Italy presents a diverse and dynamic labor market regulated by a legal framework prioritizing employer and employee rights. The balanced approach to labor regulations has played a significant role in establishing the country's robust GDP, which stands at 2.19 thousand billion USD as of October 2023, securing a prominent position globally.
One of Italy’s key strengths is its skilled workforce. Approximately one-third of these professionals can speak Italian and English proficiently. This bilingual proficiency, coupled with the right qualifications, skills, and experience, makes the country a favorable destination for employers seeking talent.
If you want to hire in Italy, it's crucial to understand the labor laws governing hiring practices, employment contracts, and workplace norms.
Labor Laws in Italy
The Italian Labor Code, also known as the Testo Unico delle Leggi Sociali, governs employment relationships in Italy. This legal framework creates a fair and stable work environment and safeguards the rights and interests of both employers and employees. Likewise, the Italian Workers’ Statute, Statuto dei Lavoratori (Law no 300/1970), aims to ensure fair treatment and protection of employees in the workplace.
Here’s an overview of the crucial aspects of Italian labor laws:
Working Hours in Italy
- The standard work week in Italy is 40 hours, with an average (including overtime) of 48 hours per week over a four-month reference period.
- Although there is no specific limit on daily working hours, employees are entitled to a continuous rest period of 11 hours within 24 hours.
Civil Code (Codice Civile)
- The Civil Code (Codice Civile) is an essential legal document in Italy that deals with civil law matters.
- It is a legal framework for resolving civil disputes and regulating relationships between people and organizations in Italy.
Contract of Employment (Contratto a Durata Indeterminate)
- The employment contract is usually indefinite unless specific situations are mentioned in the law.
- Fixed-term contracts are suitable for employment in seasonal positions, replacing employees on sick or maternity leave, and exceptional or occasional work.
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Taxes and Payroll in Italy
When running payroll in Italy, employers must record their employees' earnings, including wages, salary, or any other payment. This includes details about tax deductions and other payroll-related matters.
- According to Italian law, there are no definite minimum wages in Italy.
- However, most employees are protected by minimum wage agreements established through collective bargaining. It can be anywhere between €7-9 per hour.
Working Hours and Overtime
The Department of Labour (Inspectorate) requires specific authorization for working more than 48 hours a week.
- Overtime must be paid at least 15-50%, depending on the work done.
- The Italian courts ruled that this provision applies to all remuneration, including basic pay, bonuses (e.g., cost of living, allowances for night shifts), etc. In practice, overtime pay is around 30% higher than the basic rate.
- Collective agreements determine special pay increases for Sundays, other holidays, and night shifts.
The employer establishes working hours within the mentioned limitations and can make changes. Director-level employees are exempt from overtime payment.
13th and 14th Month Salary
- During the summer holidays and Christmas, it is common for Italian employees to receive one or two additional months of salary.
- It is generally determined in Collective Bargaining Agreements (CBAs).
Employer Tax in Italy
Employers in Italy are subject to various types of taxes, and the rates may vary depending on certain factors. Below is a summary of the employer taxes:
Employee Income Tax
Employee Benefits in Italy
Employees are entitled to the following employee benefits in Italy:
Leave Policy in Italy
Paid Time Off
- The Civil Code sets at least 22 days of leave for domestic employees only.
- For other employees, the duration of annual leave is determined by collective agreements, which typically provide for at least four weeks of paid vacation per year.
- The constitution defines four national holidays and other holidays.
- During these festive days, employees receive regular pay. If they are required to work due to technical reasons, they receive double pay.
- Italy celebrates several public holidays, as listed below:
- Pregnant women employees are protected with special provisions for maternity leave in Italy.
- A woman is entitled to a paid maternity leave of five months. It can be taken three months before childbirth.
- During this time, the employee receives a full salary, with 80% covered by Social Security and 20% by the employer.
- Fathers can take 10 days of mandated paternity leave in Italy after the birth of a child.
- Once the maternal and paternal leaves are over, employees can take parental leave in Italy.
- Parents can opt for an additional six months of parental leave at a reduced rate of 30% of their regular pay.
- After these six months, they can extend their leave to five more months until their child is 12 years old.
- When employees get sick, their rights and protections are significantly improved through collective bargaining.
- Usually, the employment contract is suspended for a certain period, determined by collective agreements based on the employee's seniority.
- The employee is entitled to a certain number of medical benefits included in the leave policy in Italy. They are:
- For medical benefits, Italy has a healthcare system called SSN (Servizio sanitario nazionale), funded through taxes from individuals and companies.
