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Italy – Employer of Record

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Country Introduction – Italy

Capital – Rome
Currency – Euro
GDP – 2.108 trillion USD (2021)
People/Nationality – Italian
Language – Italian
Major Religion – Roman Catholics
Population – 58,828,512 (as of September 28, 2023)

 Italy has one of the largest and most developed economies in the world. It is a member of the European Union and uses the Euro as its currency. The Italian economy is diverse and encompasses various sectors, including manufacturing, services, agriculture, and tourism.

It has a strong agricultural sector, producing a variety of crops, including fruits, vegetables, grapes (for wine), and olives (for olive oil). Wine production is a significant industry in Italy, with the country being one of the world’s leading wine producers.

Italy is known for its innovation, especially in fields like engineering, fashion, and automotive design. Many Italian companies are leaders in their respective industries, contributing to the country’s global economic influence. Italy is a major exporter and importer. It exports machinery, vehicles, pharmaceuticals, furniture, clothing, and food products. Its main trading partners include other European Union countries, the United States, and China.

Tourism plays a vital role in Italy’s economy. The country’s rich cultural heritage, art, history, and culinary traditions make it a popular destination for travellers from around the world. Tourism generates significant revenue and provides employment opportunities.

Contract of Employment

In Italy, employment contracts are regulated by the Labor Code (Testo Unico delle Leggi in Materia di Lavoro) and other relevant laws and regulations.

There are several types of employment contracts in Italy:

– Indefinite Contract: Offers job security with no fixed end date, the standard employment form in Italy.
– Fixed-Term Contract: Has a specific duration or task, regulated to prevent abuse.
– Apprenticeship Contract: Combines work and skill training for individuals seeking specific professional skills.

Probation Period

Typically, the probation period in Italy ranges from one to six months, with three months being a standard duration.


Generally, the notice period for terminating an indefinite-term employment contract in Italy is as follows:

By the Employer: The notice period required by the employer depends on the employee’s length of service:

– Up to 3 years of service: 1 month
– From 3 to 10 years of service: 2 months
– More than 10 years of service: 3 months

By the Employee: The notice period required by the employee is generally shorter than that of the employer and is often set at 15 days to 1 month. However, the specific notice period can also be outlined in the employment contract or collective bargaining agreement.

Working Hours

In Italy, the standard working hours are typically 40 hours per week, usually divided into 5 working days. The maximum regular daily working hours are 8 hours. However, there can be flexibility in working hours based on the industry, job position, and collective bargaining agreements.


According to Italian labor laws and collective agreements, the maximum overtime duration is typically set at 8 hours per week. This means that employees are generally not allowed to work more than 48 hours in a single week, including both regular working hours and overtime.

13th Month Pay

In Italy, the 13th-month pay, commonly known as “tredicesima” or “tredicesima mensilità,” is a mandatory annual bonus paid to employees. It is an additional month’s salary that is typically paid in December. This bonus is a form of mandatory profit sharing and is intended to help employees with extra expenses during the holiday season.

Annual Leave

The standard annual leave entitlement for full-time employees in Italy is 20 days per year. However, this entitlement can increase based on the employee’s years of service. Here’s a general breakdown:

– Up to 5 years of service: 20 days of annual leave
– From 6 to 15 years of service: 24 days of annual leave
– More than 15 years of service: 28 days of annual leave

Part-time employees are also entitled to annual leave, with the number of days calculated proportionally based on their working hours compared to full-time employees.

Sick leave

During the first 180 days of sickness, employees are generally entitled to receive sick pay, which is typically a percentage of their salary. The exact percentage can vary based on the employment contract and collective bargaining agreements.

In case of illness, employees are required to provide a medical certificate from a certified medical practitioner. The certificate should indicate the nature of the illness and the expected duration of the sick leave.

Maternity and Paternity Leave

Expectant mothers in Italy are entitled to a period of maternity leave before and after childbirth. Maternity leave typically starts two months before the expected date of childbirth and continues for three months after childbirth. In cases of complicated pregnancies or premature births, the duration of leave can be extended.

