Italy
Capital: Rome
Language: Italian
Currency: Euro (EUR)
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Facts & Stats
Italy (Italian: Italia), officially the Italian Republic (Italian: Repubblica Italiana), is a country consisting of a peninsula delimited by the Alps and surrounded by several islands. Italy is located in south-central Europe, and it is also considered a part of western Europe.
Italy is considered to be one of the world’s most culturally and economically advanced countries, with the world’s eighth-largest economy by nominal GDP (third in the European Union), sixth-largest national wealth and third-largest central bank gold reserve. It ranks very highly in life expectancy, quality of life, healthcare, and education.
Capital city: Rome
Currency: Euro (€, EUR)
Population size: 60,317,116 (2020 est.)
Languages spoken: Italian
Time zone: UTC +1
Ease of doing business: Very easy
Cost of living index: 29 of 139 nations
Payroll frequency: Monthly
VAT – standard rate: 22%
GDP – real growth rate: -8.9% (2020)
Employing in Italy
Italy does not have a nationally unified labor code. Labor legislation is wide-ranging, with laws, regulations and statutes that bear on labor relations. The Constitution of Italy (articles 35-47) contains declarations of principle relating to fair payment, maximum working hours, vacation, protection of women and minors, social insurance, illness, disability, industrial diseases and accidents, Freedom of Association and the right to strike. The Workers’ Statute of 1970 was modified, and plays an important role.
Italian employment law provides strong labor conditions and protections for employees, so employing people will generally be an important investment and commitment.
Temporary agencies are popular options for more flexible workforce arrangements. For these and many other reasons, the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Italy.
Payroll
The payroll cycle in Italy is generally monthly and is paid on the 27th of each month.
Minumum Wage
There is no statutory minimum wage in Italy, but national collective bargaining agreements set minimum wages on a sector-by-sector basis.
Bonuses
13th-month salary payments are customary in Italy and are usually paid before the employee’s holiday.
Employment Contract Details
Although not legally required – in fact, a written note outlining the terms of employment provided to the newly hired employee is sufficient – it is best practice to draft a written employment contract which should at least contain the following information:
- Identification of both parties
- Date of commencement and employment duration – for temporary contracts
- Workplace
- Description of the position
- Base salary as well as other compensation or benefits
- Working hours
- Probation period
- Total number of holidays
- Notice periods for employment termination
- Legal grounds
- Reference to collective agreements
Employment contracts in Italy are generally considered to be permanent but legislation also allows fixed-term contracts where appropriate. The maximum length for short-term contracts is twelve months – extendable to 24 months under certain conditions.
Probation Period
The length of the probation period depends on the employee’s position. For normal employees, probation periods of two months are common while managers are usually subject to a six months’ trial period.
Onboarding time
The minimum onboarding time we need is only 2 working days!
Working hours and overtime
Limitations on daily and weekly working time are set by Italian labour law and collective agreements as follows.
As a standard, employees in Italy are usually required to work 40 hours per week unless there is a collective agreement in place which limits weekly working time even further. Although the distribution of working hours over the week is quite flexible, eight-hour workdays are quite common.
Rest periods are to be organized according to the following principles:
- a minimum of 24 consecutive hours of rest over a seven-day period – usually Sunday;
- a minimum daily rest period of eleven hours;
- where working time exceeds six consecutive hours, a break of at least ten minutes is mandatory.
In no case should an employee’s weekly working time exceed 48 hours – including overtime.
Any work performed beyond 40 hours is generally considered overtime. Overtime pay is subject to regulations set out by collective agreements.
Paid time off
The Civil Code outlines paid leave in Italy as a statutory minimum of 8 days paid leave a year, following completion of 1 year of service. This leave is in addition to any public holidays. Minimum leave of all other employees is determined by their collective agreement, which generally provides paid annual leave of not less than four weeks per year.
Public Holidays
Italy celebrates both 12 national and 10 regional holidays based on the location of the employee.
National public holidays include:
- New Year’s Day
- Epiphany
- Easter Sunday
- Easter Monday
- Liberation Day
- Labor Day
- Republic Day
- Assumption of Mary
- All Saints’ Day
- Feast of the Immaculate Conception
- Christmas Day
- St. Stephen’s Day
Competitive Benefits Package in Italy
Swapp Agency can help employers provide a competitive and compliant benefits package for their employees in Italy. If you have questions, let us know and we can help.
Social Security
Medical insurance plan
Dental insurance plan
Vision insurance plan
Additional paid holidays
Flexible work schedule
Pension scheme
Life insurance
Other insurance
Taxes in Italy
Learn how employment taxes and statutory fees affect your payroll or employees’ paychecks in Italy.
