How To Hire Employees in Italy

Italy offers access to a highly skilled, multilingual workforce across sectors including manufacturing, technology, finance, and design. But hiring here comes with real complexity. Italy’s labor market is governed by detailed national legislation and dozens of sector-specific collective agreements (CCNLs) that determine everything from pay scales to working hours and termination procedures.

For foreign businesses entering the Italian market, navigating this landscape while managing day-to-day operations can be challenging. There are three main paths to hiring in Italy, each suited to different stages of business maturity and risk appetite.

To hire legally in Italy, companies must either establish a local legal entity or partner with an Employer of Record. Setting up an entity gives you full operational control but involves a lengthy registration process, ongoing administrative obligations, and significant upfront costs. An EOR offers a faster alternative, allowing you to onboard employees within days without incorporating locally, while the EOR handles all compliance, payroll, and employment obligations on your behalf.

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Layered employment regulation including CCNL national contracts, TFR severance, INPS contributions, 13th/14th month pay, and strict termination rules.

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Using an Employer of Record in Italy

An Employer of Record is a service provided to businesses to legally handle all employment-related responsibilities while the client company maintains daily management of the employees’ work.

EOR services in Italy are responsible for:

  • Swift Market Entry: Trying to set up a legal entity on your own in Italy takes 3-6 months on average and requires significant monetary investment. With an EOR like Remote People, you get to hire Italian employees within days, test the market before committing to a permanent presence, and focus on your business growth.
  • Full Legal Compliance: Italian employment laws are complex and might be hard to figure out for a new business. With an EOR, you’ll stay updated with changing regulations, ensure compliance with labor laws, and manage other mandatory documentation and reporting.
  • Risk Mitigation: An EOR protects you from the penalty of non-compliance by assuming legal responsibility as the official employer for your business. They reduce your exposure to employment-related risks, manage workplace safety compliance, and handle employee disputes according to Italian law.
  • Cost Efficiency: Using an EOR is often more economical than establishing and maintaining a legal entity. They save you the cost of legal fees you would have incurred, reduce compliance costs, and create an efficient accounting and payroll system that works well for your business
  • Payroll Management: EORs handle the payroll processing and tax withholding. They will calculate and process employee salaries and benefits in a way that keeps you in compliance with Italian labor laws.

Steps to Hire and Onboard Employees in Italy

1

Draft a Compliant Employment Contract

When drafting an employment contract in Italy, you must ensure that it complies with national labor laws and collective bargaining agreements (CCNLs).

These contracts must be written in Italian and must contain the employee’s personal information, job description and responsibilities, work location, start date, and contract duration.

Other relevant details like the working hours, salary, employee benefits, notice period, etc., must also be included.

2

Register with the Relevant Authorities

Employers must register new employees with relevant authorities such as the National Social Security Institute (INPS) for social security contributions.

The National Institute for Insurance against Workplace Accidents (INAIL) for workplace injury insurance, and the local employment office (Centro per l’Impiego).

3

Submit All Mandatory Documentation

Employers are required to submit a mandatory communication called “Comunicazione Obbligatoria” to the employment center, 24 hours before the employee starts working.

This communication document must include relevant details about the employment relationship.

4

Set Up Payroll and Tax Withholding

Employers in Italy have tax and social security responsibilities towards their business.

The labor law demands that they set up a system that handles monthly salary payments, tax withholding, social security contributions, and other mandatory deductions.

Employment and Labor Laws in Italy

Italy has some of the most employee-friendly labor laws in Europe. As an employer looking to hire in Italy, you should understand and adhere to each of them. This section provides a detailed breakdown of the employment laws and regulations in Italy.

There are four major Italian employment laws that any employer should know and adhere to before starting a business in Italy:

  • Italian Civil Code (Codice Civile): This law provides the foundation for employment relationships in Italy and how they should be implemented.
  • Workers’ Statute (Statuto dei Lavoratori): This is the law responsible for fundamental employee rights and how they are managed.
  • Collective Bargaining Agreements (CCNLs): This is an industry-specific agreement that regulates employment conditions across all industries in Italy.
  • Individual Employment Contracts: This law defines the specific terms of employment between the employer and the employee before an agreement is reached by both parties.

CCNLs (Contratti Collettivi Nazionali di Lavoro)

Italy has over 1,000 active CCNLs, and they are the foundation of the country’s employment system. These sector-specific collective agreements set minimum pay levels, working hours, overtime rates, leave entitlements beyond statutory minimums, 14th month salary requirements, sick leave top-up obligations, notice periods, and probation terms.

