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Employer of Record in Italy

Updated on:
16 Jan, 2024
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Employer of Record in Italy

Skuad’s Italy EOR (Employer Of Record) solution assists your business to expand into Italy without an entity setup. Its global HR platform makes the onboarding of remote teams, managing their payrolls, etc., a seamless process.

Skuad’s international network helps you grow your business in the country by adhering to all the local laws. Italy’s skilled population and robust economy make it an ideal destination for businesses seeking to grow into new markets. With Skuad’s experience in the Italian industry, you can now get your team in Italy up and running faster than ever before.

Italy at a Glance

Population: 58.782 million (2024 estimate)

Currency: Euro 

Capital city: Rome

Languages spoken: Italian, French

GDP: USD 2025 billion (2024 estimate)

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Employment in Italy

The Italian labor market is closely regulated and disproportionately prejudiced towards employee rights, making it difficult to navigate. Employers must comply with a plethora of regulatory provisions based on the form of employee and contract in question, and compliance with Italian labor and work legislation is often expensive and a tedious process. However, the global economic crisis has compelled Italian legislators to support fiscal, social, and legal changes to improve labor market flexibility in Italy.

In Italy, employee contracts of employment and labor associations are governed (in order of precedence) by:

  1. The Italian Constitution
  2. The Civil Code Employment and labor matters governed under Section III (‘On the employment relationship’), Articles 2094-2134
  3. Italy has comprehensive employment and labor legislation established by the Italian parliament.
  4. Regulations assigned by officials other than the parliament and government
  5. Italian Collective Bargaining Agreements
  6. Custom and practice for issues not governed by statutory provisions or by mutual agreements. Customs are more favorable to employees over statutory provision but do not prevail over individual employment agreements.
Entitlements Explanation
Statutory Working Hours Working hours should not exceed 8 hours per day or 40 hours per week.
Paid Public Holidays The public holidays in Italy for 2024 are as follows:
  • January 1, New Years Day
  • January 6, Epiphany
  • March 31, Easter Sunday
  • April 1, Easter Monday
  • April 25, Liberation Day
  • May 1, International Workers' Day
  • June 2, Republic Day
  • August 15, Assumption Day
  • November 1, All Saints' Day
  • December 7, Santo Patrono
  • December 8, Immaculate Conception
  • December 25, Christmas Day
  • December 26, St Stephen's Day
Annual Leave Entitlements for overseas employees
  • An employee is legally authorized 22 days of leave every year. It is calculated on the number of months worked per year.
  • Within first two years of employment entitlement is 32 hours (4 days) of paid leave per year. The employee can take the hours in whole bulk as well if required or per hours needed (example – doctor appointments etc).
  • From 3rd year of employment, the paid hourly leave is increased to 64 hours (8 days)
  • From the 5th year to 104 hours (13 days)
Sick Leave The statutory minimum sick leave in Italy is 3 days and statutory Maximum is 6 months. First 3 days – 100% of salary has to be paid by the employer. From the 4th till 20th day – 75% must be paid. From 21st day until the 180th day – 100% of the salary must be offered (66.66% funded by Italian social security system and 33.34% by the employer).
Maternity Leave
  • Mandatory maternity leave in Italy is for a total of 5 months and it can be taken 3 months prior to the birth.
  • The leave is extended in the case of premature birth or suspended in the case of the infant's stay in hospital in order to benefit from the time not taken during pregnancy or prolonged hospital stay.
Leave Expiry If work continues for 10 days after the expiry of the leave, the employer must pay 20% more payment; for twenty days beyond the termination date, 40% more; and only then is the contract eligible to be turned into an indefinite one.
Employee protection and anti-discriminating rights The Italian legislation against discrimination in the workplace has diverse origins. The primary law source is the Italian Constitution, which states that 'all people have an equal social dignity before the law, regardless of their sex, race, language, religion, political ideas, personal or socioeconomic circumstances.' The Constitution also stipulates that individuals with the same work have a right to equal remuneration.
Potential Employer Liability for Violating Laws Prohibiting Discrimination and Harassment If an employer is found accountable for discrimination based on the protected qualities, the employer may be penalized.
An Italian court can also mandate that any rulings involving employment discrimination be published in a major newspaper.

