Before reaching retirement age, an employee can take action against the employer only for damages due to social security contribution irregularities and this right is subject to a ten-year statute of limitations
Court of Cassation, Employment Section Judgment September 8, 2020, no. 18661
With the judgment in question, the Supreme Court of Cassation offers a broad examination of the terms of prescription and the nature of the amounts due to the employee, in relation to the breach of the employer’s obligations to pay social security contributions.
The case originates from a ruling by the Court of Rome that established the right of the employee to be hired as from 1st January 1990, and the employee’s subsequent appeal to receive compensation for damages for unpaid social security contributions for the five years 1990-1995.
The Court, after having ruled out the existence of the obligation to pay contributions because the sums due to the worker were to be considered compensatory, rejected the appeal noting that the five-year deadline had expired. The Court’s ruling was completely overturned by the Court of Appeal, which found that the employer’s liability to pay damages arising from failure to pay, or irregularity in, contributions, represents a contractual liability, imposed by law, subject to a ten-year period of prescription, pursuant to Article 2946 of the Italian Civil Code.
With regard to the amounts owed to the worker, the Judge found that they were made up of unpaid wages and that the right claimed stemmed from the violation of the contractual obligation to hire the worker, so that, since the original remunerative nature of the obligation had not disappeared, the amounts should be subject to contributions.
The Supreme Court of Cassation, having examined the question, reiterated, first of all, that the omission of the contributions produces a twofold patrimonial detriment for the worker “consisting, on the one hand, in the total or partial loss of the pension benefit, which occurs when the worker reaches retirement age, and, on the other hand, in the need to set up a fund to obtain an amount corresponding to the pension, through a supplementary pension, paying what is necessary to constitute the pension referred to in Law no. 1338 of 12 August 1962, article 13“.
As a result, before reaching pensionable age, the worker can take action against the employer only for damages due to contributory irregularities “and this right to compensation for damages – as correctly ascertained by the judges – is subject to a ten-year period of prescription“.
With regard to the amounts due to the worker as compensation for damages for the violation of the obligations incumbent on the employer, according to the Judges they “are of a remunerative nature – and are therefore to be counted in the taxable salary for tax purposes – only when they derive from a breach, which, although not directly related to the salary obligation, however, immediately affects it because it determines the non-payment of remuneration due to the employee (see Cassation 21/5/2012 n. 7987), this situation, undoubtedly recognizable in the case under consideration”.
The Court goes on to say that, “the loss of the worker’s right to social security and welfare benefits and the consequent onset of the right to compensation, occurs only when right of social security institutions to the payment of omitted contributions has prescribed”.
With regard to the action to obtain the life annuity pursuant to art. 13, Law no. 1338/1962 at the expense of the employer, due to the non-payment by the latter of social security contributions, according to consolidated caselaw of the Court, the worker’s right is subject to the ordinary period of prescription, running from the date of prescription of the INPS credit, regardless of whether the worker knows or not of the omission of contributions (Cass. S.U. 14/9/2017 n. 21302).
It should be noted, in this regard, that art. 3 of Law no. 335/1995 has reduced to five years the period of prescription for compulsory social security contributions, providing that the old ten-year period continues to apply only in the case of interruptive acts already carried out or procedures aimed at recovering the tax evaded, started while the previous rules were in force. The above mentioned hypotheses did not occur in the case in question, therefore, according to the Judges “it must be considered that the period of prescription of the unpaid social security contributions, relating to the period from 1 January 1990 to 16 January 1995, ran in the following five years, and from the expiry of that period of prescription, the further ten-year period of prescription regarding compensation for damages ran (1-1-2000/16-1-2010)”.
By virtue of the above, the Supreme Court of Cassation overturned the judgment on appeal.