The system must be reformed by 14 January 2027, which currently involves waiting up to years and payments in installments of the liquidation. Without Parliament’s intervention, there is a risk of unconstitutionality and an impact of 15.6 billion.
The system by which the State pays the Severance pay for public employees will have to change. The Constitutional Court has established that the long waiting times and payment installments can no longer be maintained. An ultimatum therefore arrives from the Council: Government and Parliament must intervene by January 14, 2027 to reform the law. Otherwise, the Court could declare the current rules are unconstitutionalwith an estimated impact on public finances of up to 15.6 billion euros. No immediate revolution however, the constitutional judges have made it clear that the current system will have to be cancelled gradualto avoid too heavy effects on the state budget.
How the payment of severance pay in the public sector works today
To date, public employees do not receive severance pay immediately after the end of the employment relationship, as happens in most of the private sector. The rules introduced in 2010 during the public debt crisis have in fact significantly increased payment times. Today we wait 9 months from the termination of service before the start of payment (in the past it was 12 months) and the first installment reaches a maximum of 50 thousand euros. The second instalment, again up to a maximum of 50 thousand euros, arrives after 12 months and for higher amounts you have to wait another year for the third instalment. In practice, when you stop working, it takes months and years to get your severance pay.
The decision of the Constitutional Court on severance pay for public employees
In the past the Constitutional Court had invited the State to intervene on the timing, hypothesizing the risk of unconstitutionality of such a long wait for workers. Now, however, we have moved from the invitation to the ultimatum: there is time until January 14, 2027 to change the legislation. If reform doesn’t arrive by then, the Court might declare the law unconstitutional.
Because an immediate stop would cost the State a lot
One of the reasons why the Council did not immediately cancel the current rules concerns the financial impact. According to INPS calculations, immediately eliminating all postponements and installments would cost the public purse approximately 15.6 billion euros. In detail, 4.2 billion would be used to eliminate the initial nine-month postponement; 11.6 billion to abolish installment payments and 15.6 billion would be the overall cost if both measures were canceled immediately. An immediate intervention would therefore produce a strong impact on the state budgetwhich is why the Court indicated the need for gradual reform.
The reform could arrive with the next budget law
The Council’s decision makes legislative intervention inevitable in the coming months. And the topic therefore enters the agenda for the next budget lawwhich will have to start redesigning the severance payment system in the public sector. The most probable hypothesis is a progressive overcoming path of expectations and installments, spread over several years, to dilute the financial impact. A reform would lead to public employees having this in the coming years shorter times to receive the settlementone reduction or elimination of installment payments and a system closer to that of private sector.
