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Capital City
Rome
Currency
Euro
(
€
)
Timezone
GMT +1
Payroll Frequency
Monthly
Tax Year
1 January - 31 December
Employer Tax
38.00%
Languages
Italian
Capital City
Rome
Currency
Euro
(
€
)
Timezone
GMT +1
Payroll Frequency
Monthly
Tax Year
1 January - 31 December
Employer Tax
38.00%
Languages
Italian
Following the conclusion of World War II, Italy's economy has advanced to become one of the most robust in Europe. On a global scale, Italy ranked as the eighth-largest economy in 2020 and the third-largest within the European Union, trailing behind Germany and France.
The driving force behind the Italian economy is the production of high-quality consumer goods by small- and medium-sized enterprises, many of which are family-owned. Consequently, Italy earned recognition in the World Bank's 2019 Doing Business Report as one of the most business-friendly countries.
Alongside its commendable low unemployment rate, Italy is renowned for its skilled, dedicated, and reasonably priced remote workforce. This makes the country an attractive destination for international companies seeking qualified employees.
Italy's labour force demonstrates excellence across diverse fields, characterised by a strong work ethic that is reflected in the superior quality of products manufactured by Italian companies.
Businesses can only operate smoothly in Italy if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Italy below, to avoid any compliance issues.
Italy does not mandate written employment contracts; oral agreements suffice. However, certain clauses must be documented, with employers required to inform employees the following in writing within the first 30 days of starting employment:
We can help you get a new employee started in Italy quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.
In Italy, probation periods vary based on the collective bargaining agreement. Non-managerial roles have a 3-month probation, while managerial positions entail a 6-month probationary period.
In Italy, employers must adhere to strict regulations surrounding working hours and overtime to ensure legal compliance and promote employee well-being. The standard working week is 40 hours, with a maximum of 48 hours, including overtime, allowed under exceptional circumstances. Overtime work is subject to specific limits, and any hours beyond the typical workweek require fair compensation. Employers should be aware that overtime compensation is generally set at a minimum of 10% above the regular hourly rate, with collective agreements potentially offering higher rates, particularly for weekend or public holiday work.
Employers must also ensure that employees are given adequate rest periods, including a minimum 11-hour break between shifts and required meal breaks for long workdays. Special regulations apply to night shifts and weekend work, with additional compensation for these hours.
In Italy, there is no statutory national minimum wage as of 2025. Instead, minimum wages are established through sector-specific collective bargaining agreements (CBAs) negotiated between trade unions and employer associations. These agreements set baseline wages for different industries, with average hourly rates ranging from €7 to €9. The absence of a universal minimum wage means that wage standards vary significantly based on industry, region, and specific agreements in place. While discussions about implementing a statutory minimum wage have taken place, no formal legislation has been enacted, and the CBA system remains the primary mechanism for wage determination.
Employers in Italy must ensure compliance with the relevant CBAs applicable to their industry, as these agreements dictate minimum wages, working conditions, and employment rights. Economic factors such as inflation, employment trends, and government policies influence wage negotiations, potentially leading to adjustments in wage standards over time. Additionally, expatriates, interns, and trainees are also subject to CBA provisions, with some agreements allowing unpaid internships under specific conditions. Given the decentralized wage-setting structure, employers should regularly review sector-specific CBAs to maintain compliance and uphold fair labor practices.
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1 January - 31 December is the 12-month accounting period that businesses in Italy use for financial and tax reporting purposes.
The payroll cycle in Italy is usually monthly, with employees being paid on the 27th of each month.
Italy has no set minimum wage at the national or regional level. Minimum wages are typically determined by the National Collective Agreements (NCAs) for different contract levels. As of July 2018, payments must be made through checks, bank transfers, or electronic methods. Cash payments are no longer allowed.
In Italy, the 13th-month pay, referred to as the "tredicesima," is provided annually alongside the December salary. Additionally, certain National Collective Agreements (NCAs) may include a 14th-month instalment, typically given in June.
Employer payroll contributions are generally estimated at an additional 38% on top of the employee salary in Italy.
In Italy , the typical estimation for employee payroll contributions cost is around 10%.
The individual income tax in Italy is calculated according to progressive rates. Factors such as household status and number of children may influence overall rates.
INPS manages Italian pensions, funded by employer and employee contributions through Social Security. To qualify for old-age benefits, individuals need a minimum of 20 years of contributions, must meet the age requirement (67 for both genders), and are about to retire.
Navigating payroll taxes in Italy involves understanding progressive income tax rates, social security contributions, and local levies such as regional and municipal taxes. Employers must calculate and withhold taxes accurately, comply with reporting obligations to agencies like INPS and Agenzia delle Entrate, and adhere to strict deadlines to avoid penalties. Properly setting up payroll requires registration with relevant authorities and adherence to Italian labor laws. Leveraging payroll management software can help employers consolidate payroll data, ensure timely submissions, and maintain compliance with Italy’s complex tax regulations.
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In Italy, work permits and visas are crucial for employers hiring non-EU foreign workers or relocating employees. The process involves obtaining a work permit, known as a Nulla Osta, submitting applications, and complying with annual quotas under the Decreto Flussi. The primary work visas available include the Self-Employment Visa, Employee Work Visa, Intra-Company Transfer Visa, Seasonal Work Visa, and the EU Blue Card for highly skilled professionals.
