Employment Law in Italy

Contracts

Italy has several different types of employment contracts, which must contain certain details per Italian law.

• Indefinite contract: The most general contract in Italy, an indefinite contract has no ending date.
• Term contract: A term contract is for less than 12 months but can be extended for another 12 months if the employer can show they have a need such as filling a temporary role unrelated to ordinary business.
• Agency contract: A contract signed by an agency, a worker, and its employer is called an agency contract and can be for a fixed or indefinite term.
• Intermittent contract: If an employee is working on and off for an organization over an indefinite or fixed term, an intermittent contract is used.
• Apprenticeship contract: Used when employing trainees, these contracts are usually for those who are using the apprenticeship to obtain a degree (often called "interns" in other parts of the world).

Employment contracts must contain certain information per Italian law. This includes (but is not limited to): 

• The duration of employment
• The length of any probationary period
• The amount of paid leave
• The predominant place of work
• The grading, level, and job title 

To ensure you have all of the information needed in an Italian employment contract, contact an expert like Safeguard Global, who can help advise you on compliant and competitive contracts and even work as your employment partner in Italy, taking on the legal risk for hiring.

Termination and notice periods

Italy has laws governing when an employee can be terminated. Broadly, employers can only dismiss a worker if: 

• Their fixed-term contract or apprenticeship has come to an end.
• They have failed to pass a probationary period.
• They are found guilty of misconduct, which may or may not require a notice period depending on the collective agreement and how great the breach of contract.
• There is a justified reason such as a company restructure or decrease in production. 

Employees are entitled to severance pay, known as Trattamento di Fine Rapporto (TFR), which accumulates annually and is payable upon termination. There is no statutory gratuity payment in Italy; however, additional compensation may be provided based on employment contracts or collective agreements. As your Employer of Record (EOR) in Italy, we can assist you in managing employee terminations by providing legal guidance and a personalized process to ensure compliance with labor laws and minimize legal risks.

Probation periods

In Italy, probation periods are indirectly addressed in local law, usually lasting up to six months in the private sector, and similar durations apply in government positions, as determined by collective agreements.

Working hours and overtime

The standard working week in Italy typically consists of 40 hours, spread across five days, with a legal maximum of 13 hours per day and 48 hours per week on average, including overtime, calculated over a reference period of four months. Employees are entitled to 11 consecutive hours of rest between working days and at least one day off per week, typically including Sunday.

Any work beyond the standard working time is considered overtime. Italian law limits overtime to 250 hours per year, unless otherwise specified by collective agreements. Overtime compensation is determined by collective bargaining agreements and may include higher pay rates or compensatory rest periods.

Taxes

In Italy, withholding tax is known as Imposta sul Reddito delle Persone Fisiche (IRPEF) and is deducted by employers before paying salaries to employees. Employers must deduct IRPEF from employee salaries based on applicable income tax rates and submit it to the Italian Revenue Agency (Agenzia delle Entrate).

Employer payroll contributions

Italy’s social security system requires employer contributions that are dependent on the total number of employees, and these contributions cover pensions, medical care, disability insurance, and gratuity payments. In addition, workers’ compensation is financed by contributions from state governments, employers, and employees.