Employer of Record (EOR) Italy - Hire and Pay Employees and Contractors with a Global PEO | Employer of Record (EOR)

An Employer of Record (EOR) in Italy is a company that takes on the responsibility of being the legal employer for a worker. This includes managing payroll, benefits, and other employment-related tasks on behalf of the worker's actual employer.

Discover the key considerations and essential details you should be aware of before you hire your remote team in Italy.

Facts About Italy’s Innovation & Startup Ecosystem

A Rapidly Growing Startup Ecosystem

As of 2024, Italy’s startup ecosystem is valued at $60 billion, reflecting strong momentum within the broader European tech landscape. While still catching up to more mature hubs, Italy is progressing steadily—currently at the stage where Spain was 3–4 years ago and France 8 years ago.

Global Ranking & Key Cities

Italy ranks 28th globally in the startup ecosystem index and features 32 cities in the global top 1000.

Milan leads as the country's top startup hub, especially in fintech, fashion tech, and enterprise SaaS.
Turin, Bologna, Rome, and Naples are also emerging with strengths in AI, aerospace, deep tech, and creative industries.

Innovation Hubs & Government Support

Milan's PoliHub and Impact Hub Milano are among the leading accelerators.
Programs like Italia Startup Visa and Startup Hub streamline founder immigration and residence permits.
The European FS Tech Hub and ICE Bocconi are positioning Lombardy as a fintech and digital economy powerhouse.

University Spin-Offs & AI Integration

University spin-outs are gaining traction, now valued at over $2 billion, though commercialization still lags behind the EU average.

The seed-to-Series A graduation rate in Italy is 18%, below the EU average of 24%.

One of the most promising areas is the application of artificial intelligence integrated into the physical world, set to transform industries such as:

Biotech
Healthcare
Defence
Manufacturing

As the e-commerce sector begins to cool, investor attention is shifting to:

SaaS startups offering B2B automation and infrastructure tools
Manufacturing tech startups, especially those using AI, IoT, and robotics

Italy is particularly well-positioned here, being the third-largest exporter of manufactured goods in Europe.

Supercomputing & Deep Tech Infrastructure

Italy is home to Leonardo, the pre-exascale supercomputer located in Bologna, ranking:

#1 in Europe
#4 globally in computing capacity

Housed in the Big Data Technopole, Leonardo supports research and industrial applications in AI, bioengineering, medicine, climate modeling, and more.

Challenges

Only 8% of Italian companies use AI, one of the lowest rates in the EU. Digital skills are also below average — only 45.8% of Italians have basic digital abilities, compared to the EU average of 55.5%.

Employment Contracts in Italy

Minimum Requirements

Employment contracts in Italy are governed by Legislative Decree No. 152 of 26 May 1997, which implements EU Directive 91/533, and was most recently updated by Legislative Decree No. 104 of 27 June 2022.

Under these laws, all employers must provide clear written information before the employee starts work — either via a formal employment contract or an official hiring notice.

The contract must include:

Parties to the agreement
Workplace location
Start date and trial period (if any)
End date (for fixed-term contracts)
Salary, payment frequency, and benefits
Working hours and paid leave entitlement
Job title and employment category (per Civil Code)
Termination notice terms for both employer and employee

Additional information, like the applicable collective bargaining agreement (CBA), may be provided within one month. It’s now acceptable to share CBAs via the company website.

Fixed-Term vs Open-Ended Contracts

Open-ended contracts (permanent roles) are the default type of employment.
Fixed-term contracts are allowed:
- Up to 12 months without any specific justification
- Up to 24 months only if supported by:
  - Collective agreements
  - Documented business or organizational needs (until 30 April 2024)
  - Employee replacement

If a fixed-term contract exceeds 12 months without a valid reason, it is automatically converted into a permanent contract.

Restrictions on Fixed-Term Contracts

Fixed-term hiring is not allowed:

To replace employees on strike
In departments where similar workers were laid off in the last 6 months
Where similar employees are suspended
If the employer has failed to conduct workplace risk assessments (under Legislative Decree No. 81/2008)

Equal Treatment

Fixed-term employees are entitled to the same rights and compensation as permanent employees unless differences are objectively justified.

