Key Takeaways for Hiring in Italy
- There is no statutory minimum wage. Compensation is determined by sector-specific CBAs
- Employees receive mandatory 13th and 14th-month bonuses, making annual compensation higher than monthly salary suggests
- Employers face high social contribution costs (30%), with additional mandatory funds for executives
- Termination is strictly regulated, and at-will termination does not exist; employers must follow CCNL requirements and justify dismissals
Continent
Europe
Capital
Rome
Currency
Euro (EUR)
Language
Italian
Payroll Cycle
Monthly
Pay Date
Last working day of the month
VAT
22%
Italy Employment Contract Overview
Hiring in Italy follows a structured framework shaped largely by national labor law and collective bargaining agreements (CBAs). Below is the core structure our employment contracts follow to stay fully compliant with Italian requirements.
What Do You Need To Include In An Italian Employment Contract?
In Italy, employment contracts are legally required, but they do not need to be in writing. When employers issue a written contract, it typically sets out the essential terms of employment to ensure clarity and compliance.
Employee Information
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The names of both the employer and the employee
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The employee’s start date
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Any probationary period
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The end date if it’s a fixed-term contract
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The salary
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Working hours
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Details of paid leave
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A description of the employee’s responsibilities
Mandatory Employee Benefits in Italy
Employment of expats is supported in this country.
| Benefits | Provider | Funded Through | Notes |
|---|---|---|---|
| Health Insurance | Government |
Payroll Contributions |
Italy operates a universal public healthcare system known as the Servizio Sanitario Nazionale (SSN). It covers all residents, including employees and their dependents. |
| Pension/Social Security | Government |
Payroll Contributions |
INPS (Istituto Nazionale della Previdenza Sociale) covers old-age pensions, invalidity/disability, survivors’ benefits, unemployment benefits (NASpI), maternity/paternity leave, sick leave, and family allowances. It applies to all employees, including foreign nationals working in Italy. |
| Other Statutory Benefits | Government |
Payroll Contributions |
The 13th (Tredicesima) and 14th Month (Quattordicesima) bonuses are mandatory. Employers must pay these additional salary installments in December and June. |
Leave And Holiday Entitlement In Italy
Annual Leave
Employees receive four weeks of paid annual leave, and they may request to take two consecutive weeks. Employers can schedule vacation periods based on business needs.
Employees cannot receive payment instead of taking annual leave unless their employment ends.
Out of the four weeks, two must be used within the year they are earned, while the remaining two can be carried over for up to 18 months.
Public Holidays
Italy recognizes 13 public holidays, which are typically paid days off:
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January 1: New Year’s Day
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January 6: Epiphany
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Easter Sunday
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Easter Monday
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April 25: Liberation Day
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May 1: Labor Day
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June 2: Republic Day
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August 15: Assumption Day
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November 1: All Saints’ Day
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December 8: Feast of the Immaculate Conception
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December 25: Christmas Day
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December 26: St. Stephen’s Day
Employees may also receive an additional local holiday based on their city’s patron saint.
Sick Leave
Sick leave entitlements depend on collective labor agreements. Employees typically receive full pay during sick leave, funded partly by the employer and partly by the National Social Security Institute (INPS).
Maternity Leave
Pregnant employees must take five consecutive months of maternity leave. They receive 80% of their usual salary, paid through the social security system.
During the first year after childbirth, working mothers can take two one-hour breaks per day (or one hour for shorter shifts), and they may use these breaks outside the workplace.
Each parent can take up to six months, with a combined maximum of 10 months, any time within the first 12 years of the child’s life, paid at 30% of salary.
Paternity Leave
Fathers, including adoptive and foster fathers, receive 10 mandatory days of paid paternity leave, including in cases of perinatal loss.
For multiple births, entitlement increases to 20 working days.
This leave can be taken from two months before the due date to five months after birth, and fathers receive 100% of salary through social security.
Both parents may use their share of the six months each, up to 10 months total, paid at 30%.
