The Fiduciary Bond: The Executive Standard

One concept sits at the foundation of every executive employment relationship in Italy: the vincolo fiduciario (fiduciary bond). Unlike the standard employment relationship, which is largely defined by statute, the executive relationship is built on personal trust. That trust is not merely cultural or symbolic. It has direct legal weight in determining what the role demands throughout its duration and, critically, under what circumstances it can be brought to an end.

The Legal Foundations

The fiduciary bond does not appear in a single statutory provision. It is built from several articles of the Codice Civile (Italian Civil Code) read together.

Article 2095 c.c. places the dirigente (executive) in a distinct legal category, separate from senior and middle management, white-collar, and blue-collar workers. Significantly, the provision names the category but does not define it. That legislative silence is legally meaningful: it is what has allowed the Corte di Cassazione to construct progressively the legal profile of the executive role, and with it, the specific character of the trust relationship that attaches to it.

The more direct statutory anchors are Article 2104 c.c., which requires the employee to exercise appropriate diligence in carrying out their duties and to follow the employer’s instructions; and Article 2105 c.c., which imposes a duty of loyalty, prohibiting competition with the employer and the disclosure or exploitation of confidential business information.

Operating alongside these provisions are Articles 1175 and 1375 c.c., which require both parties to conduct themselves with correttezza (fairness) and buona fede (good faith) throughout the life of the contract. These general principles are not background noise. The Corte di Cassazione has consistently identified them as operative parameters in assessing whether an executive’s dismissal was handled lawfully.

For the dirigente, all of these provisions operate with greater intensity than they do for other employees. Because the executive acts as the employer’s alter ego, exercising wide discretionary authority and engaging with the company at its highest level, the trust that underlies the relationship is correspondingly more demanding. The Corte di Cassazione has characterized this as a reinforced or intensified fiduciary relationship, one that attaches to the executive category by operation of law, not by individual contractual choice.

What the Bond Demands of the Executive

The fiduciary bond is not passive. It makes active, ongoing demands throughout the employment relationship, not only at moments of crisis. The Corte di Cassazione has developed, across decades of case law, a clear picture of what the bond concretely requires.

Duty not to act in conflict of interest

The executive must not place themselves in a position where their personal interests conflict with those of the employer. The obligation is proactive rather than reactive: it is not enough to refrain from acting on a conflict once it arises. Courts have treated the failure to disclose a potential conflict as itself a breach of the fiduciary bond, even where no actual damage has yet occurred. This matters because an employer can invoke even an undisclosed conflict, discovered later, as grounds for termination. The timing of discovery does not diminish the relevance of the conduct.

Duty of discretion over company information

Article 2105 c.c. covers trade secrets, but the executive’s confidentiality obligation extends considerably further: to strategic plans, client relationships, pricing strategies, and internal organizational vulnerabilities. A breach does not require disclosure to a third party. The unauthorized internal use of sensitive information for personal gain, or even preparatory conduct such as planning a competing venture while still employed, can constitute a violation. The breadth of this obligation reflects the executive’s position at the center of the company’s most sensitive decision-making.

An executive can breach the fiduciary bond even where no specific codified rule has been violated. Where authority is exercised in a manner that is formally within the executive’s powers but directed against the employer’s clear interests, courts have found the trust relationship broken. This is one of the less intuitive aspects of the bond: it is not sufficient to act within the boundaries of a formal delegation. The manner in which authority is exercised is itself subject to scrutiny. The combined effect of Articles 1175, 1375, and 2105 c.c. means that even technically permissible conduct can erode the relationship if it is carried out in bad faith or in a way that is fundamentally misaligned with the employer’s interests.

Duty to align conduct with strategic directives

As the employer’s alter ego, the executive is expected to carry out the strategic direction set by ownership or the board. Disagreement is legitimate and often valuable, but it must be channelled through appropriate internal routes. Persistent, unilateral deviation from the employer’s general direction can itself constitute a breach, regardless of whether the executive believed their approach to be the better one. The fiduciary bond does not protect the executive’s judgment against the employer’s strategy. It operates in the opposite direction: it requires the executive to subordinate their own preferences to the company’s institutional direction, except where doing so would require them to act unlawfully.

Understanding these demands matters in practice. An employer who later invokes perdita di fiducia (loss of trust) as grounds for dismissal will typically point to conduct under one or more of these heads. Knowing where the line sits allows the executive to recognize both when they are genuinely exposed and when the employer’s characterization of events is being constructed after the fact.

Dismissal and the Standard of Giustificatezza

When a dirigente is dismissed in Italy, the statutory framework that protects most other workers does not apply. Unlike other subordinate employees whose dismissal rights are governed directly by Law 604/1966, executives are excluded from that regime. Protection is instead contractual in nature, derived from the applicable CCNL (National Collective Bargaining Agreement), and the standard against which a dismissal is assessed is that of giustificatezza (contractual justification).