Employment Laws in Italy

Minimum wages

Italy does not have a statutory national minimum wage. Instead, wages are generally set by collective bargaining agreements (CBAs), which vary by sector and job type.

However, to give a general idea:

The lowest monthly wages typically range between €800 and €1,100 (gross), depending on the industry and region.

CBAs play a key role in determining minimum pay, working hours, benefits, and conditions — and are legally binding for employers in those sectors.

Working hours

In Italy, full-time work typically means 40 hours per week, unless a collective agreement (CBA) sets a lower limit. Part-time work involves fewer hours and can be arranged as shorter hours each day (horizontal) or full shifts on select days (vertical). While the standard weekly limit is 40 hours, total working time including overtime must not exceed 48 hours per week on average, calculated over a 4-month period. This averaging period can be extended to 6 or 12 months for technical or organizational reasons, if allowed by CBAs.

Rest Periods

Daily rest: Minimum 11 consecutive hours in every 24-hour period.
- Implies a maximum of 13 hours worked per day.
- Rest time can be adjusted under CBAs, but equivalent compensatory rest must be provided.
Breaks: Required when daily working time exceeds 6 hours.
- Break duration is defined by CBAs, but must be at least 10 minutes.
- Breaks are not counted as working hours unless stated otherwise.
Weekly rest: Minimum 24 consecutive hours every 7 days, usually on Sunday.
- Combined with daily rest, this equals 35 consecutive hours of rest.
- Can be averaged over 14 days, with exceptions allowed for certain jobs or industries.

Proposed 32-Hour Workweek Law (2025)

A proposed law aims to reduce the standard work week in Italy from 40 to 32 hours, with no reduction in salary. The bill encourages collective agreements to adopt 4-day workweeks (8 hours/day), along with investment in employee training and innovation. However, the bill has stalled in Parliament due to disagreements over how to finance it, especially amid ongoing industrial slowdown. For now, it remains under review by the Labor Commission.

Overtime Pay in Italy

In Italy, overtime must be paid with wage increases defined by the relevant national collective labor agreement (CCNL). The exact rate varies by sector and agreement, but here's an example from the CCNL Commercio:

15% increase for hours between the 41st and 48th hour of the week
20% increase for hours beyond 48 hours per week
30% increase for overtime on Sundays or public holidays
50% increase for overtime during night hours (10 PM to 6 AM)

Compensatory Rest

Instead of extra pay, workers may receive time off (under a "time bank" system), as allowed by collective bargaining agreements.

Payment Timeline

Overtime is usually paid in the same month’s paycheck
It may also be paid as a monthly lump sum, but must reflect actual hours worked
Upon resignation or end of contract, all unpaid overtime must be paid with the final salary

Penalties for Non-compliance

If an employer fails to follow the CCNL overtime rules, they may face administrative fines between €25 and €1,032, depending on the number of workers affected and duration of the violation.

Payroll cycle

Italy follows a monthly payroll cycle, with salaries typically paid on the 27th of each month. However, the exact payday may vary slightly based on the company’s internal policy or any applicable collective labor agreement (CCNL).

13th and 14th Month Salaries in Italy

In Italy, it’s common for employees to receive extra monthly salary payments beyond their standard 12-month compensation.

The 13th-month salary (known as "tredicesima") is mandatory and typically paid in December, just before Christmas. It acts as a form of deferred compensation to help employees manage end-of-year expenses.
In certain sectors—such as manufacturing, banking, and public services—employees may also be entitled to a 14th-month salary, usually paid in June or July. This is governed by collective bargaining agreements (CCNLs).

For new employees, both the 13th- and 14th-month salaries are prorated based on how many months they’ve worked during the year.

Probation period

Employment contracts in Italy may include a probationary period (or "trial period") allowing both employer and employee to assess whether to continue the employment relationship.

The duration of this trial period depends on the applicable national collective bargaining agreement (NCBA) and varies based on the employee’s role (executive, middle-manager, white-collar, or blue-collar).
According to Legislative Decree no. 104 of 27 June 2022, the trial period cannot exceed 6 months.
Section 2096 of the Italian Civil Code requires the probationary period to be in written form and signed by both parties. Without this, the trial period is invalid and considered never to have existed. This written agreement must be signed at the time the contract is concluded or before work begins.
During the trial period, either party can terminate the contract without notice or compensation.