Knowing these rules will help an organization save a lot of time and effort in its expansion process in Italy. Hence, partnering with an Employer of Record (EOR) in Italy like Skuad can help you gain an advantage while hiring a workforce in Italy remotely.

Contractors vs. Full-Time Employees

Full-time employees are employed by your firm and devote their working hours to your tasks. They are not paid on a project basis but rather on a set salary, and they often use your company's resources to do their task. In exchange, the employer must pay income tax as well as social and other benefits to the employee and manage their day-to-day operations. In most cases, if you wish to discontinue your working relationship with your employee, you must provide a termination notice.

Contractors, on the other hand, typically operate on a freelance basis, which means they only work when needed and have other clients. They are paid by the project and just work for you for the hours that are required. As a result, they are liable for their own taxes, and you are not required to pay any benefits to them. They also often employ their own resources, which keeps their clients' costs cheap. Depending on the contract, work can frequently be canceled at any moment or with only a short notice period.

Independent Employer Full-Time Employees
Flexibility: In general, freelancers are flexible and readily expandable to provide your company leeway in project planning without having to make regular payments at periods when investments are made more effectively elsewhere. Loyalty: Full-time employees often do not work for other clients and devote their entire time to expanding your company. They are significantly more committed to your firm and are more likely to put in a lot of effort because their professional success is directly related to the success of your firm.
Experience: Independent contractors also have many experiences, for example, in entering a new market and working with businesses from around the world. Knowledge: While contractors may have extensive expertise, the expertise of your full-time employee remains within the organization. This allows the entire company to profit from your workers' expertise and know-how, rather than simply a contractor's portion of shared information.
Independence: Contractors operate extremely autonomously and give up management time to concentrate on other projects. Clarity: One of the most significant advantages of full-time employees is that they do not have to deal with legal grey areas or misclassifications. It dramatically decreases compliance concerns and avoids the danger of fines for incorrectly designating someone as a contractor when they should have been classed as an employee.

Both alternatives have a lot of advantages. Individual demands must be considered while determining the best option for your company. 

Hiring a contractor is generally the best option if you need an overseas contractor fast to assist with a temporary job. On the other hand, if you need long-term assistance for entering a certain market or maintaining expertise in-house, you should consider employing a full-time employee.

Employment contracts

All employment contracts in Italy must be in writing. Furthermore, Italy is a member of the European Union (EU), which means it adheres to all the EU directives and legislation.

According to the European Union Directive No. 533/91, it is mandatory to provide information on all the terms and conditions of employment. The employee receives the employment contract within 30 days of recruitment. It is compulsory to mention all the terms and conditions of the company in the employment contract.

Individual employment contracts in Italy must specify the following points:

  1. Parties to the job contract.
  2. The starting date of a job, and the entire duration of the probation period, if any.
  3. An expiration date for a fixed term of employment in Italy.
  4. Method of calculating payrolls, payment frequency, and other terms and conditions related to salary.
  5. Daily work hours.
  6. Paid leaves, if any.
  7. Employee responsibility and related work category, according to Civil Code under article 2095.

