Consider partnering with an Employer of Record (EOR). An Italian EOR takes care of employment responsibilities like payroll, taxes, and labor law compliance, allowing you to focus on daily employee operations. This partnership streamlines expansion and ensures Italian employment law compliance.

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Italy's employment laws are unique and require careful handling. Unlike some countries with more flexible labor policies, Italy prioritizes employee rights and enforces strict compliance regulations.

Labor unions have a strong influence on employment conditions, and adhering to minimum wages, working hours, and payroll rules is essential. Unlike some other countries, Italy has clear federally mandated provisions for paid time-off.

Partnering with an Italy Employer of Record (EOR) or a Professional Employer Organization (PEO) simplifies the process of hiring and managing employees in Italy. These services help you efficiently onboard local talent while ensuring full compliance with Italian employment laws, payroll, and HR operations. This allows your business to concentrate on its core operations and growth strategies, all while ensuring compliance with Italian labor regulations.

The price for Italy EOR/PEO services can vary depending on factors like the number of employees, the services you need, and project complexity. Typically, these services have a pricing model, involving a monthly fee per employee or a percentage of their salary. Extra costs might apply for additional or customized services as required.

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Key Metrics For Foreign Employers 

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Italy ranks 33rd globally for talent competitiveness in INSEAD’s Global Talent Competence report. The government has also initiated policies to introduce flexibility in its labor market, such as the "Jobs Act", which brought reforms making contractual arrangements more flexible and simplifying procedures for hiring and dismissal.

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The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Italy.

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Source: The Global Talent Competitiveness Index 2023

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Through the Gloroots’ Recrew platform, you can discover amazing talent in Italy.

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Misclassifying workers means wrongly labeling them, like calling them independent contractors or excluding them from certain employment rules and benefits they should have.

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Using a PEO/EOR in Italy helps reduce these risks. It ensures compliance with labor laws, accurate worker classification, precise payroll, and access to full benefits. This lets businesses focus on their core operations while experts handle employment-related tasks.

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Italian employment law comes from various sources: European and International treaties, laws and conventions; the Constitution and domestic laws  labor laws ensure important employment rights like work hours, vacation entitlements, paid leave, data privacy, protection against unfair job termination, and employer obligations for a safe workplace. These rules are tailored to fit specific job roles and safeguard employee rights.

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Employment contract

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In Italy, an employment contract is a legally binding document that outlines the employee’s rights and responsibilities in a work relationship. 

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Key points include:

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1. Employer obligations: These encompass salary payment, defined work hours, granting paid leave, and ensuring a safe work environment in line with labor laws.

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2. Employee duties: The contract clarifies the expected job performance.

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Italy's employment law allows for both fixed-term and indefinite-term contracts, reducing potential misinterpretations and legal issues. Employers can renew fixed-term contracts once for a maximum of 12 months, as per Italian labor laws. 

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Within 30 days of hiring, employers must create a contract with the following details:

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•  Identification of the parties involved
•  Employment start date
•  Work hours and conditions
•  Job role
• Salary details, including calculation method, payment schedule, and any negotiated benefits.

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Employers can modify contracts to specify job duties and workplace, but certain changes are prohibited by Italian labor law.

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Additionally, Italian labor code requires a trial period (periodo di prova) to be stated in the contract. This period can last up to six months, during which either party can terminate the agreement without notice or indemnity.

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Working time

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In Italy, the regular workday consists of 8 hours, totaling 40 hours per week.

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Overtime

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Any hours worked beyond the standard 40-hour workweek are considered overtime and are subject to regulation through employment contracts and collective agreements. Typically, the maximum allowable overtime limits are determined by the National Collective Agreement (NCA).

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Public Holidays

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There are a total of 12 national holidays. When a national holiday falls on a Sunday, it is either observed on the following Monday or compensated with an extra day off. Additionally, there might be regional holidays in addition to the national ones, and employees are entitled to these as well.

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Minimum Wage

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Italy does not have a legally mandated minimum wage. Instead, minimum wages for different contractual levels within specific sectors are typically established through national collective agreements (NCAs).

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Annual Leave

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In Italy, the Civil Code sets a basic requirement for paid leave, which is a minimum of 8 days per year. This entitlement begins after completing one year of service and is separate from public holidays.

