How to hire employees using an employer of record in Italy

Key takeaways for hiring in Italy with an EOR

Three things every Italy EOR hire requires

You've just extended an offer to a Milan-based software engineer. Your legal entity is in the US. Without an Italian legal entity or EOR, you cannot make this hire compliantly, and the consequences of getting it wrong are significant. Employing someone without a valid contract ("lavoro nero") carries fines of €17,000–€43,000 under Italian law.

Here is what every compliant Italy hire requires from day one:

• Italy's labor law is employee-protective and at-will termination does not exist. All dismissals require just cause, justified subjective reason, or justified objective reason
• Every employee accrues TFR severance regardless of how employment ends, including resignation
• Salary minimums are CBA-driven and increase on a mandatory schedule through February 2027
• A mandatory medical check must be completed within the first 60 days of employment
• Teleworking arrangements must be formally registered with the Ministry of Labor before the employee begins remote work

An EOR handles each of these requirements as part of standard onboarding. Without one, each item becomes a separate compliance project for your legal and HR teams.

Italy at a glance before you hire

Italy's CBA-driven pay rules affect every offer you make

Italy has a population of approximately 58 million and is a founding member of the European Union, which means EU citizens have the right to work there without a separate work permit. For non-EU nationals, a work permit and residence permit are required before employment can begin.

Two statutory bodies govern employment contributions: INPS (Istituto Nazionale della Previdenza Sociale) administers pensions and social security, while INAIL covers workplace accident insurance. Employers register with both at the point of hire. Italy has no national statutory minimum wage — instead, minimum pay is set by industry-level collective bargaining agreements (CBAs), known as CCNL. For most hires Oyster makes in Italy, the applicable CBA is CCNL Commercio (the trade sector agreement).

From January 2025, a minimum gross annual salary of €30,000 applies to all non-Dirigenti employees. The 14-installment payroll calendar is not a workaround, but it is a standard feature of the CCNL, with the 13th installment paid in December and the 14th on July 1. When you see a monthly salary figure in an Italian employment contract, that figure represents 1/14th of annual total compensation, not 1/12th. Build this into your compensation modeling from the start.

What hiring in Italy actually looks like

A realistic scenario for your first Italian employee

You've just hired a Milan-based software engineer for your distributed team. Your legal entity is in the US. Without an Italian legal entity or EOR, you cannot make this hire compliantly.

Here is what Oyster handles from the moment you confirm the hire. First, the role is classified against CCNL Commercio levels, which determines the minimum salary floor, overtime rates, and applicable health fund.

Next, Oyster drafts a CBA-compliant employment contract with the correct 14-payment structure, a telework addendum, and a TFR election form. The hire is then registered with INPS and INAIL before the employee's first day.

Within 60 days, Oyster coordinates the mandatory medical check through its partner Frareg. The telework agreement is filed with the Ministry of Labor.

None of these steps are optional. Each has a hard deadline or a statutory penalty attached. Getting your people's employment right from day one is not just a compliance checkbox — it is the foundation of a trustworthy employment relationship.

What an employer of record does in Italy

EOR versus setting up your own Italian entity

Using an EOR in Italy means Oyster becomes the legal employer of record, registered with INPS and INAIL, while you direct the employee's day-to-day work under a services agreement. Italian law recognizes this structure, and it is well-established.

The alternative is setting up an Italian S.r.l. (società a responsabilità limitata). This requires a notary, registration with the Chamber of Commerce, a minimum share capital, and ongoing accounting and corporate governance obligations. The timeline is typically several months, and the ongoing compliance burden is substantial even before you factor in payroll.

For teams testing the Italian market or hiring fewer than 15 employees in-country, the EOR model is almost always the right starting point. Entity setup makes sense when you have the headcount and the operational infrastructure to justify it.

Is using an EOR in Italy legal

Yes, using an EOR in Italy is legal and the model is well-established. The EOR is registered with INPS and INAIL as the employer of record; the client company directs the work under a services agreement. Italian law recognizes this structure. What Italian law does not permit is employing someone without a valid contract, which is precisely why using a compliant EOR matters.

Four reasons to use an EOR in Italy

• No entity required to hire compliantly: you can employ an Italian worker within days, not months
• CBA classification and mandatory salary increase tracking handled for you, including the 2024 CCNL Commercio renewal and its multi-year schedule through February 2027
• TFR accrual, INPS/INAIL registration, and payroll managed in one platform with full visibility
• Termination and conciliator process managed by specialists who know Italian labor courts — because at-will termination does not exist here, and the Mutual Termination Agreement process requires a licensed conciliator

Oyster is the only B Corp-certified EOR operating in Italy, combining technology with in-house legal, payroll, and HR specialists who know Italian labor law firsthand, not outsourced partners.