Types of Contracts in Italy

Information Details
Part-time contracts
  • Part-time work contracts must specify the working hours (e.g., by day, week, month, and year) in writing. Part-time employees’ pay and other benefits are often prorated based on full-time equivalent costs.
  • Ancillary provisions are also used to allow for employer convenience and flexibility. Such examples are:
    1. Elastic clauses that bestow the right of an employer to maximize working time.
    2. Flexible clauses that allow an employer to change working hours during the day.
Fixed-Term Contract (Legislative Decree no. 368/2001)
  • Companies may recruit workers for a set period on a fixed-term contract. Fixed-term contracts are flexible and can be extended for up to 36 months. A total of 8 extensions/renewals are allowed.
  • Renewals are possible between the same groups, for the same tasks, only for a limited time. However, a specific time gap would exist between the renewals; 10 days if the previous contract was less than 6 months long and 20 days if the previous contract was more than 6 months long.
  • If the above interruption periods are not met, the new contract shall be deemed open-ended.
‘On-Call’ jobs (Legislative Decree no. 276/2003)
  • On-call employment contracts are those in which an employee announces his or her availability to work for a certain period, during which he or she may call in – sometimes for a few days – at short notice.
  • In certain situations, the contract can state that the employee is obligated to work if the employer summons him or her. National Collective Agreements (NCAs) sets an additional 20% of the pay.
Apprenticeship (Legislative Decree no. 276/2003)
  • An apprenticeship is a form of open-ended contract that focuses primarily on vocational training.
  • An employer may recruit apprentices under certain quantitative thresholds (usually based on the number of employees hired) and ensure that the apprentice obtains the necessary professional skills and qualifications.
Temporary agency contracts
  • Only eligible employment agencies may negotiate temporary contracts (both fixed-term and open-ended).
  • Workers must have adhered to the legal and economic requirements as the user company’s workers.
  • Employers cannot use staff supply contracts to replace workers on strike or employees who were temporarily laid off, or those involved in mutual dismissals in the previous few months, similar to fixed-term contracts.

Whatever path you choose, you are not required to walk it alone. Employers of record firms that offer global employment solutions handle all legal concerns associated with recruiting overseas employees on your behalf. Talk to us if you want to know more about Skuad’s Employers of Record service.

Hiring In Italy

The recruitment process in Italy is straightforward. Once the hiring needs are identified, and the job description is announced, employers must either use an internal team or partner agency to find suitable talent for the role. Professional social networking apps such as LinkedIn are immensely popular with recruiters for finding the best talent for every role.

Some other well-known websites include,

  1. Indeed
  2. Glassdoor
  3. Monster
  4. Info jobs
  5. The local.

Italy follows a straightforward procedure while hiring candidates:

  1. Candidates who fulfill all the criteria mentioned in the job description go through a primary background screening before being shortlisted. 
  1. The shortlisted candidates are interviewed through a series of panels, like technical rounds  and HR rounds, to better evaluate their aptitude for the job and analyze if they are a perfect match for the company and its culture.
  1. After a final evaluation, the most suitable candidates are selected and offered a letter of intent or employment letter. Finally, upon successful negotiation and signing, the candidates are onboarded as rightful employees of the company.

Hiring through an employment website, social media posts, or advertisements in Italy has its advantages, such as the availability of many prospective candidates from a diverse set of experience pools. It takes away the risk of not finding the right candidate or a shortage of talents in the job pool. 

On the flip side, organizations may have to go through a monotonous procedure of filtering several applications and selecting prospective candidates most suitable for the job. This is usually a challenging process, especially during initial screening.

Apps like LinkedIn and Monster still have an inadequate influence in Italy and cannot be the sole platform to source talent, especially if you need talented and experienced professionals.

Hiring talented employees in a short span is not an easy task. Partnering with an Employer of Record like Skuad in Italy is your best option, giving your organization enough time to focus on other aspects of international expansions like project management and inventory management. The EOR takes care of all the compliance and legal issues while helping you ramp up hiring using their knowledge of domestic employment practices and virtual onboarding tools. The best EORs also facilitate the e-signing of documents to enable faster onboarding.

Not only does Skuad help in rapid recruitment, but it assists in other Human Resources-related functions such as: 

  1. Payroll management 
  2. Time management
  3. Expense management
  4. Security and compliance
  5. Tax filing.

These features make up a faster, affordable, and more seamless experience for the organization and the candidate.

Skuad and its local partners also handle all legal procedures on your behalf as an Employer of Record. As a local third-party organization, we become the legal employer of your new talent as well, while you continue to manage the employee's day-to-day operations. 

We make certain that your new employee meets all local legal requirements, including the payment of taxes and social security benefits. This enables you to satisfy your worldwide employment demands with utmost ease while hiring individuals in countries where you do not have a legal company.
Learn more about Skuad’s Employer of Record solutions here.

