Italian legislation protecting employees has long introduced a principle of “joint liability” in contracts (and subcontracts), which makes the client/principal jointly liable with the contractor for the payment of wages and social security contributions owed by the contractor (and possible subcontractors) to its workers.
In particular, Article 29, second paragraph, of Legislative Decree 276/2003 provides as follows:
“In the case of works or services contracts, the client entrepreneur or employer is jointly and severally liable with the contractor, as well as with any subcontractors, within two years of the termination of the contract, to pay workers their wages, including severance pay, as well as social security contributions and insurance premiums due in relation to the period of execution of the contract, excluding any obligation for civil penalties for which only the person responsible for the breach is liable. (..)”
In an important ruling in 2017 (No. 254/17), the Italian Constitutional Court stated that the protection guaranteed by the provision in question to workers of “subcontractors” must be interpreted as extending also to workers of “sub-suppliers”.
While the contracting (and subcontracting) agreement (in Italian “appalto” e “subappalto”) is governed by Articles 1655 ss. of the Italian civil code, the “sub-supply” agreement (in Italian “subfornitura”) is defined by the specific law dedicated to it (Law 192/1998) in the following terms:
“With a “sub-supply” agreement, an entrepreneur undertakes to carry out work on behalf of a client company on semi-finished products or raw materials supplied by the client itself, or undertakes to supply the company with products or services intended to be incorporated or otherwise used in the client’s economic activity or in the production of a complex good, in accordance with executive projects, technical and technological knowledge, models, or prototypes provided by the client company.”
In essence, the sub-supplier is in a position very similar to that of the sub-contractor, but is also characterized by a “technological dependence” on its client, which places it in a position of greater weakness than the sub-contractor. It should be noted that the law on “sub-supply” (Law 192/1998) contains an express provision in Article 9 on the abuse of economic dependence, a concept that is also applied to other types of contracts, but which was specifically provided for and regulated to protect “sub-suppliers”, given their position of weakness.
The Constitutional Court, therefore, in the aforementioned judgment No. 254/17, analyzing the extensibility of the application of Article 29, second paragraph, from the contractor/subcontractor to the “sub-supplier”, concludes on this point by stating that, regardless of whether the “sub-supply” contract (in Italian “subfornitura”) is classified as equivalent or as a ‘subtype’ of the “contract” (in Italian “appalto”), or instead as a different contract,
“the rationale behind the introduction of joint and several liability of the client/principal – which is to avoid the risk that the mechanisms of decentralization and dissociation between holding of the employment contract and use of the service will be detrimental to the workers employed in the performance of the commercial contract – does not justify an exclusion (which would otherwise be in contrast with the provision of Article 3 of the Constitution) of the guarantee provided to the sub-supplier’s workers, given that the protection of the person who provides indirect work cannot fail to extend to all levels of decentralization.
In this sense, it is also important to consider that the need to protect the workers of the “sub-supplier”, given the structural weakness of their employer, should be considered even more intense and essential than in the case of a ‘normal’ contract.”
Therefore, in essence, the principle of solidarity established to protect workers in cases of production decentralization, provided for by law for the contractor’s client/principal, must include (downstream) not only cases of subcontracting (expressly provided for by the law) but also cases of “sub-supply” (in Italian “subfornitura”) (according to this interpretation by the Constitutional Court), in order to protect the employees of “sub-suppliers”, who are in even more precarious conditions than the workers of the subcontractor and the contractor.
In four recent judgments handed down by the Court of Appeal of Turin on February 24, 2025 (No. 87 and 99), March 6, 2025 (No. 90), and March 13, 2025 (No. 98), the application of this principle of “solidarity” was also confirmed for franchising agreements, extending the liability provided for in Article 29, second paragraph, to the franchisor of the client/franchisee.
In particular, the disputes in question concerned franchising agreements for the provision of transport and logistics services. In this context, some drivers (couriers), having not received payment of their wages, contributions, etc., took action not only against their employer (company ‘A contractor’), but also against the company that had contracted these services from their employer (company ‘B client/principal’) and, finally, against company ‘C franchisor’, franchisor of company ‘B client/franchisee’.