Italy employment laws your EOR must handle

Italian employment contracts and what must be included

While oral contracts are technically valid in Italy, written contracts are standard and required for fixed-term, probation, and non-compete clauses. Backdated contracts carry a €500 fine.

Within 30 days of the start date, employers must provide written disclosure of: the identity of both parties, the workplace, the start date, contract duration, probation period, job title and CBA level, salary, working hours, notice period, and the applicable CBA reference.

Fixed-term contracts are permitted for a maximum of 12 months initially, extendable to 24 months with justification, with a maximum of four renewals. Probation periods vary by level: up to 6 months for Dirigenti, Quadri, and Level 1; up to 60 working days for Levels 2–5; up to 45 working days for Levels 6–7.

Teleworking contracts must be formalized and registered with the Ministry of Labor. This is a hard legal requirement that determines where the employee is permitted to work and what reimbursement the employer must provide.

Oyster's Remote Work Statement includes a minimum €30/month internet cost stipend as standard.

Italian collective bargaining and your salary obligations

Approximately 95% of Italian workers are covered by a CBA. Italy uses industry-level agreements, and Oyster operates under CCNL Commercio for most hires. The CBA determines minimum salary by level (from Level 7 through Quadro and Dirigenti), overtime rates, and benefits.

The 2024 CCNL Commercio renewal introduced mandatory salary increases through February 2027. For example, Level 7 minimum salary moves from €1,366.15 in April 2024 to €1,463.38 by February 2027. These are not discretionary — they apply automatically to all covered employees on the scheduled dates.

The 14-installment structure (monthly salary plus 13th in December and 14th on July 1) is a CBA standard, not an exception. Law 104/1992 is worth noting separately: it provides employees caring for disabled family members with 3 days of paid leave per month, administered independently from standard annual leave.

Social security and payroll taxes for Italian employees

Employer social security contributions run approximately 30% of gross salary, split between INPS and INAIL. Employee contributions are approximately 10%. Pension contributions are 33% employer and 9.19% employee. Income tax (IRPEF) is progressive at 23–43% and is withheld monthly by the employer.

Two recent changes are worth building into your cost modeling. The Mothers' Bonus (Decontribuzione Mamme), introduced in 2024, provides female employees with three or more children on indefinite contracts an exemption equivalent to 9.19% of salary, capped at €3,000 per year.

The Impatriati regime offers workers relocating to Italy a 50% income reduction for up to five years if eligibility requirements are met (updated January 2024). This is a meaningful talent retention tool for international hires.

Salary cannot be paid in cash in Italy. Payment must be by bank transfer or electronic means.

TFR severance pay in Italy and when it applies

TFR (Trattamento di Fine Rapporto) is mandatory severance that accrues for every Italian employee, regardless of how employment ends. The formula: annual gross salary divided by 13.5, which equals approximately 7.5% of annual gross per year of service. It is paid at termination whether the employee resigns, is dismissed, or the contract expires.

Within six months of hire, employees choose whether to keep TFR with the employer or direct it to a supplementary pension fund. For CCNL Commercio employees, the relevant fund is Fon.Te, and this choice is irrevocable for the pension direction.

For Dirigenti-level employees, separate enrollment is required via SUID form. This covers health insurance (Fondo Besusso-FASDAC), accident insurance (Fondo Pastore), and pension (Fondo Negri).

TFR is one of the most commonly overlooked costs when modeling total compensation for Italian hires. It is a statutory obligation that accrues from day one.

Statutory leave and working hours in Italy

Standard working hours are 40 per week, Monday to Friday. The maximum is 48 hours including overtime, averaged over four months. Maximum overtime is 250 hours per year. Overtime rates: 15% premium for hours 41–48; 20% from hour 49. Night work carries a 50% premium; holiday work carries a 30% premium.

Annual leave is 22 days for non-Dirigenti on a five-day week and 25 days for Dirigenti. Non-Dirigenti also accrue additional paid permit hours by seniority: 32 hours in years 1–2, 68 hours in years 3–4, and 104 hours from year 5 onward.

