Employment in Italy: fulfilments due by the employers

Any foreign employer willing to hire personnel in Italy is obliged to put in place several fulfilments that can be summarized as follows:

registering with the Italian labour authorities (I.e., INAIL, INPS and Local employment office);
submitting the mandatory telematic communication of hiring to the competent employment services (i.e. “centro per l’impiego”) before the start of the employment relationship;
running a monthly payroll in compliance with the law and to the chosen National collective bargaining agreement (“NCBA”), if any;
submitting monthly and annual reports to labour and social security authorities to declare salaries paid, taxes and social contributions withheld, etc.

As far as periodic fulfilments are concerned, the employer must consider some main statements that must be submitted to Italian authorities with the help of a payroll provider, concerning both social security contributions and tax declarations. All the above fulfilments are due regardless the employer is foreign – or Italian – based and also when the employment relationship is not governed by Italian law – in principle, it is sufficient that the employment relationship takes place even partially in Italy to make them mandatory. To observe all the above fulfilments, it must be considered that foreign employers willing to hire personnel in Italy are obliged to an additional and preemptive fulfilment, that is the application for the tax code (i.e. “codice fiscale”) for both the company and its legal representative. Please, furthermore consider that fines apply in case of late or omitted of the above registrations or reporting. Should the fulfilments at issue be omitted, a substantial fine for undeclared work applies in case of assessment by labour authorities (so called “maxi sanzione”). Finally, under certain conditions, the employment of employees in Italy may involve a risk of assessment of a permanent establishment from a corporate tax standpoint. To this purpose, referring to a corporate tax expert is recommendable.

Employment regulation: law and NCBA

A) Italian Law and NCBA Basic rules regarding rights and obligations of employer-employee relationship in Italy can be found in the Constitution, in the Italian Civil Code (“Codice Civile”), which includes a special section on employment matters, and in the Workers’ Statute (“Statuto dei Lavoratori”), i.e., Law no. 300/1970 as modified by subsequent legislation. Terms and conditions of employment are also governed by NCBA(s) signed periodically between the trade unions and the employers’ associations of the same sector. It is however worth mentioning that the NCBA(s) are not statutory sources of law but are private contracts between trade unions and employers’ associations and are not legally binding for all employers. In principle, they are not binding, as employers - with the exception of those that are members of the employers’ associations – are free to decide whether to have the employment contracts governed by national collective agreements, or not. Notwithstanding the above, the application of a NCBA has the advantage of establishing a set of common rules (e.g., notice period, length of the probationary period, sickness leave and working hours etc.) for companies operating in the same industry, e.g., trade, credit, metal industry, chemical industry, etc. Moreover, unanimous case law identifies the treatment provided by the collective agreement entered into for a specific industry as the minimum and mandatory standard treatment applicable to the employees concerned. B) Professional categories and classification of the employees According to Italian Law, the employees are divided in the following four professional categories (from the highest to the lowest):

Executives (“Dirigenti”).
Middle managers (“Quadri”);
White-collar employees (“Impiegati”) and
Blue-collar employees (“Operai”).

