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Hire Employees in Italy

Updated on:
16 Jan, 2024
EOR in 
Italy
Monthly
Annually
(Save upto 15%)
$
649
/month
(billed monthly)
Start Hiring NowOffer banner
Employ contractors and employees in 160+ countries
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Employ contractors and employees in 160+ countries
EOR in 
Italy
Offer banner
$
649
/month
(billed annually)
$
699
/month
(billed monthly)

Table of Content

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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. 

Minimum Wage

  • 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:

Tax Type Description Rate (%)
Corporate Income Tax (IRES) Applied to a company's income. 24
Regional Tax on Productive Activities (IRAP) Levied on the production value derived in each Italian region. 3.9
Social Security Contributions Paid by employers on behalf of employees. The rate can vary depending on the category of the employee. 40

Employee Income Tax

Taxable income bracket (EURO) Total tax income below bracket (EURO) Tax range (%)
0 to 15,000 0 23
15,001 to 28,000 3,450 25
28,001 to 50,000 6,700 35
50,001 and over 14,400 43

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. 

Public Holidays

  • 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:
Holiday Date
New Year's Day (Capodanno) January 1st
Epiphany (Epifania) January 6th
Easter Monday (Lunedì dell'Angelo or Pasquetta) Date varies
Liberation Day (Festa della Liberazione) April 25th
International Labor Day (Festa dei Lavoratori) May 1st
Republic Day (Festa della Repubblica) June 2nd
Assumption of Mary (Ferragosto) August 15th
All Saints' Day (Tutti i Santi) November 1st
Feast of the Immaculate Conception (Immacolata Concezione) December 8th
Christmas Day (Natale) December 25th
St. Stephen's Day (Santo Stefano) December 26th

Maternity Leave

  • 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. 

Paternity Leave

  • Fathers can take 10 days of mandated paternity leave in Italy after the birth of a child. 

Parental Leave

  • 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. 

Sick Leave

  • 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.

Educational Leave

  • 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:

Key Regulations
  • National Health Service, 1978
  • National Social Security Institute, 1954
  • Maternity Law, 1902
  • Law No. 53 on Provisions for Maternity and Paternity Support, 2000
  • Law No. 222 on Invalidity and Incapacity 1984, and
  • Law No. 335 on Pension Reform, 1995
State and Compulsory Benefits
  • Retirement Benefits
  • Death in Service
  • Long-Term Disability Benefits
  • Short-Term Sickness Benefits
  • Medical Benefits
  • Employees’ Compensation Insurance
  • Maternity and Paternity Benefits and
  • Other Benefits
Private Benefits
  • Retirement Benefits
  • Death Benefits
  • Medical Benefits
  • Disability Benefits
  • Accidental Death and Dismemberment Benefits and
  • Other Benefits

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

Parameters Establishing a subsidiary Partnering with Skuad
Initial Cost The upfront costs and legal fees are quite high. Reduced initial costs due to Skuad's established presence.
Duration for setup Takes several months to set up. Companies can start hiring immediately.
Employment liabilities Have to bear the risks associated with employment. Skuad handles employment duties, minimizing risks.
Operational overhead Significant ongoing costs like HR and taxes. Skuad handles HR and compliance, resulting in minimal overhead.
Flexibility A long-term commitment is necessary and a difficult exit. Provides flexibility for short-term or trial projects.
Local compliance Subsidiaries need to comply with local regulations. Skuad focuses on local compliance to make things simpler and easier.
Parameters Partnering with Skuad Establishing a subsidiary
Initial Cost Reduced initial costs due to Skuad's established presence. The upfront costs and legal fees are quite high.
Duration for setup Companies can start hiring immediately. Takes several months to set up.
Employment liabilities Skuad handles employment duties, minimizing risks. Have to bear the risks associated with employment.
Operational overhead Skuad handles HR and compliance, resulting in minimal overhead. Significant ongoing costs like HR and taxes.
Flexibility Provides flexibility for short-term or trial projects. A long-term commitment is necessary and a difficult exit.
Local compliance Skuad focuses on local compliance to make things simpler and easier. Subsidiaries need to comply with local regulations.

Compliance Risks of Hiring Employees in Italy

Here's a brief overview of the compliance risks to consider while hiring employees in Italy:

  1. 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.
  1. 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.
  1. Data protection compliance: Italy's data protection laws are comprehensive and strict, particularly regarding employee data. Non-compliance can lead to hefty fines.
  1. Wages and benefits: Non-compliance with mandated minimum wages, working hours, and benefits can lead to penalties. CBAs and laws primarily dictate the rules.
  1. Health and safety regulations: Employers must provide a safe and healthy working environment. Non-compliance can lead to significant fines and potential criminal charges.
  2. 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:

  • TheLocal
  • Adzuna
  • Jobsinmilan
  • Expatjobs
  • Cliccalavoro
  • LinkedIn Italy
  • InfoJobs

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:

  • IT
  • Data Management
  • Human Resources
  • Sales and marketing
  • Design and creativity
  • Healthcare
  • Customer Services
  • Tourism
  • Teaching
  • 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!

FAQs 

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.

limited-offer-banner
EOR in 
Italy
Monthly
Annually
(Save upto 15%)
$
649
/month
(billed annually)
Start Hiring Now

Employ contractors and employees in 160+ countries

Get started
limited-offer-banner
EOR in 
Italy
$
649
/month
(billed annually)
$
699
/month
(billed monthly)

Employ contractors and employees in 160+ countries

Table of Content

Building a remote team?

Employ exceptional talent, anywhere, anytime!

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Looking to hire employees and contractors in Italy? Skuad's EOR platform can help!

Talk to our EOR experts
start hiring