- Short-term sickness benefits (Indennità di malattia) are provided to employees who are sick. It is a social insurance scheme where employees receive earnings-related benefits. The employer continues to compensate the employee during this time.
- Student employees have the right to paid days off to take exams.
- If employees have at least five years of experience, they can also request up to 11 months of unpaid leave (consecutively or intermittently) for educational purposes like attending schools or universities.
Statutory Benefits in Italy
Italy's social security system covers most of the population through state and private benefits.
Here’s a quick rundown of the statutory benefits in Italy:
Hiring Employees in Italy
If you're entering the Italian market, understanding how to hire talent effectively is crucial. Here are the strategic approaches to hiring employees in Italy:
Option 1: Establish a Subsidiary
- Creating a subsidiary in Italy gives companies a direct presence, allowing them more control over operations and hiring.
- It also helps enhance brand visibility and supports long-term growth in the region. Establishing a subsidiary incurs additional upfront costs, including legal fees, administrative setup, and long-term commitment.
Option 2: Hire as a Contractor
- Employers can hire professionals on a contract basis instead of as full-time employees.
- This provides flexibility, cost savings, and the ability to adjust workforce size.
Option 3: Partner with an Employer of Record (EOR) - Skuad
- Skuad can help you hire employees in Italy without setting up a formal presence in the country.
- With Skuad as your EOR, you can quickly enter the Italian market, minimize your liabilities, and ensure compliance with local employment laws. Skuad handles payroll, benefits, and other HR tasks, allowing your company to focus on its core operations.
Cost of Hiring an Employee in Italy
Understanding the cost of hiring in Italy is pivotal for businesses aiming to expand or establish their footprint in Italy. Italy has a strong workforce and favorable business conditions, but it's important to carefully consider the financial aspects of hiring.
Establishing a Subsidiary vs. Employer of Record (EOR) in Italy
Compliance Risks of Hiring Employees in Italy
Here's a brief overview of the compliance risks to consider while hiring employees in Italy:
- Employment contracts: In Italy, employment contracts should comply with the national collective bargaining agreements (CBAs). Collective Bargaining Agreements in Italy are agreements between trade unions and employers’ associations. They address specific employment matters while providing general guidelines for others.
- Termination risks: Termination of employees is heavily regulated in Italy. If not handled properly, it has the potential to result in significant legal risks, including potential claims for unfair dismissal.
- Data protection compliance: Italy's data protection laws are comprehensive and strict, particularly regarding employee data. Non-compliance can lead to hefty fines.
- Wages and benefits: Non-compliance with mandated minimum wages, working hours, and benefits can lead to penalties. CBAs and laws primarily dictate the rules.
- Health and safety regulations: Employers must provide a safe and healthy working environment. Non-compliance can lead to significant fines and potential criminal charges.
- Equal opportunity laws: Italy has strict laws against discrimination in the workplace. Violations can lead to severe reputational damage and financial penalties.
Top Job Listing Sites in Italy
The following are some of the top sites you can consider to hire employees in Italy:
- LinkedIn Italy
Hiring Trends in Italy in 2024
The labor market in Italy has been facing significant challenges during the past few years. And the unemployment rate went up by 9%. Data shows the maximum number of job vacancies in Italy will be in sectors like:
- Data Management
- Human Resources
- Sales and marketing
- Design and creativity
- Customer Services
- Unskilled laborers
Moreover, the country has seen a rising demand for remote work. As per Statista, seven million Italians worked remotely, leading to a shift in how employers hire.
Simplify Hiring in Italy with Skuad
When hiring in Italy, one cannot underestimate its intricate, expensive and time-consuming nature. It demands a thorough understanding of complex procedures. Instead of channeling your precious resources into this endeavor, it is wiser to concentrate on areas that fuel growth and development.
Skuad is a global employment and payroll platform for optimizing and simplifying your hiring endeavors. With Skuad, you gain exceptional capabilities to effortlessly hire, manage, and pay your contractors and employees in Italy, and worldwide. Book a demo today!
1. How to hire and pay remote employees in Italy?
When hiring and paying remote employees in Italy, familiarize yourself with Italian labor laws and tax regulations. Pay remote employees monthly via bank transfer, withholding income tax and social security contributions. Consult with a local employment lawyer or HR expert for compliance. You can use an EOR like Skuad for streamlined management.
2. How much does it cost to hire international employees?
In Italy, the hiring cost typically depends on the location, experience, and field of employment.
3. What is the difference between employees and contractors in Italy?
The primary differences between an employee and a contractor are their legal status, work arrangements, and taxation. Most importantly, an employee is typically engaged in full-time employment, whereas a contractor is hired on a contractual or project basis.