Table of Contents

Italy

Table of Contents

Currency

Euro (EUR)

Payroll Frequency

Monthly

Employer Taxes

30%

About Italy

Italy, a country with a long Mediterranean coastline, has a population of more than 60 million with a rich, historical, and globally popular culture in arts, architecture, food, and music. Its major tourist attractions include cities such as Rome, Venice, and Florence, which are amongst the oldest cities in the world. It is home to popular landmarks such as the Vatican and various architectural sites such as the Coliseum, the Leaning Tower of Pisa, and the Basilica. The political climate of the country is currently a little tense given the existence of a caretaker government as Italians await new elections. A power struggle between the populist coalition which won the March elections and the pro-EU politicians has resulted in a standoff with the government, with Italy’s president rejecting the populist choice for finance minister.

Employment Relationship

• Permanent Employment

Employment contracts for an indefinite period are the most common type of employment relationship allowed by the labor legislation of Italy. Unless explicitly stated otherwise, labor agreements are considered to be for an indefinite period. Such contracts are protected against unfair dismissals.

• Fixed-Term or Specific-Purpose Contracts

Although permanent contracts are the default form of employment in Italy, employees may also be hired on a fixed-term basis. Fixed-term contracts must be concluded in writing and may not exceed 12 months; otherwise, they are automatically transformed into permanent agreements from that date on. Renewals are possible only if there is a temporary and objective needs, unrelated to ordinary activities, or need to replace workers or temporary, significant and non-programmable increases in ordinary activity. Employers may use fixed-term contracts in excess of 12 months when the employee is hired to replace a permanent employee taking leave. 

• Temporary Employment Contratcs

Italian labor legislation does not clearly define temporary employment. It does, however, allow for several types of flexible employment arrangements such as: Intermittent work Fixed-term work Apprenticeships Solidarity contracts Temporary employment contracts must be in writing and a copy of it must be given to the worker within 5 days from the start date. The contract must contain the following elements: Reasons for using the provision of temporary work services Name of the employer Duties to which the worker will be assigned and the relative classification Probationary period and its duration Place, time, and economic and regulatory treatment due Start date and the end of the work activity Any security measures necessary in relation to the type of activity The law allows secondment, where an employer, to satisfy their own interest, temporarily places one or more workers at the disposal of another person for the performance of a specific work activity. If the posting occurs in violation of the general conditions indicated above, the worker concerned may request, by judicial appeal, the establishment of an employment relationship employed by the person who used the service, the employer to whom he was posted. Such posting must happen with the consent of the worker. 

Probationary Period

Employment relationships in Italy may begin with a probationary period. Any probationary period must be stipulated in the written contract or written letter of employment, per the Italian Civil Code.  Once the probationary period has been completed, the contract is considered to be for an indefinite period, and the probationary period counts toward the employee's seniority. The probationary period can last for a maximum of six months for managerial employees and three months for all other employees. Maximum probationary period lengths may differ depending on the industry or the applicable collective bargaining agreement. During the probationary period, either of the parties may end the employment relationship without notice or severance.

Working Hours

Working time is defined by the labor law of Italy as "any period during which the worker is at work, available to the employer, and in the exercise of their activity or duties." The law sets a standard workday at 8 hours, and, based on a 5-day work week, a full work week is 40 hours. Collective agreements can set shorter duration. Any hours over 40 per week are considered to be overtime. Overtime work is restricted to 2 hours per day and must be approved by the employer.

Holidays / PTO

• Statutory Holidays

New Year’s Day (January 1), Epiphany (January 6), Easter Monday (date may vary), Liberation Day (April 25), Labor Day (May 1), Republic Day (June 2), Feast of the Assumption (August 15), All Saints’ Day (November 1), Immaculate Conception (December 8), Christmas Day (December 25), Saint Stephen’s Day (December 26), Patron Saint’s Festival (date may vary).

• Paid Annual Leave

Under the Constitution, Italian workers are entitled to paid annual leave after 1 year of continuous service, and this entitlement cannot be waived. The labor law stipulates that employees are entitled to at least 4 weeks of paid annual leave. At least 2 weeks must be taken in the year the leave was accumulated, and the other 2 weeks can be accumulated and used in the next 18 months after the year of accumulation ends.

• Sick Leave

During an absence from work resulting from illness or accident, employees generally have the right to three days of paid sick leave. From the fourth day of sick leave, employees are entitled to statutory sick pay amounting to 50% of standard net pay for the first 20 days and 66.66% from the 21st to the 180th day, up to a maximum continuous absence of 180 days in a calendar year. Employers pay a statutory sick benefit to their employees and are reimbursed by the National Institute for Social Security (INPS).

• Maternity Leave

Female employees in Italy are entitled to at least 20 weeks of compulsory maternity leave. Typically, it is split into 8 weeks before birth and 12 weeks after. In addition to paid leave, a mother can choose to take up to 6 months of unpaid leave. Single mothers are eligible for up to 10 months of unpaid maternity leave following the 20 weeks of paid leave. If an employee decides to forgo maternity leave, her working hours may be reduced to 6 hours per day. Maternity leave is paid at a rate of 80% of their average monthly wage established annually by law for the type of activity carried out and is supported by the National Institute of Social Security (INPS). Employers pay the allowance to employees and then get refunded from the INPS. In the event of termination of pregnancy beyond the third month, an allowance is paid for a period of 30 days.  

• Paternity Leave

The labor law of Italy allows fathers to be absent from work for the entire maternity leave period (3 months after the birth or for the amount of unused maternity leave remaining) in the following circumstances: Cases of serious illness or death of the mother  Abandonment of the child by the mother When the male worker has exclusive custody In these cases, a father will be granted the same benefits as a mother on maternity leave. Compulsory paid leave for fathers is 7 days. Paternity leave must be used within 5 months of the child's delivery date. Compulsory leaves are paid at a rate of 100% of the worker's remuneration for that time. A daily allowance is paid by the Italian National Institute of Social Security (INPS). Adoptive fathers and custodial fathers are also entitled to paternity leave benefits. Both the compulsory paid leave and the optional leave can now be used in the case of perinatal death of the child.

Termination of Employment

• Notice Period

In Italy, upon the termination of an open-ended employment contract, both the employer and the employee are entitled to a notice period unless the agreement is terminated for just cause (a reason that does not allow the continuation of the employment relationship). The duration of the notice period typically varies according to the employee’s length of service and professional level and is established in the applicable collective bargaining agreement. In the absence of an agreement, written notice must be provided at least 5 days before the dismissal occurs. If the decision to terminate a labor agreement comes from employers, they can exempt employees from working during the notice period by providing a corresponding payment in lieu of notice.

• Severance Benefits

When an employment contract is terminated, even for just cause, the employer must pay the following: TFR payment calculated according to the formula of the employee's annual salary divided by 13.5, plus 1.5% for each year of service and added compensation for inflation Pro-rata supplementary monthly payments if the employer made such payments during the employment relationship Payment in lieu of unused holidays