Giustificatezza is broader and more flexible than either giusta causa (just cause, under Article 2119 c.c.) or giustificato motivo soggettivo (justified subjective grounds, under Article 3 of Law 604/1966). It does not require proof of a specific, serious breach. It is satisfied where the employer can point to circumstances that, assessed globally and in good faith, have genuinely severed the fiduciary bond on which the executive mandate rests. It is that rupture, and not the gravity of any individual act, that constitutes the operative legal event.

The Three Criteria Courts Apply

The Corte di Cassazione has been clear that a purely subjective sense of lost confidence is not sufficient to justify dismissal. Three criteria emerge consistently from its case law. Together, they define the boundary between a lawful invocation of perdita di fiducia and one that is pretextual or legally defective.

The third criterion deserves particular attention. It reflects a broader principle rooted in Italian civil law: a party cannot derive advantage from its own prior conduct to the detriment of the other. Where an employer’s invocation of perdita di fiducia is inconsistent with how it treated the executive in the period before the termination decision was taken, the claim becomes legally vulnerable.

The most practically significant dimension of the fiduciary bond is not the scenario in which the executive does something wrong. It is the scenario in which the employer, through its own conduct, progressively marginalizes the executive and then attempts to invoke the resulting erosion as justification for dismissal.

This pattern takes many forms. The formal job title and contractual level may remain nominally unchanged while the substance of the role is systematically hollowed out. In practice, this may look like:

• Exclusion from decisions the executive previously led
• Subordinates receiving instructions directly from ownership or the board, bypassing the executive entirely
• Removal from key projects without legitimate organizational justification
• Assignment of only marginal or purely administrative tasks
• Isolation from strategic communications and internal information flows

This conduct is not merely unfair. It is unlawful. It violates Article 2103 c.c., which prohibits demansionamento (dequalification or professional demotion), and it constitutes a breach of the employer’s own obligations under Articles 1175 and 1375 c.c. The Corte di Cassazione has recognized that Article 1175 c.c. imposes a reciprocal duty on the employer: the obligation to exercise its management powers without abusing the executive’s professional dignity. Systematic exclusion from the operational and decision-making life of the company violates that duty directly.

Demansionamento is a well-established example of this kind of marginalization. Under Article 2103 c.c., as amended by Legislative Decree 81/2015, a worker must be assigned duties that correspond to their contractual classification or to the last duties actually performed. For a dirigente, this means duties that carry genuine executive content: real decisional authority, real responsibility, real engagement with the company’s strategic direction. Where those elements are stripped away, even if the formal title is preserved, the employer is in breach. The role may still exist on paper while having been emptied of everything that gave it legal and professional substance.

The legal consequence is significant. Where the employer then attempts to dismiss on the basis that the fiduciary relationship has broken down, the Corte di Cassazione has applied a straightforward principle: an employer cannot derive advantage from its own unlawful conduct to justify a termination. The stated reason for dismissal in those circumstances is pretextual in the specific legal sense. The real cause is not any breach of trust by the executive. It is the employer’s own engineered marginalization, and Italian courts have been consistent in refusing to reward it.

Where the situation reaches a sufficient level of severity, the executive also has the option of invoking constructive dismissal under Article 2119 c.c., resigning and claiming the legal consequences of an unjustified dismissal, on the basis that continuation of the relationship has become genuinely intolerable. This is a meaningful remedy, but it requires careful assessment before being pursued. The threshold is not discomfort or professional frustration. It is a genuine and demonstrable impossibility of continuing the relationship, grounded in specific employer conduct that has irremediably compromised the executive’s ability to carry out their role.

The Fiduciary Bond as a Two-Way Relationship

An employer who invokes erosion of trust as cover for a decision that is in substance organizational convenience, a predetermined outcome, or deliberate marginalization is not merely exposed to a finding of unjustified dismissal. It is acting in direct contradiction of the very legal relationship it is invoking. The integrity of the fiduciary bond is not a tool available to the employer when convenient and irrelevant when it is the employer’s own conduct that is under scrutiny.

This is the aspect of the relationship that is most often misunderstood, and most often exploited. The executive who recognizes the pattern early, and who obtains a precise legal assessment of their position before it becomes entrenched, is in a materially better position than the one who waits until the dismissal has already been formalized.

If you are an executive who recognizes the dynamics described in this article, whether you are in the early stages of a deteriorating relationship, facing a dismissal you believe was not made in good faith, or simply seeking to understand your position before committing to a course of action, AdvaLux is available to assist. We invite you to get in touch.

By Janiya Fonseca Ocampo