A Guide On How To Hire Employees In Italy
January 18, 2021
Hire in Italy
Italy PEO &
Employer of Record
Hire & manage teams remotely in Italy without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.
Business Language
Italian
Salary Currency
Euro (€, EUR)
Payroll tax
29.40% - 32.40%
Payroll Cycle
Monthly
Time zone
GMT+2
Capital city
Rome
Hire Employees in Italy
NNRoad provides employer of record (EOR) & professional employment organization (PEO) services to ensure that your business in Italy complies with local labor laws and regulations. We process monthly payroll and act as the Employer of Record, taking on all local employer liabilities.
The NNRoad Advantage ☺
Pay as you go
No set-up or overhead costs to global expansion.
Global account manager
One point of contact for all of our 50+ serviced countries and regions.
Compliance
Ensured compliant contracts and operations.
Fast Onboarding
Start working with your remote employees/contractors within a week.
Foreigner Visas
NNRoad assists with overseas foreign hires visa needs.
Platform
Access your payroll reports and employee pay stubs on our portal.
Employer of Record in Italy
Employer of Record (EOR) services are for companies who do not have a legal entity in Italy, but who want to hire localy. Employment and full liability are outsourced to NNRoad.
01.
Candidate Selection
You interviews & select the candidates you want to hire in Italy.
02.
Employee Onboarding
We sign a local labor contract with your employees based in Italy.
03.
Compliance & Payroll
We manage monthly payroll, mandatory benefits & all HR compliance in Italy.
04.
Payroll Reporting
See all payroll reports on our platform & focus on your business in Italy.
Recruiting process outsourcing – including but not limited to resume screening, shortlisting candidates, coordination for interviews, and assistance for salary negotiation.
Hiring and termination of employees/local labor contracts (contract administration – engagement, extension termination and conversion to permanent hire).
On-boarding and off-boarding employees following labor law practice.
Complete payroll solution and benefit administration
Employee management – employee record retaining, time keeping, bonus and allowance management, expense and claims, and leave employee database management accordingly to the local law.
Mandatory insurance compliance (i.e. pension, labor and health insurance) according to the local labor laws.
Payment management (Invoicing customers/clients and vendor payments).
Work VISA application assistance, if needed.
Local individual income tax reporting.
Payroll & PEO in Italy
Professional Employment Organization (PEO) services are for companies who have a legal entity in Italy, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.
01.
Compliance & Payroll
We manage monthly payroll, mandatory benefits & all HR compliance in Italy.
02.
Payroll Reporting
See all payroll reports on our platform & focus on your business in Italy.
Registering the necessary company and personnel information for payroll calculation in the payroll software and system
Monthly Payroll Processing
Year-End Adjustment and Annual Declaration
Taxes & Payroll in Italy
Employee Income Taxes:
Individual income tax rates in Italy are based on progressive tax brackets.
Variable Compensation In The Financial Sector
Variable pay (e.g., bonuses, stock options, incentive plans) granted to a financial industry executive or management is subject to an extra tax of 10%.
Flat Tax On Productivity Bonus
A productivity bonus is a variable remuneration granted to an employee in exchange for increased product quality and/or company productivity, as long as it is applied to the entire qualifying workforce.
The amount of the productivity incentive cannot exceed EUR 3,000 per year, or EUR 4,000 per year if all employees are equally involved in the company’s structure.
Such bonus is subject to a discounted taxation equal to 10% as regional and municipal withholding.
Regional Income Tax
The rate of regional income tax varies depending on where you live. The income tax rate in the region ranges from 1.23% to 3.33%.
Municipal Income Tax
Municipal income tax depends on the municipality of residence. The municipal income tax rate ranges from 0% to 0.8%
Tax Brackets
23%: 0 – 15,000 EUR
27%: 15,001 – 28,000 EUR
38%: 28,001 – 55,000 EUR
41%: 55,001 – 75,000 EUR
43%: Over 75,001 EUR
27%: 15,001 – 28,000 EUR
38%: 28,001 – 55,000 EUR
41%: 55,001 – 75,000 EUR
43%: Over 75,001 EUR
Sample Calculation
Yearly income = 60,000 EUR
23% * 15,000 = 3,450
27% * 13,000 = 3,510
38% * 27,000 = 10,260
41% * 5,000 = 2,050
3450+3510+10260+2050 = 19270
Yearly income tax = 19,270 EUR
23% * 15,000 = 3,450
27% * 13,000 = 3,510
38% * 27,000 = 10,260
41% * 5,000 = 2,050
3450+3510+10260+2050 = 19270
Yearly income tax = 19,270 EUR
Employer Costs in Italy
Employer Contribution
32% – Social Security
0.40% – Injuries at work insurance (INAIL)
Total employment cost: 32.40%
Employee Contribution
10% – Social Security
Total employee cost: 10%
Benefits & Insurance in Italy
Social Security (INPS)
INPS (Istituto Nazionale della Previdenza Sociale) is the main entity of the Italian public retirement system. INPS provides pensions and other social security services using funds acquired in part from mandatory payments for mandatory insurances and in part from direct transfers from the government. All salaried workers and the majority of self-employed without a proper autonomous social security fund must join INPS.
