How To Hire Employees in Italy

Setting up in Italy for the first time can be very overwhelming for a foreign business.

Attempting to juggle recruitment with other things may begin to affect your core business activities, and you soon realize the need for an Employer of Record (EOR) service in 2025. Our comprehensive guide will walk you through everything you need to know about hiring employees in Italy. 

We’ll also explain how an EOR like Remote People can simplify your expansion into the Italian market using the following steps:

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Establish a Legal Entity or Partner with an EOR

Before hiring employees in Italy, companies must either establish a legal entity in Italy or partner with an Employer of Record (EOR) firm. EOR services help to speed up the recruiting process, and employees can start working for you within days.

Steps to Hire and Onboard Employees in Italy

  • 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.
  • 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).
  • 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.
  • 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.

Ready to get started with an Italy EOR?

Let us handle the complexities of hiring, compliance, and payroll in Italy while you focus on growing your team.

  • Hire employees in Italy with an EOR
  • No local entity is needed
  • Pricing starts at USD 199 per employee
  • Remote People can also help you find the best talent in Italy

👉 Get Your Customized Italy EOR Proposal Today!

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.

Diagram illustrating the responsibilities of an Employer of Record (EOR) in Italy
Simplify global expansion with an Italy Employer of Record (EOR)

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.

REMOTE PEOPLE NOTE

  • Italy has a complex labor law with strong employee protections, mandatory collective bargaining agreements, and extensive documentation requirements. With an Employer of Record, you do not need to establish a legal entity before you can ensure full compliance with Italian employment regulations.
  • Italian payroll management involves multiple mandatory payments, including the 13th-month salary, severance fund (TFR), and social security contributions that total approximately 30-32% of the gross salary. An EOR handles this and ensures accurate tax withholding and timely payments.
  • Employment termination in Italy may come with legal and financial risks, with different rules based on company size and when employees were hired. Wrongful dismissal claims can result in substantial compensation or even mandatory reinstatement, so you need an expert to guide you.
  • While Italy lacks a fixed minimum wage, sector-specific collective bargaining agreements establish mandatory minimums and regulate working conditions across industries. Companies must identify and comply with the applicable CCNL for their sector to avoid severe penalties.

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.

Employment Laws 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.

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.

Maternity and Paternity Protection

Italy offers mandatory maternity leave of 5 months and an optional parental leave of up to 10 months between both parents.

Male employees are also entitled to a mandatory paternity leave of 10 days. Please note that 80% of the regular salary must be paid during the mandatory leave.

Health and Safety

Employers are responsible for ensuring workplace safety. They must conduct risk assessments before hiring employees into the company and implement safety measures and training that will make the workspace safe and secure for everyone.

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

On-boarding & HR Support

Our onboarding process for hiring new employees in Italy is very fast and will be backed by continuous HR support. If you choose Remote People as your EOR service provider, we’ll make sure to complete the onboarding process within 3 days. 

Just make sure you submit the necessary documents for the process, and you’ll be able to commence your business operations as soon as possible. 

Working Hours

The standard working week in Italy is 40 hours or a maximum of 48 hours per week (including overtime). A minimum of 10% premium above regular pay must be compensated for every overtime duty in Italy, and each employee is allowed a rest period of 11 hours daily or 24 hours weekly. Annual leave can also be granted for 4 weeks a year.

Probation Period

Probation periods in Italy are determined by the employee’s position and the collective bargaining agreement. If you hire someone into an executive or mid-managerial role, they only have to spend 6 months on probation.

For blue-collar workers and regular employees, the probation period is 2 and 3 months, respectively.

During the probation period, either party can terminate the employment relationship without notice or severance.

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. 

What this means is that the minimum wage requirement for a particular sector or job is established through collective bargaining agreements (CCNLs). Trade unions and employer associations will have to negotiate and reach a conclusion on the suitable minimum wage.

These agreements are legally binding for all employers operating within the relevant sector, regardless of whether they participated in the negotiations or not.

Beyond the agreed monthly salary, Italian employers must also provide the following to every employee:

  • 13th Month Salary (Tredicesima): This is an additional month’s salary that must be paid every December.
  • 14th Month Salary (Quattordicesima): Some job sectors in Italy require a 14th-month salary. Employers that are in this category must ensure that the 14th-month salary is paid in June.
  • Overtime Pay: Employers must pay at least 10% above the regular hourly wage and extra if the employee works at night or during a holiday.

Pay Slips

Employers must provide detailed pay slips (busta paga) for each payment made to employees.

Employer Tax Contributions

Employers are expected to contribute 30-32% of the employee’s gross salary. This will cover pension, healthcare, unemployment insurance, etc.

Employee Payroll Contributions

Employees must contribute 9-10% of their gross salary, usually withheld by the employer.

Individual Income Tax Contributions

Employers in Italy must withhold a percentage from the employee’s salary and remit it to the tax authorities at the right time.

Taxable Income Bracket (EUR)Income Tax Rate (%)
Up to €15,00023%
€15,001 – €28,00025%
€28,001 – €50,00035%
Over €50,00043%

Other Types of Employment Tax

  • Regional and Municipal Taxes: Employees must pay regional taxes ranging from 1.23% to 3.33%, depending on their region. Municipal tax, ranging from 0% to 0.9%, must also be paid.
  • Social Security Contributions: Italian social security contributions are split between employers and employees in Italy.
  • Workplace Accident Insurance (INAIL): Employers must pay mandatory insurance against workplace accidents and occupational diseases. This usually ranges from 0.4% to 3% of their gross salary, depending on the risk level of the business.
  • Severance Pay Fund (TFR): Employers must accrue approximately 7.4% of each employee’s monthly salary for severance pay.

    For companies with more than 50 employees, this must be paid to the INPS or a supplementary pension fund. Smaller companies can keep the TFR accruals on their books.

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

Italy has specific procedures for foreign businesses that want to hire non-EU employees. They must get a work permit, an entry visa, and a residence permit before employees can start work. Please visit the official government website for a more detailed guide on how to apply.

Time Off and Leave in Italy

Mandatory Leave Entitlements

Employees have the right to a minimum 4-week paid vacation annually. 

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)

How to Use an EOR for Employee Benefits in Italy

Failing to provide the mandatory employee benefits in Italy can result in heavy penalties.

Our Employer of Record will simplify this process and ensure compliance with local regulations on employee benefits in Italy.

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 range from 6-12 months for executives, 2-4 months for middle managers, 15 days to 4 months for white-collar workers, and 8 days to 2 months for blue-collar workers.

If the employer opts not to observe the notice period, they must pay an indemnity fee equivalent to the salary that would have been earned during the notice period.

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): This is mandatory for all employees, regardless of the reason for termination. It is worth approximately one month’s salary for each year of service and is accrued monthly at about 7.4% of the annual gross salary.
  • 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: If a dismissal is deemed unlawful by a court, additional compensation may be awarded to the employee. For companies with more than 15 employees, 2–24 months’ salary may be awarded, while smaller companies may be required to pay 2.5–6 months’ salary.

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

Working with an Italy Employer of Record (EOR) is one of the smartest ways to expand your team without the hassle of setting up a local entity. From managing contracts and payroll to navigating Italian labor laws and tax requirements, the right EOR takes care of the backend, so you can stay focused on growth.

To get the most value, choose a provider that understands both the legal landscape and your company’s goals and culture. With the right partner, entering the Italian market becomes faster, easier, and far less stressful. Remote People offers the expertise and support to make your expansion smooth and compliant.