Other Types of Leave
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Personal Leave: Employees receive 15 paid days for their wedding and may take occasional leave for family matters such as a child’s illness or the death of a close relative.
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Education Leave: Employees with at least five years of service may take up to 11 months of unpaid leave for university or professional studies. Collective agreements may offer additional paid study hours.
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Military Service: Employers must hold the employee’s job during military service and for 30 days after discharge. The employer does not need to pay salary during military service, but the entire period counts toward seniority.
Termination and Offboarding in Italy
Terminating employment in Italy requires careful adherence to legal and collective-agreement rules. Below is a straightforward guide to navigating resignations, dismissals, and fixed-term contract endings.
| Type | Possible? |
|---|---|
| Termination for Cause (poor performance, misconduct, etc.) | Yes |
| Termination without Cause | No. In Italy, employment contracts can’t be terminated at will. |
| Mutual Termination Agreement (MTA) | Yes |
| Redundancy | Not possible under the EOR setup |
Employee Termination (Resignation)
Notice
Notice period
In most cases, the notice period an employee must provide when resigning is determined by the applicable collective labor agreement.
End-of-Service Benefits
Severance/Gratuity
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Under Article 2120 of the Italian Civil Code, employees are entitled to TFR (Trattamento di Fine Rapporto) upon termination, regardless of reason including resignation.
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TFR accrues during employment at a rate of approximately 1/13.5 of annual salary ( 7.4%), then adjusted annually for inflation with 1.5% plus 75% of the CPI.
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TFR must be paid upon termination, though exact deadlines vary per Collective Bargaining Agreement (CCNL), typically within 30 to 45 days.
Other Benefits
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Unused vacation leave
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Final salary for days worked up to resignation
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Pro-rata 13th/14th month payments, if applicable per CCNL
Termination Documentation
While Italian law doesn’t mandate a standard “certificate of employment,” it is customary and legally useful that the employer provides:
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A final payslip detailing TFR, unpaid vacation, and salary
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The Certificazione Unica (CU), summarizing income and TFR for tax purposes
Employer Termination With Cause in Italy
Acceptable grounds
Just Cause (Giusta Causa): Serious misconduct that renders continuation of the employment relationship impossible (e.g., theft, violence, gross insubordination).
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Justified Reason (Giustificato Motivo):
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Subjective: Breach of contractual obligations (e.g., poor performance, repeated noncompliance).
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Objective: Business-related reasons (e.g., redundancy, restructuring, economic need).
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Notice
Form
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Just Cause: Must be documented in writing; though notice is not required, proper justification is mandatory.
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Justified Reason: Requires written notice stating the reason, as mandated by Article 2118 of the Civil Code.
Notice period
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Just Cause: No notice period; dismissal is immediate.
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Justified Reason: Notice period is stipulated by the applicable CCNL, varying based on seniority and position.
Payment in lieu of notice or notice waiver
If notice is not given, the employer must compensate with a payment equivalent to the salary that would have been due during the notice period.
End-of-Service Benefits
Severance
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Regardless of dismissal reason,even in cases of just cause, the employee is still entitled to their accrued TFR (Trattamento di Fine Rapporto).
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TFR is calculated based on annual compensation divided by 13.5 (7.4 – 7.5%), including non-recurring bonuses, revalued annually with indexation.
Other Benefits
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Unused vacation or leave must be compensated at the time of termination.
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Pro-rata supplementary payments (e.g., 13th or 14th month salary) must be paid if they were part of the contractual or CCNL terms.
Termination Documentation
Employers must provide:
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A written dismissal letter specifying the grounds and effective date.
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A final payslip including TFR and any other compensation due.
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Upon request, a certificate of employment indicating job role and duration.
Employer Termination Without Cause in Italy
This termination type isn’t possible under the Employer of Record setup in Italy due to local labor law restrictions. For compliant termination options, see:
- Mutual Termination Agreements
- Employee Resignation
- Fixed-term Contract Expiry
If you need termination without cause, you’ll need to establish your own Italy entity.