In the four first instance judgments, the Court of Ivrea had recognized in the franchising agreement – which in this case provided for the franchisees to carry out transport, express transport, and logistics activities, on an exclusive basis in a specific area – the typical cause of the contract (“appalto”), albeit combined with that of franchising. Consequently, also in light of the broad interpretation given by the Constitutional Court to Article 29, second paragraph, cited above (Constitutional Court No. 254/17), the Court had considered the joint and several liability to be applicable to the franchisor as well.
In the four judgments analised here, the Court of Appeal of Turin essentially confirms the decisions of the Court of First Instance.
In particular, the Court, while noting the clear distinction between a contract for services (in Italian “appalto di servizi”) and a franchising agreement, referring to the above-mentioned ruling of the Constitutional Court, states that a legal analysis should not be carried out, but rather an economic analysis of the contractual relationship, and quotes some excerpts from Constitutional Court ruling No. 254/17; in particular:
“the rationale behind the introduction of joint and several liability of the client (…) is to avoid the risk that the mechanisms of decentralization and dissociation between holding of the employment contract and use of the service will be detrimental to the workers employed in the performance of the commercial contract,” with the consequence that “the protection of the person who ensures an indirect working activity cannot fail to extend to all levels of decentralization.”(See judgment No. 90 of 6/3/2025, p. 6).
Moving on to analyze the franchise agreement, the Court of Appeal notes that the franchisee, despite being a legally independent entity from the franchisor, “is, however, completely lacking in productive autonomy, since (…) it uses the franchisor’s distinctive signs and is required to organize its business according to the franchisor’s instructions.” (See judgment No. 90 of 6/3/2025, p. 7; judgment No. 98 of 13/3/2025, p. 4; judgment No. 99 of 24/2/2025, p. 5).
The Court then states in the four judgments that, on the one hand, the franchisee’s earning potential depends on its continued presence within the franchisor’s network and, on the other hand, the franchisor indirectly benefits from the services provided by the workers (employees of the franchisee’s contractor), given that it is the latter who carry out the transport activity that constitutes the very object of the business activity offered, using the franchisor’s know-how and distinctive signs.
Therefore, explicitly in only one of the judgments under consideration, but implicitly also in the others, the Court recognizes an “economic dependence” of the franchisee on the franchisor and then concludes that in the cases under examination there is a situation of decentralization and dissociation between the holding of the employment contract and the use of the work performance such as to justify the application of the principle of solidarity referred to in Article 29 above.
While understanding the intent to protect the employee, it should be noted that the judgments in question are open to criticism because, in the opinion of the author, they do not correctly apply the principles established by the Constitutional Court in judgment No. 254/17.
In fact, as explained above, the Constitutional Court wanted to extend the protection provided for employees ‘downstream’.
In particular, Article 29, second paragraph, of Legislative Decree 276/2003 expressly protects the workers of the contractor and subcontractor by extending the responsibility for the payment of their wages, contributions, etc. (to their employer/contractor) to the latter’s client/principal. The Constitutional Court has extended this protection to ‘sub-suppliers’ workers as well, essentially placing them in the same position as subcontractors’ and contractors’ workers, judging their position to be even more precarious than that of subcontractors’ and contractors’ workers.
The Court of Ivrea and the Court of Appeal of Turin, on the other hand, in the judgments commented on here, have extended the liability of the client/principal “upstream,” i.e., to the franchisor of the client/franchisee, although this extension of liability is not even implicitly recognized in the text of the law, nor was it evoked in any way by the judgment of the Constitutional Court, to which they refer.
The judgments of the Court of Appeal of Turin, with reasoning that cannot be agreed with, attempt to identify an economic dependence of the franchisee on the franchisor in the cases in question (in contrast with the prevailing and established case law, which, on the contrary, excludes it precisely because of the alternatives that franchisees can normally find on the market), and then proceed to extend liability ‘upstream’, which is completely unjustified from both a legal and economic point of view.
In these circumstances, it is hoped that the matter will be brought before the Court of Cassation for a more careful and correct analysis of the issue.
Silvia Bortolotti, IDI Vice-Chair/Secretary General and Country Expert for Italy
Links to judgments:
Corte d’Appello Torino, Sez. lavoro, Sent., 06/03/2025, n. 90
Corte d’Appello Torino, Sez. lavoro, Sent., 13/03/2025, n. 98
Corte d’Appello Torino, Sez. lavoro, Sent., 24/02/2025, n. 87
Corte d’Appello Torino, Sez. lavoro, Sent., 24/02/2025, n. 99
