Definitive Guide to Hiring in Italy

Hiring in Italy

Hiring employees compliantly in Italy means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Italy so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Italy; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Italy

Employee Probation Period

• The maximum term of probationary periods is six months.

Annual Leave in Italy

• Employees are granted 4 working weeks of annual leave.

Holidays in Italy

Maternity Leave Italy

• Female employees are entitled to maternity leave for two months prior to and three months following the expected date of childbirth.
• Throughout the maternity leave, a daily allowance is granted equal to 80% of the last salary paid through the social security system (INPS).

Paternity Leave Italy

• Fathers are entitled to 10 days of paternity leave

Sick Leave in Italy

• Employees are entitled to paid leave of a maximum 180 days in a year.
• During sick leave, workers are entitled to 100% wage.
• 50-66,6% of the wage is usually paid by social security (INPS) and the employer has to add a percentage to reach 100% of the worker’s wage.
• First three days are always paid by the employer.

Working Hours in Italy

• The normal work week for an employee consists of 40 hours.

Overtime in Italy

• Work performed in excess of 40 hours a week is overtime. 
• Different overtime limits can be fixed by collective agreements. In principle, overtime should be occasional or due to exceptional reasons which cannot be met by the hiring of new workers.
• The Metal Workers collective agreement, for example, sets the overtime premium at 25% for the first two hours and 30% for the following hours.
• If overtime work is performed during a festive day it is paid 55% more than normal rate and if it is performed at night, it is paid 50% more.
• Night overtime work on a festive day is paid 75% more.

Notice Period in Italy

• Length of notice period is provided by each collective agreement.
• In most collective agreements notice is as follows:-
• 9 months tenure: 10-75 days
• 4 years tenure: 10-75 days
• 20 years tenure: 30-180 days

Severance in Italy

• In Italy, there is no severance pay or redundancy compensation as such.
• However, during employment, employers must set aside an annual amount equivalent to around 7% of the employee’s pay, to be paid to the employee on termination as an “end of service allowance” or TFR (trattamento di fine rapport).  
• TFR is mandatory and is due in any case of termination of employment (including resignation, and dismissal for just cause or death).  
• TFR is calculated on the basis of the employee’s wages, taking into account not only his/her basic wage, but also any other compensation periodically paid to him/her.
• Annual TFR for each year of service is equal to annual salary divided by 13.5 (corresponding to 7.4 % of the annual wage).
• All previous year's TFR accruals are annually revaluated by an interest rate of 1.5% plus 75% of the cost of living index to compensate for inflation.

Italy Salary and Wages

13th / 14th Month Pay in Italy

• Yes
• There is no statutory requirement to pay the 13th or 14th month salary.
• It is however customary to pay the 13th and 14th month salary.
• Those are generally paid to workers in factories or other manual workers.
• The 14th month is paid to those that have worked in companies for a long time and executives.

• Italian law provides for a comprehensive system of social insurance covering the following:
  • Disability, old age and survivorship
  • Illness and maternity
  • Unemployment and “mobility”
  • Family allowances
  • Health care
  • Labor injuries
  • Professional diseases
• The system is controlled by the government, with various sections administered by separate public institutions, most notably, the National Institute for Social Security (Istituto Nazionale Previdenza Sociale, or INPS).
• Collective labor agreements provide for compulsory additional coverage through pension and health funds. Both employers and employees usually make contributions to these funds.
• The total social security rate is around 40% of the employee's gross compensation (the rate depends on the work-activity performed by the company, the number of employees of the company, the employee's position), and is shared as follows:
  • Employer's charge is around 30%.
  • Employee's charge is around 10%.