Mutual Termination Agreements in Italy
MTA is a voluntary agreement signed by both parties (employer and employee) to terminate an employment contract by mutual consent.
Notice
Form
The agreement must be in writing and signed by both the employer and the employee. After signing, the employer submits a mandatory electronic notification to the Italian labor authorities through the UNILAV system within 5 days.
Notice period
No automatic legal notice period applies. The termination date is mutually agreed and defined in the written agreement.
End-of-Service Benefits
Severance
TFR (Trattamento di Fine Rapporto) is always payable, even under mutual termination, and employees retain the right to receive their accumulated TFR.
Other Benefits
Must be included in the agreement:
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Unused vacation and leave days must be compensated.
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Pro-rata supplementary payments (e.g., 13th/14th months) if applicable under contract or CCNL.
Termination Documentation
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The mutual agreement should be documented in writing specifying:
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The termination date
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Details of the agreed financial settlement (TFR, unused leave, additional incentive)
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Any waivers of legal claims by both parties
Offboarding Process for the End of Fixed-term Contracts in Italy
If the Fixed-Term Contract Ends Normally
Notice
Neither party needs to give notice unless the individual contract or applicable CCNL explicitly requires it. The contract automatically ends on the agreed-upon expiry date.
End-of-Service Benefits
Severance/Gratuity
The employee is always entitled to the accrued TFR (Trattamento di Fine Rapporto) upon termination, regardless of how the contract ends.
Other Benefits
- Unused vacation/time off must be compensated.
- Any pro-rata supplementary payments (such as 13th or 14th month salary), if part of the CCNL or contract, must be settled.
Final Payment Timing & Immigration and Visa Compliance in Italy
Final Payment Deadline
TFR (Trattamento di Fine Rapporto) and other owed benefits are typically paid at the end of employment or as per CCNL terms (e.g., within 30 – 45 days).
Penalty
If payments are delayed, the employee can send a formal notice (diffida). Should that be ignored, they may seek judicial recovery, which can include late payment interest.
Visa and Immigration Compliance
Termination may affect foreign nationals who hold work-linked residence permits, so they may need to obtain a new permit or prepare to leave the country in line with immigration law.
Supporting Guides
Frequently Asked Questions
There’s no minimum wage in Italy?
Correct. Italian law doesn’t set a statutory minimum wage. Instead, sector-specific collective bargaining agreements (CBAs/CCNLs) determine minimum pay levels across industries. You must follow the CBA that applies to your sector and the employee’s role.
What are the 13th and 14th month bonuses?
These are mandatory extra salary payments. The 13th month (Tredicesima) is paid in December, and the 14th month (Quattordicesima) is paid in June. They’re full monthly salary amounts on top of the 12 regular monthly payments, making total annual compensation significantly higher than monthly salary suggests.
What is TFR and why is it always paid?
TFR (Trattamento di Fine Rapporto) is severance pay that accrues during employment at roughly 7.4% of annual salary, adjusted annually for inflation. It’s always paid upon termination—resignation, dismissal for cause, mutual agreement, or contract expiration. You must pay it regardless of why or how employment ends, typically within 30 to 45 days per the applicable CCNL.
Why are employer costs 30%?
Italian social security contributions are high. You pay 23.81% for old-age/disability/survivors insurance, plus additional percentages for sick leave, maternity, unemployment, family allowances, and workplace accident insurance. For executives, you also pay into mandatory sector-specific funds like Fondo Mario Negri and FASI, which increase costs further.
Can I terminate without cause in Italy?
No. At-will termination doesn’t exist. You must have either “just cause” (gross misconduct allowing immediate dismissal) or “justified reason” (subjective like poor performance, or objective like business restructuring). All dismissals require written justification and must follow CCNL notice periods. Even with cause, the employee still receives accrued TFR.
Notice periods aren’t set by law?
Correct. The applicable CCNL (collective agreement) determines notice periods based on seniority and position. There’s no standard statutory notice period in Italy. It varies by sector and role. Check the relevant CCNL for your employee’s specific requirements.
