Facts & figures

Government Type: Unitary parliamentary constitutional republic

Capital: Rome

Currency: Euro (EUR)

Languages: Italian

GDP Per Capita: 44,160 USD (2019)

Main Business sectors: 73.9%

Industry: 23.9%

Agriculture: 2.1%

Employment Rate: 57.6%

Higher Education Rate: 28% of 25-34 year old’s

Global People has a significant advantage in the Italian market thanks to our experience in providing global employment solutions and in-depth understanding of the unique employment culture at each location.

When looking to employ in Italy, its incredibly important to understand the employment structure and be familiar with all employment rules and guidelines. 

Global people’s services include:

  • PEO and HR management.
  • Realistic calculation of employee compensation.
  • Payroll, tax liabilities, insurance and employee benefits.
  • A designated point of contact for the client and the employees, available for any query or question that may rise.
  • Accessible consultation and professional opinions.

Employment Manual – Italy

Italy’s employment regulation consists of a complex system of rules provided by law and the Italian national collective bargaining agreements that differ according to sector and the level of the position and employee.

These mandatory rules set the termination procedure, minimum wages and establishment of employment relationship.

The employment relationship is managed by the employment contract, collective agreements (NCBA), the Italian civil code and Constitution and binding European rules.

Italian employees are grouped in 4 legal categories (also known as levels): executives (Dirigenti), middle managers (Quadri), White collar employees (Impiegati) and blue collar employees (Operai). These categories determine the employees minimum wages, length of probation period, duration of annual leave granted, etc.  

The employment agreement or contract must comply with Italian law, collective agreements and EU rules. The agreements must refer to:

  • Annual salary
  • Overtime entitlement
  • Sick leave
  • Annual Leave
  • Allowances
  • Severance pay
  • Notice period
  • Probation period



When terminating an employee in Italy, there are 2 types of grounds:

  • Termination due to justified reason, which means a subjective reason such as a less serious breach of contractual obligations or redundancy. In this case the contract terminates with notice.
  • Termination due to just cause, which means a serious breach of trust or serious violation of the employment contract between the parties of the employment contract. If the termination is due to just cause, there is no need of notice and the contract will be terminated immediately.

When notice is needed, it must be notified to the other party in writing, detailing the reason of dismissal.

In cases that labour court deems the termination as unfair, the employer must either reinstate the employee or pay additional compensation.

Notice is required when the employee is dismissed due to justified reasons unless they are still under their probation period. Employees resigning are also required to give notice. The notice period is governed by the collective bargaining agreements and vary depending to enrolment level, category and seniority.

The TFR (“Trattamento di Fine Rapporto”) is the Italian severance pay. Every employer is obliged to set a side this amount and it will be paid to the employee within 6 months of leaving the company. The TFR is calculated according to the employee’s gross annual salary.

Payroll Taxes

Italy does not charge a payroll tax, but they do require a flat corporate tax rate of 27.5%.

The amount of the contribution to the employee’s pension scheme is determined as a percentage of their gross salary. Employer contributions stand on approximately 33% of the employee’s gross salary, and employee contributions are 9.19%.

Social security contributions in Italy are made by both the employer and the employee. The rate of contributions depending on the category of the employee and their seniority and vary around 30% for employer and 10% for employee.

Employee Payroll Taxes

Taxable Income (EUR)

Tax rate on excess

Mandatory Employee benefits

  • Every employee is entitled to 4 weeks paid vacation.
  • The minimum amount of leave may increase from 4 weeks according to applicable NCBA.
  • Untaken vacation days may be carried over to the next year although must be used within 18 months of the end of the accrual year.
  • Employees are entitled to paid sick leave and can be absent from work due to sickness or injuries up to 180 a year.
  • The first 3 days are paid by the employer.
  • From the 4th day, social security covers the sick day and the rate paid is depending on the amount of days absent.
  • There are 12 bank or public holidays in Italy.
  • Maternity leave in Italy for mothers starts 2 months prior the planned date of birth and end 3 months following the birth.
  • During their leave, the employee is entitled to 80% daily allowance.
  • At the end of the maternity leave, the employee has the right to get back to the same job she left with the same or better conditions.
  • The father is also entitled to Paternity leave, 5-7 days which can be taken separately within 5 months of the child’s birth.

Specific Employee Benefits and Industry Benchmarks

Most employers grant employees additional paid leave days, which amount to 5 annual weeks yearly.

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