When Collective Agreements End, Do Pay Protections Continue?

Under Italian law, collective bargaining agreements play a central role in regulating employment relationships. In addition to national collective agreements, which apply across entire industries, employers and trade unions may also enter into company-level collective agreements which typically supplement national-level agreements by introducing tailored conditions and particular enhanced economic rights.

With this background in mind, the Italian Supreme Court recently addressed the issue of whether employees may continue to enjoy benefits granted under a company-level collective agreement after the employer has withdrawn from that agreement. 

The employees claimed that, on the one hand, an employer may always withdraw from an open-ended collective agreement, but, on the other hand, such withdrawal cannot adversely affect workers’ right to maintain the same level of remuneration, as that right is directly protected under the Italian Constitution.

As a consequence, according to the employees, in order to find a balance between the parties’ prerogatives, an employer’s withdrawal should be regarded as effective only towards employment contracts entered into after the termination. Instead, workers who had already benefited from the agreement in the past would retain the related economic treatment notwithstanding the withdrawal. 

With order no. 23479 of 18 July 2026, the Italian Supreme Court has rejected the plaintiffs’ argument and has confirmed that collective agreements may be amended, replaced, or terminated even where such changes adversely affect employees. In fact, reaffirming its established case law, the court noted that collective bargaining agreements, including company-level agreements, do not generally become an integral part of individual employment contracts and, therefore, when a collective agreement is no longer in force, employees are not entitled to insist upon the continued application of relevant benefits. 

According to the court, the above principles also apply when remuneration is affected by the withdrawal.

The only exception relates to so-called acquired rights (diritti quesiti), namely rights that have already definitively accrued and become part of the employee's legal patrimony before the agreement ceased to apply, even if payment has not yet occurred.

The court also emphasized that granting a collective agreement continued effect beyond the period intended by the negotiating parties would unduly restrict the freedom of the parties themselves (and in particular of trade unions) to negotiate the terms of the employment relationship, ultimately affecting the role granted to trade unions under the Constitution.

The decision nevertheless leaves room for a different outcome where the parties have expressly agreed that a particular benefit provided under a company collective agreement must be regarded as incorporated into the individual employment contract.  In such a case, the benefit may survive the termination of the collective agreement. However, in the case at hand, no such express incorporation clause was found.

View Infographic - Employer’s Withdrawal From Company-Level Collective Agreements: What Happens to Employees’ Rights?