UNUSTIFIED TERMINATION OF EMPLOYMENT: WHAT COMPENSATION IS THE EMPLOYEE ENTITLED TO?

The recent ruling no. 118/2025 of the Constitutional Court declared unconstitutional the maximum limit of six months' salary for compensation in cases of unlawful dismissal in small businesses, i.e. those with fewer than sixteen employees, thus repealing a key element of the Jobs Act.

From the workers' point of view, the decision represents a victory in terms of effective protection against arbitrary dismissal. The Court found that the rigid limit constituted a disproportionate and unreasonable imposition. As a result, workers in smaller companies, who were already less protected than those in larger companies, found themselves having to accept significantly lower compensation, even in cases of serious procedural or discriminatory violations.

The elimination of the fixed ceiling of six months' salary therefore responds to the need to ensure equal treatment: the damage suffered by a worker who has been unfairly dismissed must be genuinely compensated, in accordance with constitutional principles such as Article 3 on the right to equality and Article 24 on judicial protection.

From the employers' point of view, especially those in small and medium-sized enterprises, the ruling nevertheless raises a number of concerns and doubts. The maximum limit was introduced precisely to protect the economic sustainability of smaller companies, which, unlike large companies, often have fewer resources and fewer tools to absorb any costs associated with labour disputes. The absence of a certain and predetermined reference point risks exacerbating the sense of uncertainty and making the cost of any disputes more burdensome and unpredictable.

Nevertheless, the void left by the ruling requires timely and balanced intervention by the legislator: while it is true that compensation must comply with the principles of adequacy and proportionality, it is equally true that clear and certain parameters must be established to avoid excessive uncertainty in judicial decisions and also to preserve the stability of the smaller productive fabric.

last update September 2025