Probation And Termination

Information Explanation
Probation Period
  • Statutory probation in Italy is - 6 months for Quadro and level I - 2 months for all the others levels The probationary period can be longer for employees who are under 18 years old. It can also be longer for employees who are being promoted to a higher level position.
Work contract termination According to Italian law, an employee can be terminated on the following grounds:
  1. ‘Just Cause’ is described as a severe violation of the employee’s duties or other behavior that renders the continuity of the working relationship impossible.
  2. ‘Justified Grounds’ include:
    • A violation of duties by employees that is not severe enough to constitute cause, such as failure to comply with critical orders from the administration, injury to machinery and facilities, poor performance (related to ‘subjective causes’ for dismissal).
    • Dismissals must always be in writing and must provide a detailed explanation of why they were created.
  • The employer must follow the following guidelines:
    1. If the business hires up to 15 persons in a single working unit or up to 60 in total across Italy, the employer can either reinstate the fired employee or pay an indemnity (ranging between two-and-a-half and six months pay).
    2. In such cases, the employee is entitled to reinstatement and reimbursement for losses in the sum of at least five months’ salary.
    3. Failure to reinstate an employee who has been unlawfully fired results in a 15-month pay settlement and penalties against the employer.
  • Severance compensation is not taxed and does not require social security payments.

EOR Solution

An Employer of Record is the perfect way to access the Italian workspace without having to set up a subsidiary unit. It has many benefits, including eliminating the need to create a separate entity, opening up time and money to concentrate on other facets of growth plans, and simplifying legal compliance. 

With Skuad’s experience, company expansion becomes a cost-saving and quicker process without having to create a separate team responsible for all workforce management processes. Although companies may set up an organization to engage their personnel, the management of employees, payroll management, and navigating regulatory obstacles can be time-consuming. Why wait? Book a demo now to know how you can leverage Skuad’s solutions for your business.

Outsourcing employment through an EOR in Italy

Working with an Employer of Record will save you the time required in the whole recruiting process, such as payroll processing, tax management, and other similar processes.

Some additional benefits of working with an EOR of repute such as Skuad include tailor-made contracts, establishing all processes in compliance with local laws, easy amendment of existing contracts, and convenient e-signing of documents.

Types Of Visas In Italy

Visa Category Explanation
EU/EEA Nationals According to the concept of free movement of people, goods, services, and money, EU (European Union) and EEA (European Economic Area) nationals can work in Italy without obtaining a work permit from the Italian authorities. Swiss residents have similar entry, residency, and employment rights as citizens of other EU countries.
Non-EU/EEA Nationals
  • Non-EU/EEA citizens who plan to work in Italy, either temporarily or indefinitely, must receive a work permit from their prospective employers and a work visa from the Italian Consular authorities before entering the country. Issuing a work visa depends on the investor's knowledge of his native language and specific details such as the type of business and the technology.
  • Non-EU migrant employees are admitted based on a quota scheme for new entries on a yearly basis. The quota scheme’s purpose is to govern third-country entry and access to the Italian labor market. The government is in charge of determining yearly quotas.
  • Any employee could be excluded from the quota system’s restrictions. Relevant technical profiles may be accepted without any quantitative limit to control their inflow.
Self-employment visas Foreign nationals may partake in the following self-employment practices in Italy:
  1. As company executives.
  2. As a freelancer or in some technical capacity.
Foreign nationals must secure a self-employment visa in all scenarios.
Schengen visas A Schengen visa entitles the applicant to stay for up to 90 days for either tourist or business purposes. Applicants with a Schengen visa can freely travel within any country in the Schengen area.
There are various forms of Schengen visas:
  1. A and B visas – Airport Visas and Transit Visas for Schengen travelers.
  2. C visa – Enables a foreigner to spend as many as 90 days for different purposes in the Schengen region, including business, medical care, athletics, training, and tourism.
  3. D visa –It is a long-term visa that permits applicants to live up to 1 year in Italy.
Family member visas
  • Family members accompanying a non-EU foreign national to Italy or wishing to visit a foreign national in Italy must obtain special visas from the Italian consulate in their last country of residence. After obtaining a relative residency permit for family purposes, these visas allow family members to work in Italy.
  • Family members who have entered Italy lawfully and have valid residency permits may be eligible for a special rejoining process.