Employers are responsible for sponsorship, ensuring all requirements such as valid employment offers, proof of financial stability, and health insurance are met. Additionally, Italy is exploring options for a digital nomad visa to attract remote workers. Adhering to these processes and requirements helps ensure compliance with Italian labor regulations.
The annual leave entitlement in Italy is 22 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.
Italy recognises 12 public holidays, which are not included in the minimum holiday entitlement. However, employers typically grant their employees time off on public holidays. Collective bargaining agreements may specify that employees are entitled to take the following regional and national holidays off from work:
The collective agreement establishes the minimum leave period, typically setting a minimum of 4 weeks of paid annual leave yearly.
In Italy, pregnant employees receive 5 months of paid maternity leave, starting 60 days before the due date until the child is 3 months old. During this period, they get 80% salary from Social Security. If covered by a collective bargaining agreement, the employee may be entitled to a more advantageous benefit. Alternatively, a mother can work 6 hours daily until the child is one year old if she skips parental leave after maternity.
The father is granted 10 days of paid paternity leave within 5 months of their child's birth. During this time, they will receive their regular salary in full, covered by Social Security. Extending this leave is by 1 day is possible if a statutory maternity leave day is given up by the mother. The option of taking further parental leave is available.
In Italy, employees are entitled to paid sick leave for a maximum of 180 days, with the employer initially covering the costs at 100% for the first 3 days, the government pays thereafter at 50% from day 4 to 20 and 66.66% from day 21 to 180. A medical certificate from a healthcare professional is mandatory from the onset of illness.
In Italy, an employee has the right to 11 months of unpaid parental leave, which can be taken until the child turns 12. Both eligible parents can collaboratively determine how to allocate this time outside of their maternity and paternity leave. Social Security covers 30% of the salary during this period, but it is not extendable.
In Italy, employees are entitled to a minimum of four weeks (20 working days) of paid annual leave per year, as stipulated by statutory regulations. This entitlement is separate from public holidays, which do not count towards the annual leave. Employers must ensure that employees take at least two consecutive weeks of their annual leave within the year it is accrued, while the remaining leave can be utilized within 18 months from the end of the accrual year.
Additionally, Italian labor laws mandate various types of leave, including sick leave, maternity and paternity leave, and study leave, each governed by specific regulations and collective bargaining agreements. Employers should familiarize themselves with these provisions to ensure compliance and support employee well-being.
In Italy, employers are legally required to provide several mandatory benefits to employees, including social security contributions, which fund pensions and healthcare; paid maternity leave of five months at 80% salary; a minimum of four weeks of paid annual leave; and severance pay upon termination, known as Trattamento di Fine Rapporto (TFR). To attract and retain top talent, many employers also offer supplemental benefits such as private health insurance, meal vouchers, and performance-based bonuses. It's crucial for employers to comply with these statutory requirements and consider additional perks to remain competitive in the Italian labor market.
In Italy, employment termination is governed by strict labor laws that outline the legal grounds for dismissal, notice periods, and employee entitlements. Employers can terminate contracts for just cause (severe misconduct), subjective justified reason (breach of contractual obligations), or objective justified reason (economic or organizational factors). Notice periods vary depending on tenure and collective agreements, though immediate termination is allowed in cases of just cause. Additionally, unfair dismissal protections ensure employees can challenge terminations that lack a valid legal basis.
Severance pay, known as "Trattamento di Fine Rapporto" (TFR), is a mandatory entitlement for all employees, regardless of the reason for termination. Employers must also provide a termination letter, final payslip, and other relevant documentation upon dismissal. The termination process requires proper written notice, settlement of outstanding payments, and compliance with legal procedures to avoid disputes. Failure to adhere to these regulations may lead to legal consequences, reinforcing the importance of employer compliance with Italy’s labor laws.
As per the National Collective Agreement (NCA), termination requires justification and advance notice, unless the employee fails to meet mutually agreed-upon commitments, such as job responsibilities, engaging in serious misconduct, or termination due to economic reasons. Acceptable grounds for termination include:
In Italy, the notice period for termination depends on whether it's initiated by the employer or the employee. It is determined by factors such as the applicable National Collective Bargaining Agreement, length of employment, and employee classification. Employer-initiated terminations may have a notice period of 30 days to 12 months, while employee resignations could range from 30 days to 4 months, as per major NCBA in Italy.
Severance pay is granted in cases of authorised employer-initiated termination. The TFR (Trattamento di fine rapporto) is given to the employee upon termination, accrued monthly by the employer. Calculated by dividing the annual salary by 13.5, it also includes 1.50% for each year of service and compensation for inflation.
Disclaimer
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
ABOUT THE AUTHOR
Jesse Weisz
Jesse is an experienced R&D Analyst at Playroll, a leading Employer of Record (EOR) provider. With a strong background in data analysis and market research, Jesse specializes in identifying emerging trends and driving innovation in global HR solutions. She is an all-rounder, critical thinker and success-seeker (often inextricably linked to being a late-night tea drinker).
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As of January 1, 2025, Italy does not have a national minimum wage; rates are:
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