Public managers: reorganizations and the uncertain fate of fixed-term appointments.

Note to the judgment of the Court of Rome, sec. II labor, May 2, 2023, No. 4429 – An emblematic case lands in the Court of Rome and then in the Court of Appeal of Rome, turning the spotlight on an issue of considerable relevance to public managers: What is the fate of managerial positions in case of reorganizations?

Michael Louis Stiefel – Attorney Specialist in Labor and Social Security Law.

Click here to read this note and the judgment of the Court of Rome, sec. II labor, May 2, 2023, no. 4429 in pdf

I. The case.

A worker, hired on a five-year fixed-term contract for a second-tier management position, was served with a notice of dismissal motivated by “reorganization needs” of the ministry. His decisive judicial response opened a heated debate, with significant implications for the protection of public managers’ rights.

Comparing positions.

The executive challenged the legitimacy of the dismissal, pointing out that the law does not provide for reorganization as a just cause for termination for fixed-term executives. In his view, the Ministry should have assigned him another position at the same level instead of dismissing him.

The Ministry challenged the jurisdiction of the ordinary court and asked that the appeal be dismissed on the merits.

Rome court ruling.

In a decision in line with prevailing case law, the Court of Rome upheld the executive’s appeal.

The judgment ruled that the dismissal was unlawful because:

the law provides that the dismissal of the public manager can only be based on subjective reasons, i.e., serious failures of the manager;
reorganization of the office cannot constitute just cause for dismissal of the public manager, since the manager’s employment relationship is governed by specific rules that do not provide for such a possibility;
the reorganization of the office was not effective, but merely formal in nature, as the Ministry continued to hire other “external” managers.

The court then ordered the ministry to pay the plaintiff’s lost wages as a result of the dismissal until the natural expiration of the contract in December 2025.

The reversal of the ruling by the Rome Court of Appeals and its implications.

However, on Jan. 26, 2024, the case took an unexpected turn, with the Rome Court of Appeals reforming the court’s ruling in its entirety, which, by reading the operative part, rejected the executive’s claims, and awarded the costs of both levels of the case.

The judgment of the Court of Appeals, with its reasons for rejecting the executive’s appeal, has not yet been published, but it raises quite a few concerns and leaves open delicate questions about the legitimacy of revocations of fixed-term executive appointments in the case of reorganizations.

A topic of great importance.

The issue assumes primary relevance for public managers hired on fixed-term contracts, who find themselves, in fact, exposed to a real risk of unfair and sudden prejudice in terms of career and professionalism. The obvious divergence of views between the judges of first and second instance creates an uncertainty that undermines the stability of their work.

II. Points for further study and food for thought.

As we wait to read the grounds of the Rome Court of Appeals’ ruling, we can only wonder about the reasons that led the second-instance judges to reform the Rome court’s ruling.

Will the Court of Appeals dismantle the pivot of the Rome court ruling?

In this regard, it remains to be seen whether and, if so, on what basis, the Rome Court of Appeals departed from the well-established interpretative direction-which forms the pivot of the Rome Court’s ruling-that:

1) “the terminability of the employment relationship of the public manager … is regulated by Article 19, paragraph 1b t.u.165\91, introduced into the body of said rule by Art. 40, co. 1 lett. b) of Legislative Decree Oct. 27, 2009, no. 150, which stipulates that “managerial appointments may be revoked exclusively in the cases and in the manner set forth in Article 21, paragraph 1, second sentence,” which, in turn, after establishing that “failure to achieve objectives … or failure to comply with directives attributable to the manager entails … the impossibility of renewal of the same managerial appointment,” the second sentence adds that “… in relation to the seriousness of the cases, the administration may also, after notice and in compliance with the principle of cross-examination, revoke the appointment by placing the manager at the disposal… or terminate the employment relationship in accordance with the provisions of the collective agreement.”

2) the legislation in question “lacks … any reference, as just cause for revocation, to any ‘reorganization processes.

One deficient aspect of the Rome court ruling: the failure to justify the distinction between non-tenured and tenured managers for the purposes of protections.

At the same time, wishing to turn a critical eye to the judgment of the Court of Rome, it can be observed that it is deficient in a passage – although not decisive for the purposes of its reasoning – in which it makes a laconic distinction, as regards protections, between the position of the non-tenured executive – whose employment relationship is fixed-term – and that of the tenured executive – whose employment relationship is permanent. Indeed, according to the trial judge, the non-tenured executive could not suffer a legitimate revocation for organizational reasons, while the tenured executive could instead suffer a legitimate revocation of a fixed-term executive position, for organizational reasons; however, the judge does not make explicit the reasons for the latter distinction and thus leaves open relevant questions in this regard.

On this point, it appears, indeed, that there is no rule in our system that provides an unconditional power of the public administration to revoke-for organizational reasons-contractual fixed-term appointments given to public managers, whether tenured or non-tenured.

In this regard, it should be borne in mind, that art. 1, paragraph 18, of Decree Law No. 138 of 2011, converted with amendments by Law No. 148 of 2011, does not provide for an option to revoke executive positions for organizational reasons, but rather the possibility for the P.A. to order the transfer to another position for specific “organizational needs” of the existence of which the Administration must evidently account with an appropriate justification, susceptible to judicial review. Therefore, any revocation of an executive position that is not accompanied by a simultaneous and reasoned transfer of its holder to another executive position could well be considered illegitimate for violation of the law.

The problem of revocation of fixed-term executive positions and the protection of the public interest in impartiality, good performance and continuity of administrative action.

If we lift our gaze from the specific context and broaden our overview, we see that in recent years, following each change of governmental structure, new governments have almost always carried out and implemented more or less extensive “reorganization” projects of departments. Said reorganizations were often carried out through the introduction of mechanisms for the automatic caducation of managerial positions at the same time as the choice – through interpellation procedures – of new individuals to whom to entrust managerial positions.

The legitimacy of the latter practice appears somewhat questionable considering that it impairs, on the one hand, the public interest in impartiality, good performance and continuity of administrative action and, on the other hand, the executive’s right to complete the assignment he or she was given at the time, which is swept away without any concomitant transfer of the executive to another executive assignment, without any assessment of whether or not specific “organizational needs” exist and without any evaluation of the results achieved and aptitudes demonstrated by the executive during the assignment.

I will return to the latter topic in a further follow-up article. The article will take as its starting point a concrete case: a tenured public manager who had a first-rank (general management) executive position revoked as part of a reorganization process. In addition, as soon as the Rome Court of Appeals’ ruling reforming the judgment commented on above is published, I will publish a note with an analysis of its reasoning. If you would like to receive future articles when they come out, please subscribe here.

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I am an expert in public administration employment and follow with keen interest the subject of reorganizations, their effects on public workers’ rights and the means of protection.

I am happy to learn about the different issues and different perspectives of people interested in the topic. Therefore, if you are interested in the topic, you can contact me by email or click here for a brief meeting.