The applicable CCNL is determined by the employer’s primary business activity, not the employee’s role. An EOR provider must correctly identify and apply the relevant agreement; misapplication can result in back-pay claims and penalties.

Data Protection

Italy applies GDPR in full as an EU member state. The Italian Data Protection Authority, the Garante per la protezione dei dati personali, is one of Europe’s most active regulators and regularly issues guidance and enforcement decisions relevant to employment.

Employers have specific obligations beyond standard GDPR compliance. Employee monitoring requires either a union agreement or authorization from the Labor Inspectorate under Article 4 of the Workers’ Statute, as amended by the Jobs Act. Privacy notices must be provided to all employees, and a Data Protection Impact Assessment (DPIA) is required where systematic monitoring is in place. Penalties for non-compliance can reach EUR 20 million or 4% of global annual turnover, whichever is higher.

Employment Contracts

  • Permanent Contracts (Contratto a Tempo Indeterminato): This is the most common type of employment contract in Italy, and it often comes with no fixed end date.
  • Fixed-Term Contracts (Contratto a Tempo Determinato): This type of employment contract is limited to 12 months but can be extended further to 24 months if there’s a solid need for it.
  • Part-Time Contracts: This kind of contract is similar to full-time contracts but with reduced working hours for the employee.
  • Apprenticeship Contracts (Contratto di Apprendistato): This type of contract is drafted specifically for professional training and education.
  • On-Call Contracts (Lavoro Intermittente): An employment contract perfect for discontinuous or intermittent work needs

Working Hours

The standard working week in Italy is 40 hours, with a maximum of 48 hours including overtime, averaged over a reference period. Employees are entitled to at least 11 consecutive hours of rest between working days and a minimum of 24 consecutive hours of weekly rest, typically on Sundays.

Overtime

Under Legislative Decree 66/2003, the legal minimum overtime premium is 10% above the regular hourly rate. In practice, most CCNLs mandate significantly higher rates. Typical premiums by overtime type are as follows:

Overtime TypeTypical Premium
Weekday overtime25% to 30%
Saturday and Sunday overtime30% to 50%
Public holiday overtime50% to 75%
Night work15% to 30% additional premium

CCNL rates always take precedence over the legal minimum, so employers should verify the applicable collective agreement for their sector before calculating overtime pay.

Smart Working (Lavoro Agile)

Remote and hybrid working in Italy is formally regulated under Law 81/2017. A written individual agreement is required between employer and employee, covering work schedule flexibility, equipment provision, health and safety measures, and the right to disconnect (diritto alla disconnessione). The employer must also submit notification to INAIL. Employees working under a smart working arrangement have the same pay and social security rights as office-based staff.

Smart working became widespread during COVID and remains standard practice across many sectors, particularly in tech, finance, and professional services.

Discrimination Protection

Italian law prohibits discrimination based on gender, race, religion, disability, age, and sexual orientation. Employers must create a work environment that is non-discriminatory and provides equal opportunities and treatment for all employees.

Trade Unions

Italy has a strong union tradition, underpinned by the Workers’ Statute (Law 300/1970). The law guarantees employees the right to form and join unions, hold assemblies during working hours (up to 10 hours per year), and elect workplace union representatives (RSU or RSA) in companies with 15 or more employees. Union representatives have statutory dismissal protection, and employers are required to permit union activity on their premises.

The three major union confederations are CGIL, CISL, and UIL. Their sector-level agreements form the basis of most CCNLs and carry significant weight in employment disputes and regulatory interpretation.

Probation Period

A probation clause must be agreed in writing before employment begins; verbal agreements are void. If the clause is invalid for any reason, the contract is treated as permanent from the start date. During probation, either party may terminate without notice or severance, though TFR and all other statutory benefits accrue from day one.

Maximum probation durations are set by the applicable CCNL:

Employee Category Maximum Probation Period
Dirigenti (executives) Up to 6 months
Quadri (middle managers) Up to 6 months
Impiegati (white-collar) 2 to 3 months
Operai (blue-collar) 1 to 2 months

How an Employer of Record Helps You to Hire in Italy

An Employer of Record (EOR) service like Remote People can guide your entry into the Italian market and ensure full compliance with local laws.