Maternity leave is 5 months at 80% INPS and 20% employer. Paternity leave is 10 compulsory working days at 100% pay, initially paid by the employer and reimbursed by INPS.

Parental leave is up to 11 months combined per couple at 30% INPS. The rate rises to 80% for up to one month if the child is under six.

Wedding leave is 15 paid calendar days. Sick leave covers the first 3 days at 100% employer pay; days 4–180 are shared between employer and INPS, with rates varying by level.

A mandatory medical check must be completed within the first 60 days of employment.

Terminating Italian employees and how to avoid disputes

At-will termination does not exist in Italy. All dismissals require just cause, justified subjective reason (conduct), or justified objective reason (redundancy). The employer must follow the disciplinary challenge procedure under Article 7 of the Workers' Statute. This requires a written challenge, a five-day employee response window, and a decision within 15 days.

The recommended path for most terminations is a Mutual Termination Agreement (MTA), which must be signed in an online meeting with a licensed conciliator. This protects both parties from future claims.

MTA terminations do not trigger collective redundancy counting. The collective redundancy threshold is five dismissals in 120 days for employers with 15 or more employees, which triggers union consultation.

Wrongful dismissal risk is real: indemnity ranges from 6 to 36 months of total annual compensation. At termination, TFR plus accrued but untaken leave plus pro-rata 13th and 14th installments are all due.

Garden leave is not recognized under Italian labor law.

Remote work rules and the Italian digital nomad visa

Yes, you can work remotely for a US company in Italy, but only with proper structure in place. Italy distinguishes two remote-work categories.

Telework (lavoro a domicilio) fixes the employee to a registered home location and must be registered with the Ministry of Labor. The employer must provide equipment and cover internet costs, with a minimum €30/month stipend.

The employee cannot work from any location other than the one in the agreement. Smart working (lavoro agile) is a more flexible hybrid arrangement but is not applicable to most Oyster team members, who are registered as teleworkers.

Italy's digital nomad visa was signed in March 2022 and became effective April 4, 2024. It targets highly skilled non-EU workers and is separate from the standard work permit. For Americans staying more than 90 days, a D-Visa (national visa) is required, along with an Italian work permit and residence permit for long-term employment.

What you should know about the Italian workforce

Italy's tech talent hubs carry employer costs 30–40% above gross salary

Italy's major talent hubs are Milan (technology, finance, fashion), Rome (media, government, consulting), Turin (automotive, manufacturing), and Bologna (logistics, food technology). The country has a strong engineering and design tradition, and high-skill workers in software engineering, industrial design, fintech, luxury goods, and logistics are well-represented.

Total employer cost — gross salary plus approximately 30–40% on top — should be factored into every compensation benchmark. The 14-payment salary structure means the monthly gross in a contract is 1/14th of annual total, not 1/12th. This is a common modeling error that leads to offer letters that don't match employee expectations.

Italian high-skill workers expect role classification to match their CBA level. Misclassification creates legal risk and damages trust. The Impatriati regime (50% income reduction for up to five years for workers relocating to Italy) is a genuine retention tool for international talent — worth surfacing in offer conversations. Italy's strong worker protections and unionization culture mean that aligning with the CBA is not just legal compliance. It is also good for trust and retention (something worth remembering when you're tempted to cut corners on classification).

How to choose your Italy EOR partner

Four criteria for choosing your Italy EOR

Not all EOR providers have the same depth in Italy. The regulatory environment here rewards genuine local expertise over providers using third-party Italian payroll partners. Here are the four criteria that matter most.

Compliance expertise: Does the EOR know CCNL Commercio, have in-house Italian HR specialists, and track CBA renewals — including the 2024 renewal and its mandatory salary increases through 2027?

Pricing transparency: Is there a flat per-employee fee with no hidden add-ons for termination support, benefits administration, or INAIL filings?

Speed: Can the EOR onboard an Italian employee in under a week, including telework registration and medical check enrollment?

Human support: When your Italian hire has a question about their TFR allocation, does a real specialist respond — or a chatbot? Italy's compliance complexity means the moments that matter most are the ones where software alone is not enough.

How Oyster keeps your Italian hires compliant

Italian labor law changes Oyster tracks for you

Oyster maintains a verified single source of truth for Italian employment law, updated by in-house legal and HR specialists. Here is what that looks like in practice.

The 2024 CCNL Commercio renewal triggered mandatory salary increases from April 2024 through February 2027, automatically applied to all non-Dirigenti employees on Oyster's platform. The November 2025 Dirigenti CBA renewal triggers mandatory increases of €320/month in January 2026, €260/month in January 2027, and €220/month in January 2028.