Employer
29.40% – 32.40% Total Employment Cost:
- 29.00% – 32.00% Social Security;
- 0.40% Injuries at Work Insurance (INAIL).
Employee
10.00% Social Security
Employee Income Tax:
- 23.00% – Up to 15,000
- 25.00% – 15,000 – 28,000
- 35.00% – 28,000 – 50,000
- 43.00% – Over 50,000.01
Types of leave
Sick leave
Sick pay and sick leave in Italy are subject to the regulations agreed on in form of collective agreements. In most industries, the permissive sick leave period ranges from six to twelve months during which the employee is protected from dismissal and entitled to sick pay.
Generally, the first three days of sick leave are paid in full by the employer. Thereafter, employees usually continue receiving full pay but with social security covering at least a part of the employee’s sick pay – if not all of it.
Parental Leave
Employees are entitled to 11 months of parental leave, which can be taken until the child reaches 8. Both parents can decide how to distribute the time off, which should be taken after paternity and maternity leave. Either parent can take parental leave. Social Security (INPS) will pay 30% of the salary during this period.
- Maternity leave: employees are entitled to five months of paid leave. 60 days must be taken before the child’s birth. The employee will receive 80% of the salary during this period, and Social Security will be responsible for this pay.
- Paternity leave: employees are entitled to 7 days of paid paternity leave since the birth date. The employee will receive full salary during this period, and Social Security will be responsible for this pay.
Other leave
Adoption: upon adoption of a child, employees are entitled to 3 months of maternity or paternity leave and employees are entitled to the same financial benefits of natural children. Parents can also take parental leave in the first three years the child is in the family for same periods and financial benefits. Applies to both parents.
Work-related injury leave: collective bargaining agreements or individual contracts generally provide for a period paid time off in the case of work injury. The period is generally between 6 and 12 months and applies for both a single period of sick leave and multiple periods. The employee is entitled to keep their job and receive their salary in proportion to the period set out in the collective bargaining agreement or individual employment contract.
Employment termination
Terminations in Italy can be complex. In exceptional cases, there is at-will termination in Italy for employers outside the probation period and generally, the termination must be done for just cause.
Compliant terminations include:
1. Voluntarily by the employee;
2. By mutual agreement;
3. Unilaterally by the employer based on:
- probation period
- objective grounds
- disciplinary dismissal
- without cause (exceptional cases)
4. By the expiration of the contract.
Notice period
The employee’s notice period will usually be set out in the collective labor agreement and is calculated in accordance with the employee’s tenure, position, and level in the company.
Severance
In Italy, there is no severance pay or redundancy compensation as such. However, upon the termination of the employment relationship, the employee receives the so-called TFR (Trattamento di Fine Rapporto), which is a part of workers’ wages whose payment is deferred upon the termination of the employment relationship.
Hence, it cannot be considered proper severance pay, since it is constituted by a certain amount of salary set aside each month.
The TFR is calculated according to the formula of a year’s overall salary divided by 13.5, plus 1.5% for each year of service plus compensation for inflation.
The TFR must be paid to the worker in any case of termination of the employment relationship.
Hire Employees in Italy
Italy’s labour force is the fourth largest in the EU. Roughly 63% of working Italians are employed in the service sector. Similar to Spain and Greece, Italy’s unemployment rate continues to be very high: In 2020, roughly 9.3% of the country’s labour force was without a job.
With such a high number of skilled workers looking for a job, international companies have a large pool of possible job candidates to choose from. Also, when it comes to costs of employment, Italy is an attractive option for companies looking to hire remote employees: With average hourly labour costs being estimated to amount to roughly EUR 28.80 (Eurostat 2019), hiring in Italy is around 20% cheaper than in other European countries such as Germany or Sweden.
With Swapp Agency, your business can easily hire employees in Italy. No more worrying about complex tax systems, managing international payroll, or local laws. No entity needed. Swapp Agency takes care of everything in +170 countries.
Usually, to hire in Italy your business needs an entity. That means a local office, an address registered as a subsidiary, and an account with a local bank. All of this, plus navigating regional benefits, payroll, tax, and HR laws, can take months. Swapp Agency lets you hire employees in Italy quickly, easily, and compliantly. We even automate tax document collection, payroll, benefits, and more.
Risks of Misclassification
Italy, like many other countries, treats self-employed individuals or contractors and full-time workers differently and there are risks associated with misclassification.
Grow your Team in Italy with Swapp Agency
Common questions that could come up during the hiring process include the minimum wage, overtime rates, and guaranteed paid time off.
Swapp Agency can help you offer a complete, competitive, and compliant benefits package to your employees in Italy.
Our team ensures your employees are onboarded and paid as quickly as possible while keeping your business compliant with all local employment legislation. The minimum onboarding time begins after the employee submits all required information.