A Comprehensive Guide to HR and Employment in Italy

Here are a few key facts about the country:

• Capital: Rome
• Currency: Euro (EUR)
• Language: Italian
• Population (2020): 59.55 million
• Ease of Doing Business Rank (World Bank): 58th
• Cost of Living Index (2021): 73.11
• Payroll Frequency: Monthly
• Standard VAT Rate: 22%
• GDP Growth Rate (2020): -8.87%

Key Regulations

If you're planning to hire in Italy, it's necessary to set up a local entity to facilitate salary payments. Employers must also notify the public employment service (Centro per l’Impiego) at least 24 hours before any new employment begins. This notification automatically informs social security bodies like INPS (National Institute of Social Security) and INAIL (National Institute for Insurance against Accidents at Work).

One of the key elements of employment in Italy is the application of Collective Labour Agreements (CCNL). These agreements are sector-specific and regulate aspects like minimum wages, working hours, leave entitlements, probation periods, and even termination procedures. Given their complexity, it’s advisable to consult with HR professionals when drafting employment contracts to ensure compliance and optimal terms for your business.

Understanding Collective Labour Agreements (CCNL) and Employment Levels

Italy’s CCNLs play a critical role in governing employment relationships. These agreements are negotiated between employer associations and trade unions and apply on a sector-by-sector basis. They set the foundation for employment conditions, ensuring fairness across various industries.

CCNLs classify employees into different levels based on their roles (This may vary depending on CCNL):

• Operai (Manual Workers): Employees engaged in hands-on or operational work.
• Impiegati (Clerical Workers): Employees in administrative or office-based roles.
• Quadro (Middle Management): Professionals who hold managerial duties but do not reach the senior executive level.
• Dirigenti (Senior Executives): The highest level, responsible for high-level decision-making and strategy within the organization.

These classifications affect compensation, working hours, and benefits, and ensure that employees are treated in accordance with their responsibilities.

Working Hours and Overtime in Italy

Italy's standard working hours are 40 hours per week, typically divided into 8-hour days. Any work beyond these hours is considered overtime and must be compensated according to both the employment contract and the applicable CCNL. Some agreements may offer extra benefits for overtime, while higher-level employees, such as dirigenti, may not be entitled to overtime pay.

Leave Entitlement and Carryover in Italy

Italian employees are entitled to a minimum of four weeks (20 working days) of paid annual leave. As per Legislative Decree No. 66/2003, at least two of these weeks must be taken in the year they are accrued. Upon termination, any unused leave must be compensated in the employee’s final settlement.

Public Holidays in 2024 in Italy

Italy recognizes several national holidays each year, which must be factored into employment planning. In 2024, the public holidays include:

• 1 January – New Year's Day
• 6 January – Epiphany
• 31 March – Easter Sunday
• 1 April – Easter Monday
• 25 April – Liberation Day
• 1 May – Labour Day
• 2 June – Republic Day
• 15 August – Assumption of Mary
• 1 November – All Saints’ Day
• 8 December – Immaculate Conception
• 25 December – Christmas Day
• 26 December – Boxing Day

Salary Payments and Installments in Italy

In Italy, salaries are generally paid at the end of the month, typically between the 31st of the current month and the 5th of the following month. Employers are required to make contributions and tax payments by the 16th of each month, and these must be processed through an Italian bank account. Italian law also mandates that employees receive their salaries in 13 instalments. The additional 13th instalment, known as "la tredicesima," is paid in December, and in some sectors, a 14th instalment may be paid in June, depending on the CCNL.

Taxes and Social Security Contributions in Italy

Employers and employees in Italy are subject to various tax and social security contributions:

For Employers:

• Corporate Income Tax: 24%
• Social Security Contributions: 29-32%
• Workplace Injury Insurance (INAIL): 0.40%
  Total employer costs range from 29.40% to 32.40% of an employee’s salary, depending on the specific agreement and region.

For Employees:

• Social Security Contributions: 10%

How to Find, employ, and manage talent in Italy

Navigating Italy’s HR and employment regulations may seem daunting, but with the right knowledge and preparation, you can build a compliant and effective team. By understanding the country’s legal framework, collective agreements, and payroll regulations, your business can thrive in one of Europe’s largest and most influential economies. 

To ensure you recruit, and abide by the Italian labor laws, it is advisable to outsource a local partner who is well versed with the laws, language, and time zones and is aware of the industry. Contact any of our consultants for free advice on the Italian market.