Employer of Record in Italy

An Employer of Record (EOR) helps you hire employees in Italy without setting up a local legal entity. It's a third-party organization that acts as the legal employer for your Italian team members. The EOR handles all the administrative and legal tasks that come with employment. This includes payroll, taxes, benefits, and compliance with Italian labor laws. Using an EOR simplifies your expansion into the Italian market. It saves you time and money. For companies looking to hire in Italy, an EOR provider like Rivermate can manage the entire employment lifecycle.

How an Employer of Record (EOR) Works in Italy

An EOR simplifies the process of hiring in Italy. You find the talent, and the EOR takes care of the rest. Here is how it typically works:

• You Choose Your Candidate: You recruit and select the person you want to hire in Italy.
• The EOR Hires Them: The EOR legally hires the employee on your behalf through a local, compliant employment contract.
• Onboarding Begins: The EOR manages the onboarding process, making sure all necessary paperwork is completed correctly.
• Day-to-Day Management is Yours: Your new team member works for you, contributing to your company's goals just like any other employee.
• EOR Handles HR and Payroll: The EOR takes care of all HR administrative tasks. This includes running payroll in Euros, withholding taxes, and managing social security contributions. They ensure everything complies with Italian regulations.

Why use an Employer of Record in Italy

Using an EOR in Italy offers a practical way to build a team without the bureaucratic hurdles of establishing a legal entity. It allows you to focus on your business goals while the EOR handles the complexities of Italian employment law.

Here are some key benefits:

• Enter the Market Faster: You can hire employees and start operations in Italy much quicker than if you had to set up your own company.
• Ensure Legal Compliance: EORs are experts in Italian labor law. They make sure your employment contracts, benefits, and procedures are all fully compliant. This reduces the risk of legal issues.
• Simplify Payroll and HR: The EOR manages all aspects of payroll, tax withholding, and benefits administration. This frees you from complex administrative tasks.
• Reduce Costs: Setting up a legal entity in a new country is expensive. An EOR provides a more cost-effective solution for hiring employees.
• Offer Competitive Benefits: An EOR can provide your employees with access to comprehensive benefits packages, helping you attract and retain top talent.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Italy includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Italy.

Hiring in Italy means navigating a landscape shaped by strong employee protections and collective bargaining agreements. The job market is dynamic, with opportunities in sectors like tourism, fashion, and technology. While relationships and networking are valuable, the hiring process itself is straightforward. You will find a well-educated workforce, but be prepared for a system that prioritizes worker security.

Employment contracts & must-have clauses

You must provide a written employment contract in Italy. While verbal agreements can exist in some cases, a written contract is the standard and safest approach to ensure clarity and compliance. These contracts are heavily influenced by National Collective Bargaining Agreements (CCNLs), which set standards for different industries.

Your employment contracts should include these key clauses:

• Job title and description: Clearly define the employee's role and responsibilities.
• Compensation: State the gross salary and any other benefits.
• Working hours: Specify the weekly work schedule.
• Contract duration: Indicate if the contract is for a fixed term or is indefinite.
• Probationary period: If applicable, the length of the trial period must be in writing.
• Notice period: Outline the required notice for termination.

There are two main types of employment contracts in Italy:

Probation periods

You can include a probationary period, known as "patto di prova," in an employment contract to evaluate a new hire. This must be agreed upon in writing. Without a written clause, the employee is considered permanent from day one.

The maximum length of a probation period is determined by the relevant CCNL and the employee's role. Generally, the limits are:

• 6 months for executives and high-level employees.
• 3 months for other employees.

During the probation period, either you or the employee can terminate the contract without notice.

Working hours & overtime

The standard workweek in Italy is 40 hours. The legal maximum, including overtime, is 48 hours per week, averaged over a four-month period.

Anything beyond the standard 40 hours is considered overtime. The maximum amount of overtime is typically 250 hours per year, unless a different limit is set by a CCNL. Overtime pay rates are also determined by the applicable CCNL but must be at least 10% above the standard rate.

Public & regional holidays

Italy has 12 national public holidays. In addition to these, each city and region celebrates its own local holiday, usually for a patron saint. This brings the total number of public holidays to 13 for most employees.

Here are the national public holidays:

• January 1: New Year's Day
• January 6: Epiphany
• Easter Sunday
• Easter Monday
• April 25: Liberation Day
• May 1: Labor Day
• June 2: Republic Day
• August 15: Assumption of Mary (Ferragosto)
• November 1: All Saints' Day
• December 8: Immaculate Conception
• December 25: Christmas Day
• December 26: St. Stephen's Day

Employees are entitled to a paid day off for these holidays. If an employee works on a public holiday, they must receive a higher rate of pay.