Immigration Italy

• EU, EEA and Swiss nationals do not need permits to work in Italy.
• An EU, EEA or Swiss national who intends to reside and work in Italy must enroll with the Office of Records of the Resident Population in Italy if his or her stay exceeds 90 days.
• Non-EU nationals must enter Italy with a National Type D Visa if they intend to carry out professional activities.
• In this context, a professional activity is intended as “work” and differs from travel to Italy under a “business” status.
• In particular, if a foreign worker comes to Italy to perform work activities, he or she needs a National Type D Visa even if the duration of the stay does not exceed 90 days.
• Determining whether an activity falls within the “professional/work” category or “business” category typically requires a case-by-case assessment.
• The procedure for obtaining an employment visa for a foreign national is initiated by the prospective Italian employer (or the Italian entity for which the employee is assigned to work), which must first submit an application to the Italian Immigration Office (Sportello Unico per l’Immigrazione) for a Work Permit (Nulla Osta al Lavoro).
• The approval and issuance of such authorization usually takes up to 3 months (90 days).
• As result, expedited procedures exist for intracompany transferees under which the Work Permit is approved within 45 days of the request.
• Italian Work Permits are typically issued subject to the availability of the quotas, which are released on a yearly basis by the Ministry of Internal Affairs.
• However, some immigration permits are exempted from this numerical limitation.
• The Italian work permit scheme is administered regionally, so implementation differs significantly depending on the exact destination within Italy.
• Italian work permits must be sponsored by an Italian company. They cannot be applied for directly by a potential employee or by an agency.
• Workers who can be exempted from the entry-quota limit and for whom a Work Permit can be requested any time during the year are primarily the following:
  • Executives, highly skilled workers or trainees in the framework of an Intra-Company Transfer
  • Highly skilled workers assigned to an Italian company in accordance with a Service Level Agreement in place between the foreign employer and the Italian Host
  • Other categories of workers, such as translators and interpreters, university lecturers, trainees and health care assistants, can apply for a Work Permit out of the quota limit.
• In addition, Italy is one of the countries that has implemented the EU Blue Card directive, which enables companies to locally hire executives and high-skilled workers, avoiding the quota system.
• To obtain the EU Blue Card, an individual must prove at least three years of university education through a Declaration of Value (Dichiarazione di Valore), which is issued by the Italian consulate in the country where the university was attended.
• This contract must have a minimum validity of one year and grant a minimum annual gross compensation of approximately EUR25,000.
• After the employment visa is obtained, the individual must sign the Residence Contract within eight days after his or her arrival in Italy; the signature of the Residence Contract allows the individual to start the work activity.
• Subsequently, a Permit of Stay (Resident Permit; Permesso di Soggiorno) for employment reasons must be requested.
• Under certain conditions, a holder of a residence permit for employment reasons may engage in self-employment activities and vice versa, if the activity for which the Permit of Stay (Resident Permit) was requested remains the predominant activity.
• Foreign nationals may engage in the following self-employment activities in Italy:
  • They may be directors of companies (that is, members of boards).
  • They may pursue freelance or other professional activities. In both cases, foreign nationals must obtain a Self-employment Visa (Visto di Lavoro Autonomo).

Value Added Tax (VAT) in Italy

• Vat – Value added tax – or Iva – Imposta sul Valore Aggiunto, in Italian language, is a consumption tax that applies to the supply of goods and services carried out in Italy by entrepreneurs, professionals, or artists and on importations carried out by anyone. 
• In some cases, also Intra-Community acquisitions are subject to Vat.
• In Italy the standard Vat rate is 22% and reduced rates are provided for several supplies of goods and services, such as 4% for listed food, drinks and agricultural products or 10% for electric power supplies for listed uses and listed drugs. 
• Specific supplies of goods and services expressly listed in Presidential Decree n. 633/72 are exempt from Vat, for example education, insurance services, specific financial services, supply, leasing of particular immovable property.

Mandatory Benefits in Italy

• These are benefits as postulated by law
• These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, notice period, 13^th month pay.
• Statutory benefits also include social security benefits

Payroll Accrual in Italy

Country Accruals Additional Information

Payroll Accruals Additional Information

Accrued Benefits in Italy

Why use Global Expansion to hire in Italy

Establishing a branch office or subsidiary in Italy can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Italy labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Italy law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Italy. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Italy Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.