Notice Period

When an open-ended (indefinite) contract ends—except in cases of “just cause” (a serious reason preventing continuation of employment as defined in Section 2119 of the Civil Code)—both employer and employee must respect a notice period.

The length of notice depends on the employee’s length of service and professional level, as specified by the applicable NCBA.
If the employer dismisses the employee, they can choose to exempt the employee from working during the notice period by paying an indemnity in lieu of notice.
If the employee resigns and does not respect the notice period (except when resigning for just cause), the employer may withhold compensation equivalent to the notice period from any payments due to the employee after termination.

Severance Pay

In Italy, all employees are entitled to severance pay, called TFR (Trattamento di Fine Rapporto), when their job ends—no matter the reason. TFR is a form of deferred pay and is about 7.4% of the total salary earned during the employment period.

Since 2007, employees can choose what happens to their TFR:

If the company has fewer than 50 employees, the TFR can either stay with the employer or be sent to a pension fund chosen by the employee.
If the company has 50 or more employees, and the employee doesn't choose a fund, the TFR is automatically sent to a government-managed fund called the Fondo di Tesoreria, run by INPS.

If the employee doesn’t make a decision, the TFR goes to a default pension fund based on collective agreements.

At the end of employment, the employer must pay:

The TFR amount,
Any unpaid salary, and
Unused vacation or leave.

These are usually paid with the final paycheck. If not paid, the employee has five years to claim them.

Personal Income Tax in Italy – 2025

In 2025, Italy will continue with a progressive income tax system, applying three tax brackets based on total annual income after allowable deductions.

Income Tax Rates for 2025

The rates remain the same as in 2024:

23% on income up to €28,000
35% on income between €28,001 and €50,000
43% on income above €50,000

These rates apply to taxable income, which is your gross income minus deductions, such as social security contributions and other eligible expenses.

Tax Deductions for High Earners

From 2025, individuals earning over €75,000 annually may qualify for the following deductions:

Up to €14,000 for incomes between €75,000 and €100,000
Up to €8,000 for incomes exceeding €100,000

Additional deductions may apply based on the number of children or if dependents have disabilities.

Nontaxable Bonus for Low-Income Earners

Employees earning €20,000 or less per year are eligible for a nontaxable bonus, calculated as a percentage of their total income.
Employees with income above €20,000 may still receive a prorated deduction, depending on the number of days worked.

Company Vehicles (Mixed Use)

For company vehicles granted under contracts signed from 1 January 2025, the taxable benefit is calculated based on vehicle type and usage:

10% of the ACI-defined per-km cost for electric vehicles
20% for hybrid or plug-in vehicles
50% for petrol or diesel vehicles

The calculation assumes an annual mileage of 15,000 km, as per guidelines from the Automobile Club of Italy (ACI).

Cross-Border Workers

Under current transitional rules:

Frontier workers (e.g., those living in Italy but working in Switzerland) can perform up to 25% of their work remotely without losing their frontier status.
Italian residents working abroad can still benefit from the Notional Remuneration tax method, even if they return to Italy once a week.

Work Permit in Italy

When hiring or relocating foreign talent to Italy, companies must comply with Italian immigration and employment laws. Working with an Employer of Record (EOR) simplifies this process, especially when managing international assignments or directly hiring foreign nationals in Italy.

When Are Work Permits Needed?

Work permits are required if a foreign national who is not an EU/EEA or Swiss citizen is going to work and reside in Italy. The type of permit and the process depend on:

The employee’s nationality,
Whether the worker is being relocated (seconded) or hired locally,
The duration and nature of the assignment.

1. Non-EU/EEA Nationals

Non-EU nationals must obtain:

A “nulla osta” (work authorization) from the Italian immigration office,
A work visa from the Italian consulate in their home country,
A residence permit (permesso di soggiorno) within 8 days of arriving in Italy.

