Italy Labour Laws: Key Regulations & Rights

Italy’s employment landscape is defined by intricate labour laws ensuring fair rules and protections for workers. These laws cover various aspects of employment, including job security, workplace environment, and workers’ rights.

Understanding Italy’s employment laws, including labour codes, is crucial for businesses aiming to thrive here.

Employment Contracts and Worker Rights

Proper employment contracts safeguard both employer and employee interests, contributing to job security and defining obligations. Italian labour laws differentiate between employees and freelance workers, providing rights and protections specifically for those under employment contracts. The sections below about hours, pay, benefits, and other protections assume that the worker is an employee under contract. Employees benefit from clear terms and have the right to negotiate better conditions if needed. 

There are several kinds of contracts recognised under the labour laws in Italy: 

• Indefinite contracts with no expiration date
• Term contracts of 12-24 months, when employers have:
  
  • Temporary extraordinary needs
  • Short-term replacement needs
  • Temporary increases in workload
• Agency contracts (indefinite or fixed)
• Intermittent contracts (at workers’ discretion)
• Apprenticeship contracts, of three types:
  
  • Vocational qualification only
  • Educational or research-oriented
  • Vocational certification and diploma

Note that workers classified as freelancers may be considered employees in the eyes of the Italian government if the company exerts control over how work is done.

Working Hours, Overtime, and Leave Entitlements

In Italy, as in many other places, the standard work week is 40 hours. More specifically, a full-time employee’s average work week must be about 40 hours, with CBAs sometimes allowing for slightly more or less depending on the position. However, the maximum allowed workload must not exceed 48 hours weekly, including overtime, to comply with labour laws. 

Just as there is no legally mandated minimum wage in Italy, there is no standard overtime rate. Overtime hours must be paid at a higher rate than regular work hours; many companies start at about 10% or 15% more, but CBAs typically determine the exact rate in a profession.

Italian labour law also specifies periods of rest, within the working week and in mandated annual leave. Within a regular work week, Italian workers are entitled to 11 consecutive hours of rest every 24 hours, with 24 consecutive hours (including Sunday) in between weeks. These provisions highlight the importance of balance between work responsibilities and personal life. 

And, with respect to paid leave, Italian labour law entitles workers to four weeks per year. Two of these weeks must be taken consecutively within the year in which they are earned, but employers do enjoy some control over when employees can schedule their breaks. Flexibility in scheduling helps employers manage their workforce effectively. 

Payroll and Minimum Wage Compliance

Unlike many other countries in the EU and elsewhere, Italy does not have a mandatory minimum wage. Instead, pay minimums are negotiated in collective bargaining agreements (CBAs). However, most workers in Italy can expect to be paid at least €7 per hour. And there is a movement to implement a €11/hour minimum wage currently being considered.

However, there are other Italy payroll compliance issues to be aware of. To start with, companies need to register with the Istituto Nazionale Previdenza Sociale (INPS) to be official employers. This ensures they can contribute to social security funding. To avoid penalties, companies must maintain compliance with these labour regulations. 

Employee Benefits and Social Security Contributions

Employer contributions to Italy’s social security system cover the mandatory benefits they need to provide to workers. Employees should understand the conditions surrounding social security benefits and salary deductions. The total amount employers pay is approximately 30% of a given worker’s gross annual salary, which funds the National Pension Scheme and a variety of other benefits (unemployment, healthcare, sick time, parental leave, social mobility, etc.). Because of these contributions, understanding gross pay vs. net pay is crucial to ensure compliance with Italian regulations and to accurately budget for your workforce. 

Employers may elect to provide additional benefits above and beyond what is required, such as vouchers or credits for employee transportation or food, or supplemental health coverage.

Termination, Severance, and Employee Protections

Finally, global employers need to be aware of why and how they can terminate a worker in Italy, as laws regarding protection and reinstatement can vary widely across countries.

Italian labour laws recognise three legitimate grounds for terminating an employee:

• For just cause – When a material breach of contract or other event causes a legitimately irreparable break in the relationship between employee and employer.

• For a justified subjective reason – When there’s a material breach of contract, with less serious impact to either or both parties than in cases where just cause applies.

• For a justified objective reason – When there’s a legitimate reason an employee’s position or division is no longer needed (i.e., a company closure or restructuring).

Aside from fixed-term contracts, notice is only needed for justified subjective or objective reasons. Notice periods are determined by CBAs; there is no legally mandated period. Having clear rules and conditions mitigates disputes over contract obligations. 

All employees in Italy are entitled to severance pay in the form of Trattamento di Fine Rapporto (TFR). About 7% of employees’ gross salaries are to be set aside and paid out in lump sums at the end of their employment period, irrespective of the means of their termination.

Ensuring Compliance with Italy Employment Laws

Global employers targeting the Italian labour market need to be aware of the various labour laws governing employee contracts, working hours, payroll, and termination. Doing payroll in Italy can be especially challenging due to the country’s complex regulations and strict compliance requirements. Partnering with an Employer of Record (EOR) is one of the best ways to ensure seamless long-term compliance.

An EOR solution helps your company navigate complex regulatory requirements, manage payroll accurately, and avoid potential legal pitfalls in Italy and beyond. Effective management ensures that legal obligations towards employees are fulfilled. Omnipresent provides EOR and other services to international employers seeking to expand their horizons and hire the best workers the world has to offer.

We’ll help you get started in Italy or any country you’re looking to hire from, building a diverse and powerful global team.