Hiring contractors in Italy

Using independent contractors in Italy can be a flexible way to access specialized skills. However, you must be careful to classify workers correctly. Italian authorities look closely at the actual working relationship, not just the contract.

An independent contractor generally:

• Controls their own work schedule and methods.
• Assumes business risks.
• Works on a project basis.

Misclassifying an employee as a contractor can lead to serious consequences, including back payments for social security contributions, fines, and other penalties. An Employer of Record (EOR) can help you mitigate this risk. An EOR ensures that your workers are classified correctly under Italian law, handling all the necessary legal and HR responsibilities. This lets you focus on your business goals without worrying about compliance issues.

Navigating compensation and payroll in Italy can be complex. The system has many rules and regulations you need to follow. These come from the Italian Civil Code and National Collective Bargaining Agreements. To pay your team correctly and on time, you need to understand these local laws. This guide breaks down the key parts of Italian payroll to help you stay compliant.

Payroll cycles & wage structure

In Italy, you typically pay salaries monthly. A unique feature of Italian payroll is the "13th month" salary, which is an extra payment usually made in December. Some collective bargaining agreements also require a "14th month" salary, paid in June.

An Italian payslip is very detailed. It must show the gross salary, all deductions, and the final net pay. You need to keep accurate records of any changes to salary, new hires, departures, bonuses, and benefits.

Overtime & minimums

Italy does not have a national minimum wage set by the government. Instead, minimum pay rates are determined by National Collective Labor Agreements (NCLAs) for specific sectors. These agreements set the baseline pay for employees in different industries.

Employer taxes and contributions

As an employer in Italy, you are responsible for paying several social security contributions. These cover pensions, unemployment, healthcare, and other benefits for your employees. The total contribution for an employer is around 30% of the employee's gross salary.

Here is a general breakdown of your contributions:

Employee taxes and deductions

Employees in Italy also contribute to social security and pay income tax. The employee's share of social security is about 10% of their gross earnings. Income tax is progressive, meaning the rate increases with income.

Here are the national income tax rates:

In Italy, employee benefits and leave are generous and deeply rooted in the country's social fabric. The system is designed to protect employees, ensuring a healthy work-life balance and providing strong social security support. For companies, this means navigating a system where benefits are a mix of government mandates and collective bargaining agreements, which vary by industry. Understanding these obligations is key to hiring and retaining talent in Italy.

Statutory Leave

Italian law provides employees with several types of paid leave. These are the minimum requirements, and collective bargaining agreements (CBAs) often provide more favorable terms.

• Annual Leave: You must provide a minimum of four weeks of paid annual leave. Employees must take at least two of these weeks consecutively within the year they are earned. The remaining two weeks can be taken within 18 months. You cannot pay employees instead of them taking their minimum vacation time.

• Sick Leave: Employees are entitled to paid sick leave. As the employer, you pay for the first three days. After that, the National Institute for Social Security (INPS) contributes to the employee's pay for up to 180 days. The exact amount and duration depend on the relevant CBA.

• Maternity and Paternity Leave: Pregnant employees get five months of paid maternity leave. This is typically taken two months before the birth and three months after. INPS covers 80% of their salary during this time. Fathers receive ten days of paid paternity leave.

Public Holidays & Regional Holidays

Italy has 12 national public holidays. In addition, each major city or region celebrates the feast day of its patron saint.

Typical Supplemental Benefits

To attract and retain top talent, you will likely need to offer more than the legal minimum. Here is a look at both required and common supplemental benefits.

How an EOR Can Help with Setting Up Benefits

Navigating Italy's complex system of labor laws and collective bargaining agreements can be a challenge. An Employer of Record (EOR) simplifies this for you.

An EOR acts as the legal employer for your Italian team members. This means they handle all the administrative tasks related to benefits and compliance.

Here is how an EOR can help:

• Ensure Compliance: An EOR understands the nuances of Italian labor law and the specific requirements of different CBAs. They ensure your benefits package meets all legal obligations from day one.
• Administer Benefits: The EOR manages everything from enrolling employees in social security and pension funds to administering paid leave.
• Offer Competitive Packages: An EOR can advise you on what supplemental benefits are common in your industry. This helps you create a competitive offer to attract the best candidates.
• Simplify Payroll: All statutory and supplemental benefits are managed through the EOR's payroll. This means you make one simple payment, and the EOR handles the rest.

