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Italy: high severance pay even in small businesses

Italy: high severance pay even in small businesses

Italian labor law, with one of its latest reforms (the “Jobs Act”), provided that in so-called small businesses (fewer than 15 employees), a worker dismissed without justification could be entitled to severance pay (only) up to six months' gross salary.

The Italian Constitutional Court, in its decision no. 118 of July 21, 2025, ruled that this maximum limit was unjustified discrimination, since in large companies, severance pay can be up to 24 months' salary under collective agreements. As a result, workers in small businesses must now be treated in the same way. This is an interesting decision from a comparative law perspective; in Germany, employees of small businesses (here, up to 10 employees) have no protection against dismissal at all.