For companies looking to hire skilled talent in Italy without establishing a legal entity, our EOR service can assist you with the onboarding process. For companies that primarily work with independent contractors, our Contractor of Record service can also offer similar benefits to contractor relationships.

Payroll and Employment Taxes in Italy

Managing payroll in Italy can be very overwhelming due to the country’s complex tax system, social security requirements, and collective bargaining agreements. This is why companies hiring employees must understand payroll management in Italy, so they are not subject to heavy fines and penalties when they fail to comply.

Payroll Cycle

Salaries in Italy must be paid monthly, usually by the end of the month.

Payment Method

Bank transfers are the standard most accepted payment method used by many employers in Italy.

Minimum Wage

Unlike many other European countries, Italy does not have a statutory national minimum wage set by law. Instead, minimum pay is determined through sector-specific collective bargaining agreements (CCNLs), negotiated between trade unions and employer associations. These agreements are legally binding for all employers operating within the relevant sector, regardless of whether they participated in the negotiations.

Employer Tax Contributions

Employers in Italy contribute approximately 29% to 32% of an employee’s gross salary to social security, administered by INPS. The exact rate varies depending on the applicable national collective agreement (CCNL), company size, and employee classification. Key components include:

Component Rate
Pension (IVS) ~23% to 24%
Unemployment Insurance (NASpI) 1.31% to 1.61%
Illness Fund 2.22%
Maternity Fund 0.46%
Wage Guarantee Fund (CIG) 1.70% to 4.70%
INAIL (Workplace Injury Insurance) 0.4% to 3%

INAIL is an employer-only contribution and the rate is risk-based, varying by industry. All other contributions are remitted monthly to INPS alongside the employee’s payroll deductions.

Employee Payroll Contributions

Employees contribute 9.19% of gross salary up to EUR 55,448 per year. For income above this threshold, an additional 1% solidarity contribution applies, bringing the total rate to 10.19%.

The maximum insurable salary for INPS purposes is EUR 120,607 per year for employees registered with INPS after 1996. Contributions are withheld directly from the employee’s salary by the employer each month.

Individual Income Tax Contributions

Employers in Italy must withhold income tax from employee salaries and remit it to the tax authorities on time. Italy simplified its tax structure from four brackets to three in 2024, a change made permanent under the 2025 Budget Law. The 2026 Finance Law further reduced the middle rate, saving most middle-income earners up to EUR 440 per year.

Taxable Income (EUR) Tax Rate (2026)
Up to EUR 28,000 23%
EUR 28,001 to EUR 50,000 33%
Above EUR 50,000 43%

In addition to national IRPEF, employees are subject to a regional surcharge of 0.70% to 3.33% and a municipal surcharge of 0% to 0.9%, both of which vary by location and are withheld through the same payroll process.

Bonus Payment

All employees in Italy are entitled to a 13th month salary, known as the Tredicesima, paid every December. This is an additional month’s salary on top of regular compensation and applies across all sectors.

Some sectors also require a 14th month salary, known as the Quattordicesima, typically paid in June. Whether this applies depends on the employee’s applicable CCNL.

Payroll Record-Keeping

Italian law requires employers to maintain detailed payroll records for their business. All employee records must be kept for at least 5 years, social security documentation for 10 years, and other tax-related documents for another 10 years.

Learn more about doing business in Italy to understand your responsibilities as an employer in the country.

How an EOR Helps You Run Payroll in Italy

An Employer of Record (EOR) service like Remote People can simplify the process and help you run payroll management.

  • We’ll calculate the right salary for each employee, tax to be withheld, and other mandatory additional payments. 
  • We will ensure employees receive their salaries on schedule through secure banking channels.
  • We will create compliant and detailed pay slips for each employee.
  • We will maintain all required payroll records per Italian law.
  • We will ensure compliance by reporting to the relevant authorities.
  • We will help your team focus on core business activities rather than complex administrative tasks

Work Permits and Visas in Italy

Non-EU workers require three documents to work legally in Italy: a Nulla Osta (work authorization issued by the Sportello Unico per l’Immigrazione), an entry visa, and a Permesso di Soggiorno (residence permit) obtained after arrival.

The main permit types are as follows:

  • Subordinate Work Permit — Issued under the Decreto Flussi quota system, which caps the number of non-EU work permits issued each year. Employers must demonstrate they were unable to fill the role locally before a permit will be granted.
  • EU Blue Card — Available to highly qualified workers with a minimum annual salary of EUR 28,399. Offers a faster and more flexible route for skilled hires.
  • Intra-Company Transfer Permit — For employees relocating from a non-EU entity within the same corporate group.

