Employer of Record in Italy

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.

Employment Contract Requirements

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:

• Identification of both parties
• Starting date and and employment duration (for temporary contracts)
• Workplace and working hours
• Job description
• Base salary (including compensation or benefits)
• Probation period (if applicable)
• Total number and duration of paid holidays
• Notice periods for employment termination
• Legal grounds
• Reference to collective agreements

Onboarding Process

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.

Working Hours in Italy

Regular working hours in Italy amount to 8 hours per day and 40 hours per week, calculated over a seven-day period rather than a fixed workweek. Additionally, employees are entitled to a daily rest period of 11 hours within each 24-hour cycle.

Overtime in Italy

Work exceeding the standard weekly hours is paid by overtime and is regulated by employment contracts or collective agreements. The National Collective Agreement (NCA) typically determines the maximum limits for overtime pay.

Probation Period in Italy

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.

Fiscal Year in Italy

1 January - 31 December is the 12-month accounting period that businesses in Italy use for financial and tax reporting purposes.

Payroll Cycle in Italy

The payroll cycle in Italy is usually monthly, with employees being paid on the 27th of each month.

Minimum Wage in Italy

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.

Bonus Payments in Italy

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 Tax Contributions

Employer payroll contributions are generally estimated at an additional 38% on top of the employee salary in Italy.

Employee Payroll Tax Contributions

In Italy , the typical estimation for employee payroll contributions cost is around 10%.

Individual Income Tax Contributions

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.

Pension in Italy

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.

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.

Mandatory Leave Entitlement in Italy

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.

Public Holidays In Italy

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:

Paid Time Off in Italy

The collective agreement establishes the minimum leave period, typically setting a minimum of 4 weeks of paid annual leave yearly.

Maternity Leave In Italy

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.

Paternity Leave In Italy

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.

Sick Leave In Italy

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.

Parental Leave In Italy

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.

Termination Process in Italy

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:

• Voluntarily by the employee
• Mutual agreement
• Unilaterally by the employer (based on probation period, objective grounds, disciplinary dismissal, or in exceptional cases, without cause)
• Expiration of contract

Notice Period in Italy

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 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.