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For other employees, the amount of paid leave is determined by their specific collective agreement. Typically, these agreements ensure a minimum of four weeks of paid annual leave each year.

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Paid Sick Leaves

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In Italy, employees are eligible for paid sick leave, which is covered by the employer and later supplemented by the government.

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For the first two instances of illness in a year, the employer pays 100.00% of the regular salary for the first three days. This decreases to 66.00% for the third bout of sickness and 50.00% for the fourth. Any subsequent illnesses within the same year are unpaid.

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Starting from the fourth day of sickness, the employee continues to receive 100.00% of their regular salary. This payment is split between the employer (50.00%) and the Italian government (50.00%) from days 4 to 21. After day 22, the government covers 66.00%, and the employer's contribution decreases to 34.00%. To qualify for sick leave, employees must provide a medical certificate from a doctor starting from the first day of their illness.

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Maternity leaves

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In Italy, female employees are entitled to 5 months of paid maternity leave, which is usually taken from two months before the due date and three months after giving birth. However, if the employee's job poses a risk to her health or the unborn child, the maternity leave before the due date can start earlier or can be extended beyond the three months after the due date.

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During maternity leave, the employee receives 80.00% of her regular salary, which is paid by the employer and later reimbursed by INPS (the government agency).

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Additionally, new mothers have the option to take up to six months of unpaid leave after their maternity leave ends. Alternatively, if a mother decides not to take additional parental leave, she can work 6 hours a day until her child reaches one year old.

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Mothers whose income was below 8,145 EUR before maternity leave will receive an extended maternity allowance for an additional three months.

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Paternity leaves

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The father is eligible to receive his full regular salary during the paternity leave, which lasts for 10 days and must be taken within five months of the child's birth.

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Tax and Social Security contribution:

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Employer Payroll Contributions

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Employee Payroll Contributions

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Employee Income tax

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Termination 

Termination must have valid reasons, including notice, and align with the National Collective Agreement (NCA), unless it occurs through mutual agreement, employee's failure to meet job expectations, severe misconduct, or economic reasons.

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Severance Pay

In Italy, severance pay is provided when the employer terminates the employee for valid reasons. Upon termination, the employee is entitled to receive the TFR (Trattamento di fine rapporto), which the employer accumulates monthly. The TFR amount is calculated using a formula that considers the employee's yearly salary divided by 13.5, with an additional 1.50% for each year of service, along with adjustments for inflation.

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Notice Period

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In Italy, the notice period for termination depends on whether it's initiated by the employer or the employee. The duration of the notice period is determined by factors such as the relevant National Collective Bargaining Agreement (NCBA), the employee's length of service, and their job classification. According to prominent NCBA agreements in Italy, if the employer initiates termination, the notice period can vary from 30 days to 12 months. Conversely, if the employee resigns, the required notice period can range from 30 days to 4 months.

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Probation period

Probation periods mandated by Italian law are determined based on the employee's job role. Employees without managerial duties have a three-month probation period, while other employees, including managers and supervisors, have a six-month probation period. However, the probation period can often be defined differently in the applicable National Collective Agreements (NCAs) and may extend beyond these standard durations.

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Expanding your global workforce means navigating a complex web of rules and regulations. Employers must ensure that every aspect of the hiring and onboarding process complies with local employment laws, payroll procedures, diversity, equity, and inclusion (DE&I) standards, GDPR, and data protection requirements, among others. While establishing local entities and starting the hiring process can be challenging, keeping up with the ever-changing compliance landscape can be even more demanding.

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At Gloroots, we simplify these challenges by offering a comprehensive solution. Our in-house experts serve as a protective barrier against cross-border employment and payroll compliance risks. We help you create employment contracts, ensure timely payments, and provide compliant benefits, allowing you to focus solely on talent acquisition.

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Our commitment is to provide a hassle-free global employment experience for both you and your employees in Italy.

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Expanding your team means hiring the right people for the right jobs when you need them. In Italy, having a local presence is essential for handling compliance, payroll, taxes, and benefits, which can be complex due to the country's employment regulations.

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With Gloroots's global Employer of Record (EoR) service, you can entrust us to manage payroll, taxes, benefits, and compliance, allowing you to focus on your team and growing your business.

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