Processing typically takes 2 to 6 months, though timelines vary significantly by permit type and the stage of the Decreto Flussi cycle. Quota-based permits are subject to annual caps that are often exhausted within hours of opening, which can delay hiring by up to a full year if the quota is missed. EU Blue Card and intra-company transfer applications are generally faster and not subject to the same quota constraints.

Employers should factor in lead times for the Nulla Osta application, consular processing, and post-arrival residence permit registration when planning international hires.

Time Off and Leave in Italy

Mandatory Leave Entitlements

Employees are entitled to a minimum of 4 weeks (20 working days for a 5-day week) per year under Legislative Decree 66/2003. At least 2 consecutive weeks must be taken in the year of accrual; the remaining 2 weeks can be deferred for up to 18 months. Leave not taken cannot be monetized during employment and is only paid out upon termination.

Many CCNLs provide additional leave days based on seniority. The metalworking CCNL, for example, adds days after 10 and 18 years of service.

ROL (Riduzione Orario di Lavoro)

ROL is an additional paid time-off entitlement, typically ranging from 32 to 104 hours per year depending on the applicable CCNL. It functions as a reduction in working hours and is separate from statutory annual leave.

Public Holidays

  • New Year’s Day (January 1)
  • Epiphany (January 6)
  • Easter Monday (Variable Date)
  • Liberation Day (April 25)
  • Labor Day (May 1)
  • Republic Day (June 2)
  • Ferragosto / Assumption Day (August 15)
  • All Saints’ Day (November 1)
  • Immaculate Conception (December 8)
  • Christmas Day (December 25)
  • St. Stephen’s Day (December 26)
  • Local Patron Saint’s Day (Varies by municipality)

Maternity Leave

Maternity leave is 5 months, structured as 2 months pre-birth and 3 months post-birth. With medical approval, this can be taken flexibly as 1 month pre-birth and 4 months post-birth. INPS pays 80% of salary; most CCNLs require the employer to top up to 100%. Dismissal is prohibited from the start of pregnancy until the child turns 1 year old.

Paternity Leave

Fathers are entitled to 10 mandatory days within the first 5 months after birth, or 20 days in the case of multiple births. INPS pays 100% of salary for this period.

Parental Leave (Congedo Parentale)

Parents may take up to 10 months of parental leave combined, or 11 months if the father takes at least 3 months. Leave is available until the child turns 12. Pay is provided by INPS on the following structure:

Period INPS Pay Rate
First month 80%
Second month 60% (as of 2025)
Remaining months 30%

Sick Leave

There is no statutory limit on sick leave duration. Pay during sick leave is shared between INPS and the employer, with most CCNLs requiring the employer to top up INPS payments to 100%.

Period INPS Pays Employer Obligation
Days 1–3 (carenza) Nothing 100% of salary
Days 4–20 50% Tops up to 100% (per CCNL)
Days 21–180 66.66% Tops up per CCNL

Employees must obtain a medical certificate within 2 days of absence; this is submitted electronically to both INPS and the employer.

The comporto period, typically 6 to 12 months depending on the CCNL, is the maximum protected period during which an employee cannot be dismissed for illness. Once the comporto is exceeded, termination may be permissible.

Employee Benefits in Italy

Fringe Benefits

For 2025 to 2027, the tax-free threshold for fringe benefits is EUR 1,000 per employee, rising to EUR 2,000 for employees with dependent children. This covers benefits in kind, domestic utility reimbursements, and primary residence rent or mortgage interest contributions. The standard threshold outside this period is EUR 258.23.

Productivity bonuses of up to EUR 5,000 per year are subject to a flat tax of 5% in 2025, reduced further to 1% for 2026 and 2027.

Supplementary Pension (Previdenza Complementare)

Employees may direct their TFR accrual into a supplementary pension fund rather than leaving it with the employer or INPS. Most CCNLs also require a matching employer contribution, typically 1% to 2% of gross salary, alongside the employee’s own contribution of a similar amount. Contributions are tax-deductible up to EUR 5,164.57 per year. Many CCNLs require the employer to formally offer enrollment within 6 months of hiring.

Terminations and Severance in Italy

Termination Process

Italian law allows termination by mutual consent, resignation, and by the employer for individual or collective dismissal reasons.

