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Euro is the official currency of Italy. Its currency symbol is €, EUR.
Estimated at 38% of employees salary
Italian is the official language of Italy, San Marino and Vatican City, with 58 million residents speaking the language
Employees are usually paid monthly
To start growing your team in Italy, you must establish a local entity – including an account with a local bank, a local office and an address registered as a subsidiary. This allows you to manage payroll, tax, benefits and compliance for your employees, but can take several months. Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.
Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.
When expanding into Italy, your business can take advantage of its attractive economy, which boasts significant international investment. Italy’s economy is one of the top 10 largest in the world, and the third largest in the European Union. Italy is very popular to businesses wanting to invest in R&D, innovation and design, whilst entering the European Single Market. However, conducting business in Italy does pose some challenges, no matter how rewarding. The country is known to have long, complex and difficult-to-navigate regulatory processes. Though Italy’s workforce is highly skilled and educated, cultural differences can make team management difficult.
As well as being a popular tourist destination and location of historical interest, Italy has strong labour unions and pro-worker policies. For example, employers are required to ensure each remote worker has safe working conditions. Italy has also approved a digital nomad visa which allows foreign nationals to live and work remotely in the country. Italy also benefits from one of the lowest living costs, making it the fourth cheapest country to live in Western Europe.
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| Social Security | 23.81% |
| Family Allowances | 0.68% |
| General Fund | 1% |
| Sickness Benefit | 2.44% |
| Maternity | 0.24% |
| Termination Severance Fund (TFR) | 7.40% |
| TFR Guarantee Contribution | 0.20% |
| Employment Insurance | 1.61% |
| Injuries at Work Insurance | 0.40% |
Health, maternity, paternity, disability, and death insurance
Occupational accident and illness insurance
Government pension contributions
Family allowances
Unemployment benefits
Contracts in Italy must include:
A written contract of employment (contratto di lavoro) is a legal requirement in Italy. Some clauses, such as probation periods and non-compete covenants, are not valid unless they are in writing. A contract of employment should also include salary, place of work, hours, annual leave entitlement, compensation details, and termination requirements. Unless an end date is specified in the contract of employment, then employment is considered to be indefinite.
Fixed-term contracts are permitted on the basis they are justified on grounds such as replacing an employee on maternity leave, sick leave, seasonal work, occasional work, or extraordinary work. If employment continues beyond the expiry date, the employer is required to pay additional remuneration at a rate of 20% for up to 10 days beyond the expiry and 40% for up to 20 days. If the employee is still working 20 days after the expiry date, their employment will be deemed indefinite. If an employee is
rehired less than 20 days after expiration (or 10 days for contracts of less than six months), their employment will also be deemed indefinite.
Probation periods in Italy vary depending on the position of the employee. A probation period is generally 6 months for high level employees such as management, and 3 months for other employees. A probation period should not exceed 6 months and will need to be provided in writing.
Emerald Technology can onboard employees in Italy within 48 hours.
Post-termination restraints can be enforceable if they are reasonable and protect a business’ legitimate interests. Both customer and employee non-solicits are permissible.
Any non-compete agreements should be no longer than 6–12 months. These clauses must be agreed in writing, limited in territory, scope and time, and provide reasonable compensation. Reasonable compensation is usually 25–50% of annual salary for a one-year non-compete agreement for the entire Italian region. This clause would be null and void if requirements are not met.
National health insurance in Italy is managed by the National Health Service (Servizio Sanitario Nazionale or SSN) and funded through direct and indirect taxation. Registration is handled by the Local Health Authority Service (Azienda Sanitaria Locale or ASL) which issues a social security number and a health card (Tessera Sanitaria). This card entitles the holder to either no or low-cost treatment. Hospital services are free of charge and there are charges for services such as dental treatment and some outpatient services. Private health insurance is also available, with the option to choose doctors, specialists, and treatment at private hospitals. It is common for employers to offer this to their employees as a benefit so medical bills will be fully covered for items not included by the SSN.
The Italian Social Security system (previdenza sociale) is managed by the National Social Security Institute (Instituto Nazionale Previdenza Sociale or INPS). Contributions are made by both employees and employers. The INPS contributes to benefits such as sick pay, maternity, paternity, parental leave, retirements benefits, disability, and survivor benefits.Social security contributions are the responsibility of the employer to deduct from an employee’s salary before payment. Contribution rates vary based on the industry sector and seniority level of the employee. Contribution rates are typically around 10% for an employee and 30-35% for employers.
