Monetization of Leave in "In House" Companies: The Court of Cassation Clarifies with Ruling No. 16772 of 2025
The management of annual leave is a crucial issue in labor law. The Supreme Court of Cassation, with ruling No. 16772 of June 23, 2025 (rapporteur F. BUFFA), has provided a decisive interpretation regarding the monetization of untaken leave for employees of so-called "in house" companies. This pronouncement is part of a complex legal debate, offering important clarifications on the practical implications and the principles governing these entities at the intersection of public and private sectors.
"In House" Companies: A Boundary Between Public and Private for Leave
"In house" companies are formally private entities (capital companies) but substantially public, as they are wholly controlled by one or more public entities for which they perform services. This hybrid nature makes them subject to a particular legal regime. While in the private sector untaken leave at the end of employment is generally monetized, in public employment the prohibition of monetization is almost absolute. The central question has always been: do "in house" companies follow the private regime or the stricter public employment regime regarding leave?
So-called "in house" companies, although subject to public law for sectors of activity where the substantial nature of the public interests involved and the non-private destination of intervention funding are paramount, must comply with ordinary private law rules regarding employee leave, with the consequent exclusion of the prohibition of its monetization.
The headnote of ruling No. 16772 of 2025 unequivocally clarifies that "in house" companies must adhere to private law rules for the management of their employees' leave. This means that the general prohibition of leave monetization, typical of "pure" public employment, does not apply to these entities. Employees of "in house" companies therefore have the right to request compensatory payment for untaken leave at the end of their employment relationship, exactly as happens in the private sector. This pronouncement clearly distinguishes the leave regime for "in house" workers from that of employees of public administrations in the strict sense, for whom the prohibition of monetization is almost absolute, with very rare exceptions.
The Court of Cassation and the Balance Between Needs
In the specific case that pitted A. D. against M. A., the Court of Cassation reaffirmed the private nature of the employment relationship in "in house" companies. The Supreme Court recognized that, although such companies are subject to public law for specific sectors (as per Legislative Decree of July 6, 2012, No. 95, converted with Law of August 7, 2012, No. 135), this does not extend to the leave regime. The decision protects the right to paid annual rest, enshrined in Article 36 of the Constitution and Directive 2003/88/EC, which provides for economic compensation for untaken leave in the event of termination of the relationship. This interpretation aligns with previous orientations (such as the reference to No. 8926 of 2024), balancing the specificity of "in house" companies with the general principles of labor law, ensuring greater protection for the worker and flexibility for the company.
Practical Advice for Workers and Companies
This ruling has significant implications:
- For Employees: the right to monetization of untaken leave at the end of the employment relationship is confirmed, offering greater legal certainty.
- For "In House" Companies: leave management must follow ordinary private law rules, paying attention to applicable collective agreements and specific regulations. It is essential to monitor leave taken and provide for economic compensation in case of termination.
- Differentiation: the ruling reiterates the clear distinction between the leave regime for "in house" employees and that for employees of "pure" public administrations.
It is advisable for both workers and affected companies to seek qualified legal advice for the correct application of these principles and to address any disputes.
Conclusions
Ruling No. 16772 of 2025 by the Court of Cassation represents a firm point in the debate on the applicable regime for "in house" companies regarding leave monetization. By reaffirming the application of private law rules, the Supreme Court has provided clarity and legal certainty, protecting workers' rights and offering a more defined regulatory framework. This is a pronouncement that strengthens the principle of the special nature of "in house" companies, while keeping them anchored to the principles of common labor law, ensuring a balance between public interest needs and the protection of individual rights.
