In the event of an unlawful dismissal, NASPI benefits received between termination and the reinstatement order do not have to be repaid to INPS if the employment relationship has not been effectively reinstated, as mere de jure reinstatement is insufficient. However, exercising the option for substitute indemnity results in the voluntary termination of the employment relationship and, from that moment on, ends the status of involuntary unemployment, which is a prerequisite for receiving unemployment benefits. The Case The case stems from an appeal filed by two workers who were dismissed as part of a collective dismissal procedure. After their appeal, the court of first instance annulled the termination, ordered reinstatement, and required the employer to pay compensation under Article 18, paragraph 4, of Law No. 300/1970. Both employees had subsequently exercised their right to opt for compensation in lieu of reinstatement. The INPS, considering that the workers were not actually unemployed, demanded repayment of the NASPI benefits paid between the dismissal and the exercise of the option and suspended payments for the subsequent period. The District Court and the Court of Appeals of Turin rejected the workers’ claims, emphasising the contractual nature of the option, which established a condition of unemployment that could not be considered involuntary. The Period Prior to Exercising the Option In Judgment No. 24981 of September 3, 2026, the Supreme Court upheld the workers’ appeal only for the period before the option, clearly distinguishing the two time periods at issue. In fact, with regard to the period between the dismissal and the court’s order for reinstatement, the Court of Cassation cited the rulings of the Joint Divisions (Judgments Nos. 23476/2025 and 23876/2025), according to which the right to social security benefits ceases only with the de facto restoration of the employment relationship, for all purposes—including economic ones—and not with the mere de jure restoration resulting from the court order mandating reinstatement. It follows that, in the absence of an actual reinstatement of the employment relationship, NASPI benefits lawfully received need not be repaid to the Institute, as the condition of need protected by Article 38, second paragraph of the Constitution continues to exist. The Court also emphasized the autonomy of the social security relationship with respect to the circumstances of the employment relationship, clarifying that the basis for the payment of benefits is exclusively the loss of wages, as long as that loss persists, and that any failure on the part of the worker to comply with the reinstatement order is irrelevant. The Period Following the Exercise of the Option Courts have reached different conclusions about the period following the exercise of the option. The Court of Cassation reaffirmed that the declaration of intent to opt for the fifteen months’ salary as an alternative to reinstatement constitutes an autonomous contractual act—an expression of a discretionary right exclusively vested in the employee—with terminating effects predetermined by law and the reasons underlying the choice being irrelevant. In this scenario, the termination of the employment relationship stems from an expression of the employee’s will and places the employee in a state of unemployment that cannot be classified as involuntary, nor is it comparable to that of an employee who has been dismissed or has resigned for just cause, thereby causing the prerequisite for entitlement to NASPI benefits to cease to exist. Concluding Remarks The ruling consolidates a legal approach that distinguishes between the spheres of labor protection and social security protection, linking the right to NASPI to the actual existence of a state of need resulting from the involuntary loss of wages: the merely formal reinstatement of the employment relationship as a result of a reinstatement judgment is therefore not, in and of itself, sufficient to negate entitlement to the benefit. At the same time, by emphasizing the decisive nature of the choice to opt for the substitute allowance, the ruling links the termination of involuntary unemployment—and, consequently, the loss of entitlement to receive NASPI for the subsequent period—to the worker’s free choice.
2026 - Morri Rossetti