Notice Period

Notice periods in Italy are governed by the applicable CCNL and vary by employee category and seniority. The following ranges are typical across most collective agreements.

Employee Category Typical Notice Period
Dirigenti (executives) 6 to 12 months
Quadri (middle managers) 2 to 4 months
Impiegati (white-collar) 15 days to 4 months
Operai (blue-collar) 8 days to 2 months

During the notice period, the employee continues to work and accrues all benefits as normal. Payment in lieu of notice (indennità sostitutiva del preavviso) is permitted and must include all salary components: base pay, pro-rata 13th and 14th month salary, and TFR accrual.

Severance Pay

When employment ends in Italy, employees are entitled to several types of severance payments as listed below:

  • Severance Pay (TFR – Trattamento di Fine Rapporto): TFR is mandatory for all employees regardless of the reason for termination, including resignation, dismissal, and retirement. It accrues at approximately 6.91% of annual gross salary (calculated as annual salary divided by 13.5, minus a 0.5% INPS contribution) and is revalued annually at 1.5% plus 75% of the ISTAT CPI index. Companies with 50 or more employees must transfer TFR contributions to the INPS treasury fund or the employee’s chosen pension fund; smaller companies may retain it on their books or transfer it at the employee’s election.
  • Indemnity in Lieu of Notice: This is the amount payable when an employer does not provide the required notice period. It must be equal to the salary and benefits that would have been earned during the notice period.
  • Additional Compensation for Unfair Dismissal: All dismissals must be based on giusta causa (just cause) or giustificato motivo (justified reason, whether objective or subjective). Where a dismissal is found unlawful, the outcome depends on when the employee was hired and the size of the company.

    For employees hired after 7 March 2015 in companies with 15 or more employees, the Jobs Act (Legislative Decree 23/2015) provides compensation of 2 months per year of service, with a minimum of 6 months and a maximum of 36 months. For employees hired before March 2015 in companies of the same size, reinstatement remains possible under Article 18 of the Workers’ Statute in cases of discriminatory or manifestly unfounded dismissal. For small companies with fewer than 15 employees, compensation ranges from 1 to 6 months’ salary.

Expand into Italy Easily with Remote People’s Employer of Record in Italy

Hiring in Italy means navigating one of Europe’s most structured labor markets, where CCNLs, TFR obligations, INPS contributions, and strict termination rules all demand close attention. Getting it right from the start protects your business and builds the kind of employment relationships Italian talent expects.

Remote People acts as the legal employer for your Italian team, handling contracts, payroll, social contributions, and compliance under the correct CCNL for your sector. You retain full control of day-to-day work while we manage every obligation behind the scenes. Whether you’re hiring your first employee in Milan or scaling a team across multiple regions, we can have people onboarded and productive within days, no entity required.

Get in touch with Remote People to start hiring in Italy.

Frequently Asked Questions

No. An Employer of Record like Remote People acts as the legal employer on your behalf, allowing you to hire in Italy without incorporating locally. This is the fastest and most cost-effective route for companies that want to establish a presence or test the market before committing to a full entity setup.

A CCNL (Contratto Collettivo Nazionale di Lavoro) is a sector-specific collective agreement that governs employment conditions including minimum pay, working hours, overtime rates, leave entitlements, and notice periods. Italy has over 1,000 active CCNLs. The applicable agreement is determined by your company's primary business activity, not the employee's role, and its terms are legally binding. Misapplying the wrong CCNL can result in back-pay claims and penalties.

Italy does not have a statutory national minimum wage. Minimum pay levels are set by the applicable CCNL for each sector and are legally binding for all employers operating in that industry, whether or not they participated in the collective bargaining process.

All dismissals must be based on giusta causa (just cause) or giustificato motivo (justified reason). Employees must receive notice or payment in lieu, and TFR must be paid out in full. For employees hired after March 2015 in companies with 15 or more employees, unfair dismissal compensation under the Jobs Act ranges from 6 to 36 months' salary. Reinstatement remains possible for pre-2015 hires in cases of discriminatory or manifestly unfounded dismissal.

TFR (Trattamento di Fine Rapporto) is a mandatory severance fund that accrues throughout the employment relationship at approximately 6.91% of annual gross salary. It is payable upon termination regardless of the reason, including resignation and retirement. For companies with 50 or more employees, TFR must be transferred to INPS or a supplementary pension fund; smaller companies may retain it on their books.