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Before hiring employees in Italy, there are some key things you’ll need to know. Firstly, at the end of any employment contract, all employees in Italy receive severance pay (“Trattamento di Fine Rapporto"). It accrues over the course of their employment at a cost of 7% of gross salary to their employer.
In Italy, a normal weekly working hour limit is 40 hours, but this does not apply to executives, managers, or remote workers.
Italy also has customary 13th and 14th salaries—one is paid at the time of an employee's summer holiday and one is paid at Christmas.
We know keeping track of all this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform.
Get an overview of what you need to know when hiring in Italy below.
At a Glance
13th / 14th SALARY
13th (June) & 14th (December)
Good to know
- All employees in Italy receive severance pay (“Trattamento di Fine Rapporto") at the end of their employment. It accrues over their employment at a cost of 7% of gross salary to the employer.
- The normal weekly working hour limit is 40 hours in Italy, but this does not apply to executives, managers, and remote workers who work from home or another office.
- Italy has customary 13th and 14th salaries. One is paid at the time of the employee's summer holiday and one is paid at Christmas.
There are working hour restrictions in Italy, but they don’t apply to:
- Executives, managers and employees who have any form of independent decision
- Remote workers and employees working from home
The normal working week is 40 hours, and the maximum working week is an average of 48 hours every seven days (including overtime) calculated over a four-month reference period. Although there’s no defined day length, employees are entitled to a daily rest period of 11 consecutive hours every 24 hours.
Overtime in Italy can not exceed 250 hours per year. Overtime must be compensated with increased salary.
In Italy, the probation period is six months for managers and three months for non-managers.
There is no statutory notice period in Italy, but agreed-upon notice periods must be included in employment contracts and collective bargaining agreements.
Non-compete agreement must be in writing and must be limited in terms of duration and scope. The maximum duration of a non-compete agreement in Italy is three years for employees and five years for executives.
It must also include financial compensation to the employee which is paid on top of their normal salary. Such compensation is generally evaluated on a case by case basis, and generally varies from between 20% and 40% of the gross annual remuneration paid to the employee.
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Paid time off
All employees are entitled to a minimum of four weeks paid annual holiday.
In Italy, sick pay and time off is defined in individual contracts and collective bargaining agreements.
Some sick pay is provided by the Italian state and some by the employer. The amounts depend on the length of service and business sector.
It’s compulsory for pregnant employees to take maternity leave for two months before and three months after childbirth. During maternity leave, employees receive an allowance from the National Social Security Body equal to 80% of their salary.
Paternity leave is a mandatory 10 days in the first five months of the child's life.
Employers in Italy are taxed approximately 30% of each employee’s salary for social contributions.
Employees in Italy are taxed between 23% and 43% depending on their income bracket. Employees are also taxed around 10% which goes to social contributions.
Termination of employment
At the end of any employment contract, even for just cause and resignations, employers in Italy must pay the “Trattamento di Fine Rapporto” which is a severance pay of an employee’s all-time received salary divided by 13.5. It is an extra cost to the employer of ~7% per month.
An employer can terminate an employee based on two reasons:
1) An objective reason such as redundancy due to economic reasons
2) A subjective reason such as a breach of their contractual duties
If an employee believes they have been unfairly dismissed, they can go to an employment tribunal where paid damages for a typical case are between three to six months of an employee’s salary.
Start hiring employees in
Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast.
We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.
With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.
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