Work Permits

As an EU member, Italy permits people from other EU member states to work without a visa or permit. European Economic Area (EEA) country citizens are also free to work in Italy. Any workers who are not citizens of the European Union or the EEA need a ‘Nulla Osta (invariable visa)’ working visa. 

In Italy, a working visa, also known as a national or D-Visa, falls under the ‘long-stay category.’ It is worth noting that an Italian work visa only allows workers to enter the country. They will need to obtain a residency permit on arrival to remain in Italy. 

Trust Skuad to take care of your work permit requirements. Call us to know more.

Payroll And Taxes In Italy

To set up payroll in Italy, you must be mindful of the local laws and the acts that regulate those rules. Knowing your employee profile is important, and it will help you understand which laws are applicable and need to be complied with.

Taxation is another necessary process that you need to be vigilant about. Working with an EOR such as Skuad will help you save precious time and initial expenses so that you can focus on the expansion of your business operations.

Information Explanation
Remote Payroll One option for a non-resident corporation to pay its workers in Italy (both local and foreign) is to use a fully outsourced service such as a GEO or PEO, which would hire and pay the employees on their behalf.
Local Payroll Administration In certain situations, a corporation may file in Italy using one of the available formats but may choose to enlist another firm to handle their payroll. This can be done with the help of a payroll service.
It is important to remember that as the Employer of Record, the corporation is also entirely responsible for ensuring that all housing, visa, tax, and payroll laws are followed. Payroll calculations, fees, and filings, on the other hand, will all be delegated to a payroll company.
Internal Payroll Multinational companies can opt to handle their local payroll for all employees, both native and foreign.
Fully Outsourced Payroll and Employment Companies should outsource the hiring and salaries of their employees in Italy to an EOR, such as Skuad EOR. This is the easiest, quickest way to pay both foreign employees and Italian employee salaries.
Skuad EOR handles all facets of payroll for Italian employees, including taxes, withholding tax, social security contributions, and other legal provisions. Skuad EOR becomes the Employer of Record and hires employees on the client’s behalf.
Employees are paid annually, with payroll and social security deducted at the source and billed to local governments. Skuad EOR bills the customer annually before the payroll date.

Taxation in Italy

Employer Taxation

Tax Explanation
Corporate Taxes Companies operating in Italy must pay various taxes, including corporate income tax (IRES), a municipal tax on economic operations (IRAP), withholding tax, VAT, identification tax, social security taxes, transaction tax, and stamp duty.
In Italy, the current corporate tax rate is 27.5%.
Sales Tax Individuals (individual, partnership, company with share capital, or an institution) who make taxable supplies of goods and services under the Italian Value Added Tax (VAT) regime must apply for an Italian VAT number before doing business.
The new VAT rates have increased to 24% in 2016, 25% in 2017, and 25.5% in 2018.
Payroll Tax No Payroll Tax
Withholding Tax
  • Non-residents of Italy are subject to withholding tax (WHT) on the following types of income:
  • Dividends are paid at a rate of 26% (unless participation exemption applies).
    1. Royalties: 30 % on 70% of the sum, with a total effective tax rate of 22.5 %.
    2. Interest: A final WHT of 26%. Non-residents are not required to pay interest on savings deposits with banks and post offices.
  • A lower rate could apply under a relevant Double Tax Treaty.
Other Tax
  • Resident and non-resident businesses are subject to a regional tax on profits derived from economic activities in Italy.
  • Non-residents are only eligible for the International Road Assessment Programme (IRAP) if their operations carry on over 3 months via a permanent establishment.
Time to prepare and pay taxes It takes approximately 240 hours.
Time required to start a business It takes approximately 6.5 days.

Employee Taxation

Information Explanation
Income Tax
Grossed income Tax Rate (%)
0-€15,000 23
€15001-28000 27
€28001-55000 38
€55001-75000 41
Over €75000 43
It is to be noted that, by the end of the fiscal year 2016, an extra 3% tax will be levied on wages in excess of EUR 300,000.