Italy offers paternity leave to fathers. Fathers in Italy are entitled to take up to four days of paid paternity leave in the case of the birth of their child. During these days, fathers typically receive full pay.


The standard VAT rate in Italy is 22%.

Reduced Rate (10%): This reduced rate is applicable to some specific goods and services, such as food products, water supplies, certain pharmaceutical products, and cultural services like admission to museums and archaeological sites.

Super-Reduced Rate (4%): This super-reduced rate is applied to necessities such as some food items, books, and medical products.

Income Tax

Income up to €15,000 Tax rate of 23%
Income from €15,001 to €28,000 Tax rate of 27%
Income from €28,001 to €55,000 Tax rate of 38%
Income over €55,000 Tax rate of 43%


Employer / Employee Contributions

Employer Contributions:

Social Security Contributions: Employers contribute to Italy’s social security system, covering pensions, healthcare, and unemployment benefits. Rates and thresholds vary based on employment contracts and salaries.

Workplace Insurance: Employers must provide insurance for work-related accidents and injuries, with the cost covered by the employer.

Welfare and Supplementary Funds: Certain industries require employers to contribute to funds providing extra benefits like healthcare or retirement coverage for employees.

Employee Contributions:

Social Security Contributions: Deducted from salaries, these contributions fund healthcare and pensions. Rates vary based on income and circumstances.

– Income Tax (IRPEF): Progressive tax rates, deducted at source from salaries, with higher earners paying more.
– Regional and Municipal Taxes: Additional taxes may apply based on the employee’s residence location.
– Union Dues: Deducted from salaries of union members.
– Pension Contributions: Employees contribute to their own pensions based on their income.

Public Holidays

In Italy, public holidays, known as “giorni festivi” or “festività pubbliche,” can vary by region, but there are several national public holidays that are observed throughout the country.

January 1 – New Year’s Day
January 6 – Epiphany
Easter Sunday – date varies (usually in March or April)
Easter Monday – The day after Easter Sunday
Apri 25 – Liberation Day
May 1 – International Workers’ Day
June 2 – Republic Day
August 15 – Assumption of Mary
November 1 – All Saints’ Day
December 8 – Immaculate Conception
December 25 – Christmas Day
December 26 – St. Stephen’s Day

Severance Pay

In Italy, severance pay is mandatory and known as “TFR” (Trattamento di Fine Rapporto). It is provided to employees upon the termination of their employment contract, calculated based on years of service and last year’s salary. TFR can be received as a lump sum or managed by a severance pay fund. Specific rules and calculations can vary, so legal or financial advice is advisable for accurate information.

Work and Residence Permits (Expatriates)

Expatriates planning to work and reside in Italy typically require work and residence permits. Here is an overview of the permits needed for expatriates working in Italy:

Work Permits:

– EU Blue Card: For highly skilled non-EU workers. It allows residency and work rights in Italy.
– Work Visa: Non-EU citizens need a work visa to enter Italy legally.
– Intra-Company Transfer (ICT) Permit: For employees transferred within multinational companies.

Residence Permits:

– Temporary Residence Permit: Issued for specific work contracts, usually lasting one year and renewable.
– Permanent Residence Permit: After 5 years of legal residence, expatriates can apply for permanent residency.
– Family Reunification Permit: Allows family members of a foreign worker to join them in Italy.
– Student Residence Permit: For international students studying in Italy.

Application Process:

Employers typically initiate the work permit process on behalf of the expatriate employee and expatriates need to submit various documents, including employment contracts, proof of accommodation, and financial means. Non-EU citizens apply for work visas at the Italian embassy or consulate in their home country to get final visa stamp. After entering Italy, applicants must apply for a residence permit at the local police station within 8 days. Temporary residence permits usually need to be renewed annually. Some permits and applicants may require proof of Italian language proficiency.

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