By using an EOR, you can provide your Italian employees with a comprehensive and compliant benefits package without needing to become an expert in local labor laws.

When you part ways with an employee in Italy, you need to follow a structured process. Italian law protects employees, so you can't just dismiss someone "at will." You must have a valid reason and follow specific procedures to the letter. Think of it less like a quick goodbye and more like a formal, documented process.

You must provide the termination notice in writing, clearly stating the reasons for the dismissal. Vague explanations won't work. The grounds for termination generally fall into a few categories: serious misconduct, a significant breach of contract, or economic reasons like restructuring. The entire process is designed to be fair and transparent, ensuring employees understand why their contract is ending.

Notice Periods

When you terminate an employee, you must provide a notice period. This is the time between when you inform an employee of their termination and their last day of work. The length of this period isn't one-size-fits-all. It depends on the employee's role, their length of service, and the specific National Collective Bargaining Agreement (CCNL) that applies to your industry.

Here’s a general idea of what to expect for notice periods:

Instead of having the employee work during this time, you can choose to pay them an amount equivalent to the salary they would have earned. This payment must include all parts of their regular compensation.

Severance Pay

In Italy, all employees are entitled to severance pay when their employment ends, regardless of the reason for termination. This is a key feature of Italian labor law. This payment is called "Trattamento di Fine Rapporto" (TFR).

The TFR is a form of deferred compensation that the employee builds up over their time with your company. Each year, a portion of the employee's salary is set aside for their TFR fund. You, as the employer, are responsible for managing this fund and paying it out when the employee leaves.

The calculation is based on the employee's annual salary. Here’s how it works:

• Each year, you set aside about 7% of the employee's gross salary.
• This amount is then revalued annually to account for inflation.

When the employment contract ends, you must pay the total accrued TFR to the employee.

How Rivermate Handles Compliant Exits

Navigating Italian termination laws can be complex. The rules are strict, and a misstep can lead to legal challenges. That's where we come in.

At Rivermate, we manage the entire offboarding process for you. We make sure every termination is fully compliant with Italian law and the relevant CCNL.

Here’s what we do:

• Ensure Correct Procedure: We follow the exact legal steps for dismissal, from drafting the written notice to ensuring it's delivered correctly.
• Calculate Notice and Final Pay: We determine the correct notice period and calculate the final payment, including any payment in lieu of notice.
• Manage Severance Pay: We handle the TFR calculations and ensure the correct amount is paid out to the departing employee.
• Handle Documentation: We prepare all necessary termination documents, providing a clear record for both you and the employee.

We take the guesswork out of offboarding. You can be confident that every exit is handled professionally and by the book.

Navigating Italian visa and work permit requirements can feel complicated. The right path for you depends on your citizenship and how long you plan to stay. If you are a citizen of the European Union, the European Economic Area, or Switzerland, you can work in Italy without a visa or work permit. All other non-EU citizens will need to secure the proper documents before they can legally work in the country.

Employment visas & sponsorship realities

For non-EU nationals, the process generally starts with your employer securing a work authorization, called a nulla osta, on your behalf. Once this is approved, you can apply for a long-stay visa, also known as a National or D-Visa, at the Italian consulate in your home country. This visa allows you to enter Italy, but you must apply for a residence permit (permesso di soggiorno) within eight days of arrival to be able to legally live and work there.

Italy uses a quota system, known as the decreto flussi, which limits the number of work permits issued each year. However, some categories of highly skilled workers may be exempt from these quotas.

An Employer of Record (EOR) can be a valuable partner in this process. An EOR can legally employ workers in Italy on your behalf, managing HR, payroll, and legal compliance. This means you can hire talent in Italy without needing to set up a local legal entity. While an EOR can hire both local and foreign nationals, their ability to sponsor visas for non-EU employees can sometimes be limited by the visa quotas.

Here's a breakdown of what an EOR typically can and cannot do for visa sponsorship:

Business travel compliance

For short-term business trips to Italy, you may not need a visa. U.S. citizens, for example, can enter Italy for up to 90 days for business purposes without a visa. However, you will need a valid passport.

If you do need a business visa, it will typically be a short-stay Schengen visa, valid for up to 90 days within a 180-day period. To apply for a business visa, you will generally need the following:

• A completed visa application form.
• A valid passport with at least two blank pages.
• A recent passport-sized photograph.
• A letter of invitation from the Italian company you are visiting.
• Proof of sufficient financial means for your trip.
• Proof of lodging for your entire stay.
• Proof of medical coverage abroad.
• A copy of your round-trip flight reservations.