A new CBA leave provision now provides women who are victims of gender-based violence with 90 working days of protected leave.

Oyster coordinates mandatory medical checks via its partner Frareg within the first 60-day window and registers telework agreements with the Ministry of Labor. Oyster's payroll cut-off is the 10th of the month; changes submitted after this date take effect the following month.

GDPR and IP protections in your Italian employment agreements

All Oyster Italy employment agreements include GDPR-compliant data processing clauses. IP created during employment can be assigned to you with appropriate contract language, though employees must be compensated separately for patent rights under Italian law.

Confidentiality is already required by Article 2105 of the Italian Civil Code. Oyster's agreements include explicit penalty provisions for post-employment breaches.

Non-compete clauses are enforceable in Italy if they are in writing, time-limited, and compensated. Time limits are up to 3 years for non-executives and 5 years for executives. Compensation is typically 25–50% of annual salary, or 30% of monthly salary per month for Italy-only geographic scope.

What transparent pricing looks like for Italy EOR

What you pay with Oyster for Italian hires

Oyster's pricing for Italy is flat per-employee with no termination fees, no hidden benefits-administration charges, and no INAIL filing add-ons. Italy's EOR cost complexity is higher than many markets. CBA-mandated health fund contributions, TFR accrual tracking, and telework agreement filing are all included in Oyster's flat fee. The applicable health funds are Fondo EST for standard levels, QUAS for Quadri, and FASDAC for Dirigenti.

Competitors may charge separately for termination support, conciliator coordination for MTA, and medical check enrollment. Oyster includes all three. Payslips are uploaded to the Oyster platform before month-end, and mandatory salary increases are monitored and applied automatically.

How quickly Oyster onboards your Italian employees

Your Italian hire from signed offer to day one

Oyster can onboard a new Italian employee in approximately 48 hours from the point the employment agreement is signed. Here is the full sequence:

1. You confirm candidate details, compensation, and CBA level via the Oyster platform
2. Oyster drafts and issues a CBA-compliant Italian employment agreement with telework addendum and TFR election form
3. Employee signs electronically via QES (Qualified Electronic Signature, accepted under Italian law)
4. Oyster registers the hire with INPS, INAIL, and the Ministry of Labor
5. Oyster enrolls the employee in the appropriate CBA health fund (Fondo EST, QUAS, or FASDAC)
6. Oyster coordinates the mandatory medical check via Frareg within the 60-day window
7. Employee receives platform access; payslips are uploaded monthly before salary payment

If the hire is submitted before the 10th of the month, the employee is included in that month's $5payroll cycle. Italy has specific onboarding milestones with hard deadlines — Ministry of Labor notification before the employee's first day, medical check within 60 days, TFR choice form within six months. Oyster tracks all three.

How Oyster compares to other Italy EOR providers

Oyster versus Deel, Remote, and Rippling for Italy

Versus Deel: Oyster gives you an in-house team of Italy specialists and HR experts who understand your context. Deel is more product-led, with support often reliant on AI and chatbots. 

Versus Remote: Oyster provides a dedicated point of contact backed by a team of specialists. Remote offers more self-serve support, often via email or chat, with access to experts priced as an add-on. Oyster charges no termination fees, which matters given Italy's complex MTA and conciliator process. Telework registration and medical check coordination are included in Oyster's standard service, not billed separately

Versus Rippling: Oyster is an EOR-first platform, purpose-built for global employment, and tracks Italy-specific CBA renewals and mandatory salary increases automatically. Rippling is a broader workforce platform with a newer EOR module among many HR and payroll modules, and covers 60+ countries to Oyster's 180+.

Italy's labor framework is specific enough that the difference between an EOR with genuine in-country expertise and one using third-party partners shows up in the details, and the details here carry real legal and financial consequences.

Hire talent in Italy confidently and compliantly with Oyster

With Oyster’s employer-of-record services, you can hire full-time employees in Italy quickly and compliantly without opening an Italian legal entity. The all-in-one platform makes it easy to manage payroll in EUR, issue compliant contracts, and meet all local labor requirements. Recognized as a category leader by G2, Oyster combines local expertise with global reach so you can grow your team with confidence in 180+ countries, including Italy.

Ready to get started? Use our Italy employment cost calculator and book a demo to learn how Oyster can support your global hiring strategy.

About Oyster

Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.

Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.