Hiring Talent And Managing Payroll In Italy

Hiring in Italy? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in Italy.

Employment norms in Italy

Italy is one of the member countries of the European Union. The new and updated labor laws of Italy have made it appealing to global talent. Due to its talented local population, Italy has become a lucrative destination for business expansion. With the changing laws for new businesses, it may be challenging to navigate through the legalities. EOR services assist new employers with employee payrolls, benefits, taxes, etc., and ensure legal compliance.

General Information:

The Italian currency is Euro (EUR)
Rome is the capital of Italy.
Italian is the official language of Italy. Documentation can be in Italian to be considered legally valid.
As of 2021, the GDP of Italy was reported to be USD 2.11 trillion.

Italian Labor Law is regulated by the Italian constitution, the Civil Code, the Workers' Bill of Rights, and other applicable norms. Collective labor agreements also play a crucial part in setting norms.

Table of Contents

Select Section

Agreements
Onboarding Process
Visa
Minimum Wage
Payroll Cycle
Annual Bonus
Health Benefits
Working hours and overtime
Leaves
Social Security
Taxes for Employers
Taxes for Employees
Probation
Termination
Severance Pay
Employees or Contractors
Final Words

Agreements Onboarding Process Visa Minimum Wage Payroll Cycle Annual Bonus Health Benefits Working hours and overtime Leaves Social Security Taxes for Employers Taxes for Employees Probation Termination Severance Pay Employees or Contractors Final Words

Agreements

Contracts can be written or verbal. However, collective labor agreements are almost always in writing. Written contracts and agreements are always recommended.
Italy has different types of agreements such as -
- Permanent employment contract
- Part-time contract
- Fixed-term contracts - permissible only under certain conditions
- Job sharing - two or more employees share a single position
- Job-on-call - job to be performed on an intermittent basis (applicable to those below 25 and above 45 years of age)
- Staff supply
- Ancillary labor
- Training contract
- Starter's contract
- Secondment
- Autonomous or atypical workers
For legal purposes, contracts and agreements must either be written in Italian or should have an Italian translation attached.

Onboarding Process

There is no stipulated onboarding process in Italy. However, some common practices are-

Provide the employee with a copy of the agreement or contract
The new employee must be enrolled with the social security institution
Employees must be registered with other applicable government institutions
Provide new employees with the required training.

Visa

Work visa:

Citizens of EU (European Union) member countries or EEA (European Economic Area) do not require a work visa or permit to work in Italy.
Citizens of countries outside the EU or EEA require -
- A valid employment contract
- Long-stay visa (Nulla Osta - citizens outside EU or EEA)
- Residence permit upon entering Italy
- Passport
- Proof of sufficient finances
- Proof of accommodation in Italy
- Qualifying certificates

Business visa:

A short-stay or Schengen visa is required for business trips to Italy. This visa is valid for up to 90 days. Documents required for this visa are -

A formal invitation from a valid company in Italy written in Italian or English with the company's letterhead
A valid reason for the visit
Proof of adequate finances
Clean criminal record and good reputation
Travel Insurance
Other application documents

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Minimum Wage

There is no mandatory minimum wage in Italy. Fair wages are usually set by collective agreements.

Payroll Cycle

In Italy, the payroll cycle is usually monthly. Salaries are paid at the end of the month with the 27th being the most common date.

Annual Bonus

There is no mandatory annual bonus in Italy. However, employees in Italy may receive the 13th month's salary. Some may also consider both 13th and 14th-month salaries. This depends on the conditions in the collective agreements.

Health Benefits

Health benefits are included in the Italian social security system. Employees and employers are required to make certain contributions towards social security.

Working hours and overtime

Work-hours: A typical work day consists of 8 hours with a maximum of 48 hours per week. An employee cannot work for more than 250 overtime hours per year.
Break: There is no norm for a break. But 1 to 2 hours are usually provided as a lunch break.
Overtime: Overtime pay and other details are set in the collective agreements.

Leaves

Sick Leaves

Depending on the labor agreement, employees are entitled to a paid sick leave of up to 6 months. This can be extended in serious cases.

Parental Leave

Maternity leave: Female employees can take up to 5 months of maternity leave (2 months before and 3 months after childbirth) with 80% pay. The wages are generally paid by social security. The employer may also pay the wages and receive compensation from the INPS (social security).
Paternity leave: Employees can take up to 10 days of paid paternity leave within 5 months of the birth of the child. In case of the death of the mother during delivery or a serious illness, the father may take the remainder of the leave as paternity leave.

Annual Leaves

An annual vacation of 4 weeks must be granted to employees.

Personal Leave

Employees are entitled to 15 days of paid personal leave for occasional day-offs and personal responsibilities (like the death of a relative or if a child falls sick).

Public Holidays (for the Calendar year 2024)

These dates may change as per official government announcements.

New Year's Day - 1st January
Epiphany - 6th January
Easter Sunday - 31st March
Easter Monday - 1st April
Liberation Day - 25th April
International Workers' Day - 1st May
Republic Day - 2nd June
Assumption Day - 15th August
All Saints' Day - 1st November
Immaculate Conception - 8th December
Christmas Day - 25th December
St. Stephen's Day - 26th December

Public Holidays (for the Calendar year 2025)

These dates may change as per official government announcements.

New Year's Day - 1st January
Epiphany - 6th January
Easter Sunday - 20th April
Easter Monday - 21st April
Liberation Day - 25th April
International Workers' Day - 1st May
Republic Day - 2nd June
Assumption Day - 15th August
All Saints' Day - 1st November
Immaculate Conception - 8th December
Christmas Day - 25th December
St. Stephen's Day - 26th December

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Taxes for Employers

Employers are required to make a contribution of 30% of the employee's salary towards social security.

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Taxes for Employees

Social security tax: Employees must contribute 10% of their salary towards social security.

Income tax: The following are the income tax brackets for resident and non-resident employees. The income tax is in three categories - national, regional, and municipal.

National income tax:
- 0 to EUR 15,000 - 23%
- EUR 15,000 to EUR 28,000 - 25%
- EUR 28,001 to EUR 50,000 - 35%
- EUR 50,001 and above - 43%
Regional income tax ranges from 1.23% to 3.33%, depending on the region of residence.
Municipal income tax ranges from 0 to 0.9%, depending on the municipality of residence.

The tax rules differ slightly for executives or managers.

Probation

The probation period in Italy can be for a maximum of 6 months. For employees, the probation period is usually 3 months. For high-level executive employees, the probation period can be up to 6 months.

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Termination

Employees terminated under just cause are not entitled to a notice period.
For any other reason, a notice period must be granted. The employer can choose to dismiss the employee right away by including the salary payable during the notice period along with other payments.
Employers will have to pay a certain amount to INPS (social security) in case of collective dismissals in cases of redundancy.
Failure to observe termination clauses can result in legal action against the employer.

Severance Pay

Employees in Italy are entitled to mandatory severance pay. The severance pay is calculated by dividing the annual gross salary of the employee by 13.5.
If applicable, unused holidays, bonuses, etc. may also be added.

Employees or Contractors

Employees and contractors are considered different entities in Italy. Fixed-term contracts can only be granted in certain industries or on certain conditions.
Misclassification of the two would result in serious penalties or legal action.

Final Words

Italy's proximity to other global business hubs makes it a great destination to expand your business. Friendly norms and the high availability of global and local talent make it a lucrative business destination. EOR services help in the management of employees leaving businesses to focus on their goals.