Termination of managers performing below the expectations of the employer
- 26 febbraio 2016
- The trust relationship between employer and manager
- Dismissal for cause: new clarification of the Italian Supreme Court
- Final considerations
The trust relationship between employer and manager
In Italy, managers falling under the category of “dirigenti”, are subject to different regulation to that applicable to all the other categories of employees. This is the result of the particular content of a manager’s role: managers carry out high profile duties and responsibilities, and often act autonomously, usually on behalf of the employer, effectively becoming its alter ego. In this regard, a very strong trust relationship between the employer and manager, in whose hands the company’s business is entrusted, is essential.
Dismissal for cause: new clarification of the Italian Supreme Court
Due to the particular nature of manager’s role, he/she is expected to manage the company’s business with professionalism and accuracy. Indeed, the manager should fulfill his/her responsibilities with the utmost care and do all in his/her power to run the business of the company efficiently, while upholding its core values, and the employer must be able to rely on the capabilities of the manager. For these reasons, once trust is undermined, continuance of employment becomes impossible, even if only for the notice period, and the employer may dismiss the manager immediately for cause.
With decision no. 24941/2015, the Italian Supreme Court has offered new clarifications regarding the dismissal of managers for cause: bearing in mind the specific and crucial trust relationship that exists between manager and employer, Italian judges have stated that the employer can lawfully ground a dismissal on the fact that the manager is not up to the task associated with the job.
In accordance with the relevant settled case-law, the Italian Supreme Court has affirmed that any significant non-compliance with the general instructions of the employer, especially when it causes loss of business or damage to the company or third parties, can justify a dismissal for cause.
However, the groundbreaking implication of the judgment is that a dismissal for cause is well grounded in all cases of inadequate or negligent conduct of the manager that potentially lead to detrimental consequences for the company. According to the Court, it might be sufficient that the manager’s work performance falls below the expectations of the employer, provided that these expectations were known/knowable to the manager at the time of hiring or during the employment relationship. By way of example, underachievement of fixed targets, inadequacy in leading a working team or a lack of precision can be liable to weaken the trust relationship between the employer and the manager. In addition, the employer may terminate a manager in case of failure to improve strategic plans to boost profits and efficiency, or to develop and expand new business opportunities, thus hindering the growth and progress of the company.
The Italian Supreme Court recognized the possibility of dismissing a manager for cause, when his/her performance fails to meet the expectations of the employer, by simply communicating the termination of the employment relationship. This is quite different – and maybe easier – from the procedure to be followed for dismissal of a standard employee in cases of poor performance: indeed, it is not necessary to give a manager time to increase his/her efficiency at work or to provide an improvement plan to assist with rectifying the situation before dismissal is finally implemented.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.