the agreement between the employer and the employee entered into at the end of the procedure shall be fully effective and cannot be challenged by the parties.

Under Italian law, post-termination non-competition agreements are valid and enforceable only if all the following conditions are satisfied:

• the agreement is executed in writing.
• its duration does not exceed three years, extended to five years for executives.
• its scope is clearly defined.
• the restriction applies only within a specified geographical area.
• the employee receives specific compensation, additional to salary, which must be fair and proportionate to the actual breadth of the non-competition obligation. Such compensation may be paid during the employment relationship, provided that a minimum guaranteed amount is agreed, or after termination of the employment relationship.

If even one of these requirements is not met, the agreement is null and void. The only exception concerns duration. If the agreed term exceeds the statutory maximum, the duration is automatically reduced by operation of law to the maximum period permitted under Italian law, while the remaining provisions remain valid and binding.

With reference to the compensation, according to a well-established line of case law, it is generally deemed proportionate when it is not lower than approximately 30% of the employee’s gross annual salary for each year of effectiveness of the agreement.

The agreement is also considered null and void if the combination of its duration, scope and territorial limits is so extensive that it effectively prevents the employee from obtaining alternative employment.

Under Italian law, it is possible to restrict an employee, after termination of employment, from carrying out competing activities, working for a competitor, or soliciting customers, clients or employees of the former employer. These restrictions are typically implemented through a post-termination non-competition agreement governed by Article 2125 of the Italian Civil Code.

To be valid and enforceable, the agreement must satisfy several statutory requirements. In particular:

• it must be executed in writing.
• its duration may not exceed three years for employees and five years for executives.
• it must clearly define the scope of the restricted activities.
• it must be limited to a specific geographical area.
• the employee must receive a specific and fair consideration, in addition to ordinary salary, proportionate to the extent and duration of the restriction.

If any of these requirements is not satisfied, the agreement is generally considered null and void. However, if the duration exceeds the statutory maximum, the clause is not entirely invalid but is automatically reduced to the maximum period allowed by law, while the remaining terms remain effective.

Finally, the covenant will also be deemed invalid if its overall scope, considering its duration, geographical reach and business restrictions, is such as to effectively prevent the employee from finding alternative employment or carrying out a professional activity after termination.

As a general principle, Article 2105 of the Italian Civil Code imposes on employees a duty of loyalty, which includes the prohibition against engaging in activities in competition with the employer and against disclosing information relating to the organization and production methods of the undertaking, or using such information in a manner capable of causing prejudice to the employer. This duty applies throughout the entire duration of the employment relationship and extends to all information, data, and knowledge acquired by the employee during, and by reason of, the employment.

The obligation of confidentiality may continue to apply after termination of the employment relationship, provided that the information at issue qualifies as a “trade secret” under the applicable statutory framework.

Under Italian law, information qualifies as a trade secret where all the following cumulative requirements are met:

• the information is secret, in that it is not generally known or readily accessible to people operating in the relevant sector.
• the information has economic value by virtue of its secrecy.
• the employer has adopted adequate measures reasonably designed to maintain its secrecy.

Where these conditions are satisfied, the information benefits from the statutory protection afforded to trade secrets, and such protection may be enforced against former employees following termination of the employment relationship.

Conversely, Italian law does not provide an equally structured post-contractual regime of protection for confidential information that does not meet the threshold of a trade secret. In such circumstances, protection primarily derives from the duty of loyalty during the employment relationship and, after its termination, from any specific contractual undertakings entered by the parties.

In any event, the parties remain free to execute a post-contractual confidentiality agreement pursuant to which the employee undertakes to maintain confidentiality for a specified period following termination, subject to compliance with the general principles of reasonableness and proportionality.

Under Italian law, employers are under no statutory or regulatory obligation to provide employment references to a prospective employer at the request of a former employee.

In the event of an express request from a former employee, the employer, although not obliged to do so, shall be free to provide the type of reference deemed most appropriate.

The main difficulty for employers who intend to proceed with a dismissal is dealing with the complex regulations provided for by Italian legal system, particularly regarding the associated economic risks. In Italy, there are specific protections that vary depending on the type of dismissal: null and void, unlawful, lacking the prerequisites of subjective justification or just cause cited by the employer, due to the non-existence of the disputed fact, or if the fact falls within the scope of conduct punishable by a conservative sanction provided for in collective agreements or applicable disciplinary codes.

The rules also vary according to the employee’s length of service, distinguishing between those hired before or after 7 March 2015, as well as according to the size of the company. Added to these complexities is the unpredictability of court rulings and the impact of recent interventions by the Constitutional Court, which have further affected the regulatory framework. Employers are required to conduct a rigorous and detailed analysis of each individual case, in order to clearly identify legal risks and potential regulatory issues, ensuring a robust defensive preparation in anticipation of any disputes.

Constitutional Court ruling no. 111/2025 partially declared the constitutional illegitimacy of Article 6, first paragraph, of Law no. 604 of 15 July 1966, in the part where it does not provide that, if at the time of receiving the dismissal notice or during the 60-day period for its challenge (including extrajudicial), the worker is in a condition of incapacity to understand or to act, the obligation of prior challenge does not apply, and the dismissal may be contested within the maximum expiration period of 240 days from receipt of the notice.

The case arose from the situation of a female worker who, due to a serious mental illness, had been unable to timely challenge her dismissal. The existing regulation, by linking the challenge period to the receipt of the notice even in cases of involuntary incapacity, was considered unreasonable, violating the right to work, the right of access to legal remedies, and the principle of equality, and discriminatory against persons with disabilities. The Court, while recognizing the need for certainty in legal relationships, affirmed that such certainty cannot result in excessive restriction of the fundamental rights of the worker, especially in situations of vulnerability.

Therefore, in such situations, the worker will be able to challenge the dismissal within the extended period of 240 days (60 days for the extrajudicial challenge + 180 days for filing the appeal in court), either directly by filing the appeal, including a precautionary one, or by notifying the other party of a request for conciliation or arbitration. In this way, the Court sought to balance the need for legal certainty with the importance of ensuring that a worker’s mental or physical vulnerability does not lead to permanent loss of the right to defence and the right to work.

This ruling therefore represents a significant step toward anti-discrimination protection for persons with disabilities or incapacity, in line with constitutional principles and supranational sources. The decision takes into account obligations under the UN Convention on the Rights of Persons with Disabilities and Directive 2000/78/EC, which require avoiding discrimination and adopting adequate measures to remove disadvantages faced by persons with disabilities.

Finally, mention should be made of Constitutional Court ruling no. 118/2025, in which the Court partially declared unconstitutional Article 9, paragraph 1, of Legislative Decree no. 23 of 4 March 2015, insofar as it provided that, in cases of unlawful dismissals carried out by employers who do not meet the size thresholds of Article 18 of Law no. 300/1970, i.e., employing up to 15 employees in the production unit or, in any case, up to 60 employees in Italy, the amount of compensation could not exceed six months of the last remuneration.

The provision at issue in the Court’s ruling established that, when the employer does not exceed the size thresholds of 15 employees per production unit and, in any case, no more than 60 employees overall, the indemnity could not exceed six months’ pay. According to the Constitutional Court, this rule, which halves the compensation compared to that applicable to larger enterprises, excessively restricts the discretion of the judge tasked with determining the lawfulness of the dismissal.

Pending legislative intervention on the matter, the Court’s ruling represents in any case a significant development, as it restores centrality to the role of the labour judge, who may now exercise discretion in adjusting the sanction based on the specific circumstances of each case, and reduces the disparity of treatment between employees of small enterprises and those of large enterprises.