The EOR can act as the legal sponsor, handle all administrative tasks, and employ the worker compliantly under Italian law.

2. EU/EEA and Swiss Nationals

EU/EEA and Swiss citizens do not need a work permit or visa to live and work in Italy. However:

They must register with the local municipality if staying more than 90 days.
The EOR ensures social security registration, tax compliance, and proper onboarding.

3. Posted Workers (Secondments)

If a foreign company sends its employee temporarily to work in Italy, the worker may qualify as a posted worker (distacco). In such cases:

A posting declaration must be submitted to the Italian Ministry of Labour.
The employee may remain on their home country contract, but must still follow Italian labor standards (e.g., minimum wage, rest periods, workplace safety).
For EU postings, an A1 certificate allows social security coverage to remain in the home country.
The EOR can ensure that notification rules and payroll compliance are fully met during the assignment.

4. EOR's Role in Work Permit Compliance

An Employer of Record in Italy supports international employment by:

Sponsoring visas and managing immigration documentation,
Registering employees with INPS (social security) and tax authorities,
Ensuring payroll compliance and adherence to Italian labor laws,
Navigating the complex posting rules or transitioning seconded workers to local contracts.

Employee Benefits in Italy

Mandatory Employee Benefits in Italy

Healthcare

All employees are covered by the Italian National Health System (SSN), funded by contributions from both employers and employees.
Pension Contributions

Employees and employers contribute to the state pension system (INPS), which covers retirement, disability, and survivors’ benefits.
Workplace Injury Insurance

Employers must pay for mandatory work accident insurance (INAIL). This covers accidents and occupational diseases, with reimbursement possible if the employer is negligent.
Sickness Benefits
- Employers pay the first 3 sick days (up to 5 times/year).
- From day 4 to 21, SSN pays 50% of salary.
- After 21 days, benefits increase based on job type.
Sector-Specific Insurance

Some industries require additional insurance per collective agreements.

Supplementary Employee Benefits in Italy

When offering benefits in Italy, employers must follow national collective labor contracts that vary by sector and employee level. The two main sectors are Industrial and Commerce. Employee groups are divided into Executives, Middle Managers, Employees, and Blue-Collar Workers.

Industrial Sector

Executives
- Life Insurance: €200,000 for singles, €300,000 for families.
- Personal Accident Insurance: Coverage of 5x annual gross salary for death and 6x for permanent disability.
- Medical Insurance: Must enroll executives and their families in the FASI fund, which covers medical expenses.
- Long-Term Care: No employer obligation.
- Retirement: For companies with over 50 employees, employers pay severance (TFR) into a pension fund or INPS. Individual agreements are possible.
Middle Managers, Employees, Blue-Collar Workers
- No mandatory life, accident, medical, or long-term care insurance.
- Retirement rules are similar to executives regarding TFR and pension contributions.

Commerce Sector

Executives
- Must enroll in the Fondo Antonio Pastore, covering life insurance (amount varies with age and gender), permanent disability, long-term care, unemployment, and savings accounts.
- Personal accident insurance covers up to €150,000 salary; excess must be insured separately.
- Medical insurance through the FASDAC fund for executives and families.
- Retirement requires employer contributions of about 15.17% of annual gross salary (capped) into pension funds like Mario Negri, plus 1% employee contribution. TFR can be paid into the pension plan.
Middle Managers
- No mandatory life, accident, or long-term care insurance.
- Must be enrolled in the QUAS fund for medical expenses.
- Retirement contributions follow the same TFR/pension rules depending on company size.
Employees
- No mandatory supplementary insurance benefits.
- Retirement contributions are the same as middle managers.

Working with an Employer of Record (EOR) in Italy lets companies hire employees without setting up a local entity. The EOR handles all legal, payroll, tax, social security, and HR tasks, ensuring compliance with Italy’s complex labor laws. This simplifies hiring, reduces admin work, and lets companies focus on business. Italy’s strong manufacturing and tech sectors make EORs a fast, cost-effective way to expand.

Southern Europe: EOR Greece | EOR Italy | EOR Spain | EOR Portugal

Employer of Record (EOR) Italy - Hire and Pay Employees and Contractors with a Global PEO