Work Injury Insurance (INAIL)
Inail, the National Institute for Insurance against Accidents at Work, is a public non-profit entity safeguarding workers against physical injuries and occupational diseases.
Even as a result of recent legislative changes, worker protection is increasingly taking on the characteristics of an integrated system of protection, ranging from workplace prevention to medical services and financial assistance, as well as rehabilitation and reintegration of victims of workplace accidents or occupational diseases back into social life and work.
Working Hours in Italy
Working Hours Per Week
The standard working hours for full-time employees are 40. Employees can work a maximum of 48 hours per week, including overtime if specifically agreed.
Overtime
In the absence of any collective bargaining rules, overtime is only permissible if both the employer and the employee agree, and only for a period of not more than 250 hours per year. Finally, the law stipulates that overtime be computed independently and paid as a salary increase under the NCBA, which may allow overtime to be rewarded with time off in addition to or instead of any salary increases that may be due.
Termination Laws in Italy
Any termination of employment must be justified under Italian law. There are three primary categories of reasons for terminating an employment contract:
- Objectively justifiable reasons – which are related to the elimination of a job post as a result of a company’s economic situation in terms of production, work organization, or effective operation
- Subjective justifiable grounds – when an employee violates his or her contractual responsibilities or is negligent in the performance of his or her tasks, but the behavior is not severe enough to warrant dismissal for just cause
- Just cause – any major wrongdoing or breach that makes it difficult to continue working, such as theft, riot, serious insubordination, or any other behavior that seriously damages the fiduciary relationship between employer and employee
Severance
The payment of a postponed type of salary, sometimes known as a severance payment, is allowed under Italian law. It is called Trattamento di Fine Rapporto (TFR). When an employment contract is terminated, the TFR, together with other minor statutory termination amounts, must be paid to employees, regardless of the reason for termination. The TFR amount is determined by the employee’s income and duration of service (it is approximately equal to 8 percent of the yearly gross salary per each year of employment).
Employment Contract in Italy
Employment Contract
Under EU law this must be provided in full in writing and must include:
- Starting date and ay trial/probation duration
- Expiration date if for a fixed term
- Salary and benefits and frequency of payment
- Working hours
- Vacation entitlement
- Employee’s duties and the related work “category” as established by the Civil Code
The main types of employment contracts are:
- Full-time
- Part-time
- Fixed-term
- On-call
- Apprenticeship
- Temporary agency
Probation Period
Probationary periods are common in Italy and the length varies depending on the terms of the applicable Collective Bargaining Agreement (CBA). The maximum term of probationary periods is six months.
Types of Leaves in Italy
Annual Leave
Full-time employees are entitled to a minimum of four weeks of paid vacation per year. Individual contracts may provide for a greater period of vacation time, and vacation time cannot be replaced by a payment in lieu. The quantity of vacation time is also determined by the national collective bargaining agreement that governs the employment contract.
Sick Leave
In Italy, employees are entitled to paid sick leave, which is funded by the employer and then the government.
For the first two periods of sickness per year, the employer pays 100% of the regular salary rate of pay for the first three days. For the third and fourth periods of sickness, this drops to 66% and 50%, respectively. Any following illness within a year is not covered.
From the fourth day onwards, the employee receives 100% of the usual salary rate of pay, paid as 50% by the company and 50% by the Italian government. The government begins to pay 66% on day 22 while the employers’ payment drops to 34%.
Maternity Leave
All female employees are entitled to five months of paid maternity leave, which is typically taken two months before the due date and ends three months following the delivery of the child. During maternity leave, the employee is entitled to 80% of her regular wage, which is paid by the employer and repaid by the INPS. In addition, after maternity leave, a new mother can take up to six months of unpaid leave.
Paternity Leave
The father is entitled to receive 100% of the regular salary and compulsory paternity leave of 10 days within five months of the child’s birth.
Parental Leave
In Italy, an employee can take up to 10 months of unpaid parental leave.
Public Holidays in Italy
Public Holidays
- New Year’s Day – January 1st
- La Befana – January 6th
- Easter – April 17-18
- Liberation Day – April 25th
- Labour Day – May 1st
- Republic Day – June 2nd
- Ferragosto – August 15th
- All Saint’s Day – November 1st
- Immaculate Conception Day – December 8th
- Christmas Day – December 25th
- St Stephen’s Day – December 26th
Resources