Non-absorbable superminimum and binding company custom

Remuneration and benefits
Non-absorbable “superminimum”: consistency in company practice creates a binding custom
Milan Court of Appeal

An employee challenged her employer’s decision to absorb, in 2018, the item of “individual superminimum” following pay increases provided for by the renewal of the collective agreement. The Milan Labor Court upheld the claim, ordering the company to pay the amounts due for the disputed period.

The Milan Court of Appeal fully confirmed the first-instance decision, holding that the company’s long-standing conduct—consisting in never absorbing superminimums during previous contract renewals—had consolidated a genuine “company custom.” Such a custom, qualified as a collective source, binds the employer vis-à-vis the entire workforce and prevents the absorption of the superminimum, unless there is an express provision of equal collective level to the contrary.

The Court specified that a unilateral decision by the employer to absorb the superminimum, in the absence of a formal termination of the custom or a contrary contractual clause, constitutes a breach of contract and cannot affect employees’ acquired rights. Consequently, where there is a consistent and generalized practice of non-absorption lasting for years, the employer may not unilaterally change such treatment, even by invoking the general principle of absorbability of the superminimum, if its conduct has generated an opposite company custom.