Moreover, according to NCBA(s) provisions, each White-Collar and Blue-Collar employee is enrolled into a specific contractual level, depending on the duties carried out and the grade of expertise. Specific treatments are provided for Executives (“Dirigenti”) by the NCBA(s) for Executives which differ from the NCBA(s) applicable to the employees enrolled in the other professional categories. Main differences concern the regulation of holidays and paid leaves, sickness and injury treatments, notice period and protections against dismissal. C) Employment conditions and “protected” events Before the employment relationship becomes definitive, the employee and employer may set a trial period (i.e. “periodo di prova”). The statutory maximum duration of trial periods is six months, but a shorter duration may be provided for by the applicable NCBA. For fixed-term contracts, the trial period must be proportionate to the duration of the contract and the tasks to be performed. In the absence of more favorable provisions in collective agreements, the duration is set at one day of actual work for every fifteen calendar days of the contract, with specific minimums and maximums depending on the contract's length. A new trial period is not permitted if a fixed-term contract is renewed for the same duties. During the trial period, each party may freely terminate the employment relationship at any time, without any notice, obligation or payment of the relevant indemnity in lieu. As far as the economic treatments are concerned, Italian law does not give a statutory definition of “wages” and “salary”. According to Article 36 of the Italian Constitution, employees are entitled to receive a salary in proportion to the quality and quantity of their work and, in any case, enough to guarantee a decent lifestyle for themselves and their family. Minimum wages for each contractual level are usually set out by sector in the relevant national collective agreements. The minimum salary of the NCBA(s) is updated regularly (almost every two years). Apart from these minimum lower limits, the parties are free to determine the amount of salary. Under Italian law, remuneration is granted in thirteen monthly installments. The additional 13th instalment (“tredicesima”) is paid out each year along with the December salary. Some NCBA(s) provide for a 14th monthly installment, normally paid in June. For income tax and social security purposes, any compensation granted to the employee within the scope of the employment relationship, including compensation in kind, is considered wages (this does not include a few limited exceptions, such as expenses reimbursement). In addition to the above, Italian Law provides for some “protected” periods during which the work activity is suspended due to reasons such as sickness, injuries at work, marriage, maternity, paternity, etc. In this respect, specific leaves are provided for by law and NCBA provisions, and the relevant indemnities due to the employees are quantified accordingly. In most cases, INPS provides the employee with a leave indemnity, to which the employer contributes to a certain percentage, depending on the case.

Social security and employment costs

The payment of social security contribution is one of the duties of any company employing workers in Italy. Indeed, employees are currently entitled to a 33% pension contribution rate, plus a further contribution rate to fund “protected events” such as illness, maternity and unemployment that is generally referred to as “minor contributions”. In principle, about 1/3 of the global contribution percentage is charged on the employee and directly withheld by the employer through the monthly payslip, whereas the remaining 2/3 is borne by the employer. Moreover, it must be observed e pension contribution rate applies up to an annual income “cap” (i.e. “massimale contributivo”), which is determined yearly by INPS. For workers without contributions prior to 31 December 1995, this cap is updated annually based on the consumer price index. For the year 2026, this amount is estimated to be over EUR 122.295. In addition to social security contributions, the employer must bear further costs related to the employment, for instance:

the work accidents insurance (i.e. “INAIL”), whose cost depends on the employees’ gross salaries, the kind of activity carried out by the workforce and the related potential risks;
the payment of contributions due to complementary healthcare funds or private pension scheme that could be provided for by the applicable NCBA;
the severance indemnity payment (i.e. “trattamento di fine rapporto” or “TFR”, in Italian parlance) due to the employee upon the employment termination.

Transfer to Italy and relevant fulfilments due by the employees

EU regulations and Italian residency

In force of EU treaties, citizens of any Member State and their family may freely move and reside in Italy subject to some specific requirements. The right of residency is in fact recognized for those (i) who work in Italy, (ii) who are following a course of study and (iii) who have sufficient resources to stay in Italy and health insurance or other risk cover. EU citizens who have resided legally and continuously for five years in the Italian territory may be entitled to permanent residence. Any Italian employer who intends to establish a subordinate, fixed-term or open-ended, seasonal or domestic employment relationship with an EU worker has to follow the ordinary procedures provided for the employment of an Italian citizen. According to the principle of free movement, in order to be employed in our country, EU citizens must be in possession of (i) a valid identity document (e.g. identity card or passport) and (ii) the Italian tax code, which can be requested personally at the competent territorial office of the Italian Revenue Agency (i.e. “Agenzia delle Entrate”).

Extra-EU workers

As per Italian law, entrance in our country of extra-EU personnel due to reasons of subordinate employment takes place within the framework of labour entry quotas, as defined by Legislative Decree No. 286 of 1998 (also known as the “Italian Immigration Code”). Indeed, the number of extra-EU employees who may enter Italy regularly each year for work is subject to specific limits, depending on the provisions early stated by the so called “Flows Decree”. Otherwise, Article 27 et seq. of the Italian Immigration Code provides for the possibility of hiring extra-EU employees outside the labour entry quotas above illustrated regarding workers who are defined as “highly specialized”. This category of employees may be entitled to a special working visa, the so called “Blue Card”: in this regard, the hiring of extra-EU personnel by Italian employers is subject to several requirements on the part of the worker, such as a high education qualification and a high professional profile.

Employment

Employment in Italy: fulfilments due by the employers

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