Bonuses are generally given at the discretion of the employer as a 13th month salary at Christmas, but are sometimes mandated by contracts or collective bargaining agreements as well, for example, a vacation pay in the summer.

Incorporation: How to Set Up a Subsidiary in Italy

A foreign company seeking a work permit for its employees in Italy must first establish its Italian subsidiary/branch/representative office. After that, this Italian entity can apply for a work permit. 

The entire procedure consists of three steps: 

  1. Authorization requests are made by the employers to the Immigration Single Desk (ISD).
  2. Visa requests are made by prospective employees in their home country.
  3. The work permit is requested and delivered. 

These steps require a thorough knowledge of the entire process and an understanding of the workings of the local authorities to avoid any reworks in the application process. Companies providing EOR solutions, such as Skuad, can be of great help in this case.

Talk to us now to learn more about our EOR solutions.

Professional Employer Organization (PEO)

A Professional Employer Organization (PEO) provides human resources services such as recruiting, payroll management, pension administration, and workforce management. However, where it differs from an Employer of Record is that a PEO acts as your co-employer and all final decisions regarding human resource management still rest on your shoulders. An EOR, on the other hand, is a third-party organization that acts as the legal employer of your employees in the country of expansion and takes over the burden of Human Resources management for you. 

Skuad offers PEO services as well as EOR services. As a PEO affiliate, companies influence the decision-making processes when partnering with Skuad. EOR solutions in Skuad do not require organizations to have an agency in the expansion country. Skuad completely takes over the hassles of working through the various stages of documentation and employment contracts.


The most important part of setting up a remote team in Italy while conducting business expansion is knowing the local laws and how they affect all employment processes. The method of growth is based on several factors and rules: 

  • Various categories of employees.
  • Variations in legislation.
  • Understanding the Italian negotiation process.
  • Establishing payrolls and tax complexities.

However, instead of setting up an entirely new entity and knowing the consequences of every law on the employment process, it is simpler to work with a trusted and experienced partner who can take care of your HR needs.

This step ensures that the organization’s human resources policies are consistent with the local legal codes and that you are never in error. The multinational teams and expertise of Skuad make it easy to recruit skilled personnel in Italy and effectively manage your payroll and pensions. It also supports you with a unified employment platform for compliance and taxation.

Skuad has succeeded in building trust among many distinguished organizations and is looking for ways to make your preparations for expansion easier. Book a demo today and get the boost you need for your company’s growth plans.


1) What is an employer of record in Italy?

An Employer of Record (EOR), like Skuad, is responsible for employment tasks such as onboarding, payroll, benefits, and compliance, enabling companies to legally employ talent worldwide, without establishing a local entity.

2) What is the employer tax in Italy?

In Italy, the employer tax includes both social security contributions and other statutory costs, typically ranging between 28% to 40% of an employee's gross salary, depending on factors like the industry sector and local regulations. This total includes contributions to health insurance, pensions, and unemployment insurance, amongst others.

3) What is an international EOR?

A global or international employer of record enables businesses to hire employees and contractors worldwide without setting up local entities and handles all employment-related legal and administrative tasks.

4) What is the employer of record for international employees?

For international employees, the employer of record acts as the official employer on behalf of the client company, managing all local employment legalities and payroll in the employee's country, simplifying global workforce management.

5) What are the benefits of EOR?

The benefits of using an EOR in Italy include quick and compliant market entry, cost savings on setting up a legal entity, streamlined HR and administrative processes, and reduced risk of legal and financial non-compliance. EORs manage employee onboarding, payroll, taxes, and any issues related to employment law, which can be particularly advantageous in the complex Italian labor market.

6) What are the overtime rules in Italy?

Overtime in Italy is regulated by national laws, collective bargaining agreements, and individual employment contracts. Generally, overtime work must be voluntary and compensated with a higher pay rate than regular hours, often at a rate of 10-15% above normal pay. The total overtime hours should not exceed 250 hours per year unless specified otherwise by collective agreements or contract stipulations.

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