Expectant mothers in Italy are entitled to five months’ maternity leave (congedo di maternità). Generally, this is taken two months prior to the expected due date and three months after the birth. Subject to certain conditions, the leave may be taken earlier or later. During maternity leave, the employee is entitled to up to 80% of their basic salary which is paid by social security (INPS) (Instituto Nazionale Previdenza Sociale).
Parents also have the option of parental leave (congedo parentale facoltativo); this may come into effect after maternity leave ends and is paid at 30% of salary. Parental leave can be used until the child reaches 8 years of age and can be split between the mother and father. The length of parental leave is 11 months. During the first year after the birth, a mother is entitled to take two hours’ rest per day when working over six hours and one hour’s rest when working less than six hours.
Fathers may take seven days’ paternity leave within five months of the birth, paid at 100% of basic salary.
Parents also have the option of parental leave (congedo parentale facoltativo); this may come into effect after maternity leave ends and is paid at 30% of salary. Parental leave can be used until the child reaches 8 years of age and can be split between the mother and father. The length of parental leave is 11 months. During the first year after the birth, a mother is entitled to take two hours’ rest per day when working over six hours and one hour’s rest when working less than six hours.
Sick leave and payment in Italy generally depend on any collective bargaining agreements, or individual agreements stipulated in the contract of employment. Typically, for the first three days, an employee is paid in full by the employer. After the three days, further payment depends on any prior agreements. Social security will make a contribution of 50% for days 4-20 and 66% from day 21 onwards. A certificate must be provided by a doctor to prove the employee is unable to work.
As the legal employer, Emerald Technology requires the following employee documents to ensure complete compliance:
When an employer dismisses an employee it must be with just cause and they must give them notice. The notice period starts from the day after the employer notifies the employee of the termination. Notice must be given in accordance with the following schedule at a minimum:
Employment in Italy cannot be terminated without a just cause or reason. These include breach of contract, gross misconduct, company reorganisation, and economic reasons. If an employee is dismissed for gross misconduct such as a serious breach of trust, or serious violation of contractual duties, then no notice period is required. If an employee is dismissed for a justified reason, which may be subjective such as a less serious breach of their contractual obligation, or objective e.g. redundancy. In these cases, notice of termination is required. | |
Dismissals must be notified in writing with reasons detailed. If the dismissal is due to just cause or subjective reasons, a special disciplinary procedure must be complied with. Notice periods are subject to any collective bargaining agreements. |
In Italy, when any employment is terminated (regardless of the reason, including resignation), the employee has the legal right to receive a leaving indemnity, known as TFR (trattamento di fine rapport). TFR is calculated based on the employee’s basic salary plus any other compensation periodically paid, and usually equates to 7% of the employee’s total compensation.
Employees are entitled to a minimum of 4 weeks holiday per year when working full time, excluding public holidays.
New Year’s Day
Epiphany Day
Easter Monday
Liberation Day
International Worker Day
Republic Day
Assumption Day
Commerce Celebration Day
All Saints Day
Saint Ambrose
Immaculate Conception
Christmas Day
Saint Stephen’s Day
Italy does not have a mandatory minimum wage. Salaries are typically determined by collective bargaining agreements on a sector-by-sector basis.
The average working hours in Italy are 8 hours per day, 40 hours per week, with a maximum of 8 hours overtime permitted each week. Overtime hours may also depend on industry and any collective bargaining agreements. Employees working over 6 hours per day are entitled to a rest break. A break cannot be less than 10 minutes; however, collective bargaining agreements typically state any rest breaks.
Salaries (stipendio) in Italy are generally paid on a monthly basis, most commonly towards the end of the month. A 13th month bonus payment (tredicesima mensilità) is common in Italy and is usually paid in December, before Christmas. Some larger companies also provide employees with a 14th month of pay (quattordicesima mensilità) which is paid in the summer.
13th -month pay, “tredicesima” provided alongside December salary annually. Also, 14th-month pay may be provided in June.
The Italian tax year runs from January to December. It is the employer’s responsibility to ensure taxes are paid from salaries before payments are made to employees. The
general personal income tax rates are listed below as guidance.
Salary Tax Rate
Up to 15,000 23%
15,001 – 28,000 25%
28,001 – 50,000 35%
50,000+ 43%
Similar to other countries, Italy has strict rules on classifying individual contractors and full-time employees differently. Misclassifying your workers can put your business at risk of fines.
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