Italy

Overview

Italy’s economy is the 3rd-largest in the Eurozone and the 12th-largest by GDP. In addition to its sizeable economy, Italy is one of the most influential countries in Europe as it is a key member of the Eurozone, European Union (EU), the G7, the OECD, and the G20. As a member of the European Union, Italy complies with various labor standards set by all EU nations.

Italy’s diversified economic growth is propelled by the consumer goods industry. GDP’s expenditure side includes 61% of household consumption, 19% of government expenditure, and 17% of the gross fixed capital formation. Exports of services and goods contribute to 30% of GDP while imports account for 27%, adding 3% to GDP.

Currency: Euro

Principal language: Italian

Government: The Parliamentary Republic with a multi-party system

Capital City: Rome

Major Cities: Rome, Milan, Naples, Turin, Palermo, Genoa

Employment Contracts

Employment contracts are required under the Italian law, but it is not mandatory that the contracts be in writing.

An employment contract can be executed for either a fixed term or an indefinite period. The maximum permissible duration of fixed-term contracts is 36 months. A maximum of five contract extensions is allowed only if the concerned employee agrees to it. The extension must be related to the same job, and the extension is agreed upon within the 36-month employment period.

Work/Time Regulations

Employees have a usual work schedule of 40 hours per week. Employers can’t ask employees to work more than 48 hours, including overtime during any 7 day period within an average period of several months or even a year. Employees can take breaks or rest periods of at least 10 minutes after working for 6 consecutive hours. They are also entitled to the rest periods of at least 11 consecutive hours every 24 hours, and a rest period of 24 consecutive hours every 7 working days.

Employers are required to provide minors a rest period of at least 2 consecutive days every week. Normally this rest period is given on Saturday and Sunday.

Collective labor agreements specify reasonable overtime rates. Employers are required to refer to their collective labor agreement to determine the applicable overtime rates.

Even if not mentioned, overtime hours can’t exceed 8 hours per week or 250 hours per year. Any violations can result in administrative penalties for the company.

Leave

Workers are entitled to 4 weeks of paid annual leave. 2 of these 4 weeks can be taken consecutively if an employee requests. Employers can ask their employees to take vacation leave at a particular time of the year depending on business requirements. Employees can’t opt for pay in lieu of annual leave.

Sick Leave
Collective labor agreements specify employees’ entitlement to sick leave. Employees are usually entitled to full pay during sick leave, partly from the National Social Security Institute and from the employer.

Maternity Leave
Pregnant women employees can take 5 months of maternity leave; 2 months before delivery and the remaining 3 months after delivery. During the mandatory rest period, the mother is entitled to 80% of her normal pay from the social security system.

Paternity Leave
Employees get mandatory paternity leave for a day and 2 additional days if the mother consents to share these days from her maternity leave.

During pregnancy or childbirth, if the mother dies or gets seriously ill, the father may take paternity leave equal to what the mother would have received in maternity leave, and the cost to be borne by the social security system.

Personal Leave
Employees are entitled to 15 days of paid personal leave at the time of their marriage and occasional days for familial responsibilities, including the death of a relative or the sickness of a child.

Education Leave
Employees who have worked with a company for at least 5 years can take a maximum of 11 months of either continuous or intermittent unpaid education leave to attend college or any other educational institute.

Military Service
Employers are required to protect their employees’ position during military service period and for 30 days after discharge. Employers are not liable to pay wages to the concerned employee during this period but must consider this period to calculate seniority.

Holidays

Italy grants the following 11 public holidays as paid leave for employees:

  • Jan. 1: New Year's Day
  • Jan. 6: Epiphany
  • Easter Monday
  • April 25: Liberation Day
  • May 1: Labor Day
  • June 2: Date of the Founding of the Republic
  • Aug. 15: Assumption Day
  • Nov. 1: All Saints' Day
  • Dec. 8: Feast of the Immaculate Conception
  • Dec. 25: Christmas Day
  • Dec. 26: St. Stephen's Day

Apart from these holidays, each region provides an extra holiday to honor its patron saint.

Workers are entitled to an additional day's pay if a public holiday falls on a Sunday or any other non-working day. Workers who work on a holiday are to be paid overtime.

Benefits

The retirement age in Italy is 66 years and 7 months for men and 65 years and 7 months for women in the private sector. Usually, an employee is required to make pension contributions for at least 20 years to be eligible to receive pension benefits.

The retirement age for all types of workers will be set at 67 by 2022.

The INPS (Istituto Nazionale della Previdenza Sociale) manages the administration of pensions from other agencies for certain categories of workers such as show business employees, civil servants, and sports professionals. These agencies, along with INPS, are known as the National Institute of Social Security and Assistance for Entertainment Workers or Ente Nazionale di Previdenza e Assistenza per i Lavoratori dello Spettacolo, ENPALS for show business employees and sports professionals, and the National Insurance Institute for Employees of Public Administration for civil servants or Istituto Nazionale di Previdenza per i Dipendenti dell'Amministrazione Pubblica, INPDAP. The National Insurance Institute of Italian Journalists (Istituto Nazionale di Previdenza dei Giornalisti Italiani, INPGI), an agency that provides pensions to journalists remains a separate entity.

How GPS can Help

With our Global PEO/Employer of Record services, companies can expand into Italy and hire their employees without having to establish a branch office or subsidiary in Italy.

  • Your candidate is hired via our Italy PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
  • Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Italy laws.
  • Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
  • With no contractor risks, pass on the compliance burden to Global PEO Services.

Spin Off/M&A Support

  • Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.

24/7 Support in 100+ Countries

  • Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
  • We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.

Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and managements. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcounts.

Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Lean more about our end-to-end international expansion services.