Employer of Record & PEO in Italy
Hire & manage teams remotely in Italy without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.
How NNRoad Employment & PEO Services Work?
NNRoad provides professional employment organization (PEO) & employer of record (EOR) services for companies looking to hire and manage teams in Italy. Registering a legal entity in Italy as a means for employment is an outdated practice that takes both time (months) and money (thousands of USD). NNRoad’s employer of record and PEO services enables companies to hire and manage employees in Italy in full accordance with local labor laws in under a week.
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 in Italy. Employment and full liability are outsourced to NNRoad.
➊ You interviews & select the candidates you want to hire in Italy.
➋ NNRoad arranges a local labor contract with your new employee.
➌ NNRoad arranges a service contract between your organization & NNRoad.
➍ NNRoad organizes, manages & processes payroll in Italy in full compliance with local employment laws.
➎ You maintain a normal working relationship and manage your team in Italy while NNRoad manages payroll & HR liabilities.
- Acting as Employer of Record for leased employee
- Preparing, amendment, and signing the employment contract directly with the employee
- Employee on-boarding and off-boarding process in compliance with local laws
- Complete payroll solution and statutory benefit administration
- Employee management:
- Maintaining the mandatory employee files in electronic format
- Management of mandatory medicine agency and medical visits
- On-line employee management (online travel and personal expenses tool for employees and online vacation, presence and absences and timesheet management tool for employees)
- Time keeping, bonus and allowance management
- Expense claims management accordingly to the local law
- Other HR management – Joiners and leavers registrations and de-registrations
- Illness, accident, parental leaves registrations and de-registrations
- Payroll and HR set up:
- Explaining the key items of compliance and collective agreement
- Set up of benefit providers (lunch vouchers, company cars, health insurances, etc.)
- Creation of an employment contract, joiners and leavers document template
- Setting up of payroll, work time registration and travel expense processes
- Providing the required supporting documents to obtain a visa (in case of an expat employee)
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.
➊ You interviews & select the candidates you want to hire in Italy.
➋ NNRoad organizes, manages and processes payroll for your local employees in full compliance with local employment laws.
➌ You maintain a normal working relationship and manage your team in Italy while NNRoad manages payroll & HR compliance.
- Registering the necessary company and personnel information for payroll calculation in the payroll software and system:
- Raw data collection and cleaning
- Employee data maintenance
- Local government bureau registration and statutory insurances
- Maintain employee record accordingly to the requirements by local government
- Monthly payroll processing
- Gathering of monthly mutations and variable compensation in Provider’s on-line tool
- Calculation of gross salary, salary deductions (e.g. tax, social contribution, and other deductions), and net salary based on pre-agreed format
- Processing of benefits in payroll and bonus accruals etc
- Completion of Gross-TO-Net report, payment list and employer costs list
- Distribution of electronic payslips to employees
- Creation of a standard bank file for payment execution
- Call for funds and execution of payments on behalf of the client
- Generation of payroll accounting booking file and reconciliation
- Handling the payment of the following items monthly within the 16th day of the following month of elaboration:
- IRPEF (income taxation)
- INAIL (work insurance)
- INPS (social security)
- Locale Tributes (ADDIZIONALI REGIONALIE COMUNALI)
- De-registration of an individual with authorities (social security) and statutory insurances
- Monthly/Quarterly/Annual Declaration of statutory benefits and insurances
- Issuance of a certification of the yearly income of each employee (period January-December). These certifications are delivered to the employees within February of the following year. The certification is called a CU (Uni Certification)
Advantages of NNRoad's Italy Employment Services
- With EOR/PEO solutions you can manage client meetings, sales, quality control, marketing, R&D and customer support without a local company in Italy.
- Pay as you go
- Dedicated account manager – One point of contact for multiple locations
- Employment & termination processing
- Complete payroll solution and statutory benefit according to local laws
- With EOR/PEO solutions you can hire staff while waiting for the registration of your company in Italy.
- NNRoad only works with professional locally licensed partners
- GDPR compliant
- NNRoad manages employee record timekeeping, bonus and allowance, expenses claims and personal leaves according to local law.
- NNRoad provides foreigner VISA application services, if needed
Employment Compliance in Italy
Taxes & Payroll in Italy
Employee Income Taxes:
Individual income tax rates in Italy are based on progressive 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
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
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%
Employer Costs in Italy
32% – Social Security
0.40% – Injuries at work insurance (INAIL)
Total employment cost: 32.40%
10% – Social Security
Total employee cost: 10%
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.
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.
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.
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
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).
Holidays in Italy
Public Holidays in Italy
- 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
Paid Leave in Italy
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.
Employment Contract in Italy
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:
- Temporary agency
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
Types of Leaves in Italy
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%.
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.
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.
In Italy, an employee can take up to 10 months of unpaid parental leave.
Immigration Laws in Italy
Italy, as a member of the European Union (EU), permits individuals from other EU countries to work without the need for a particular visa or authorization. It is also possible to work in Italy if you are a citizen of a European Economic Area (EEA) country. Employees who are neither EU or EEA citizens will need a work visa. An additional residence permit is required to stay in Italy.
Before applying for an Italian work visa, citizens from countries outside the EU and EEA must have a job in Italy.