Italy

Overview

When it comes to a global talent pool, Italy is a lucrative choice for many employers. 

As an EU member and due to its strategic position between countries like France, Switzerland, and Austria, entering the Italian market is a gateway to a larger economy. 

The country has a robust market driven by its 61 million population.

Italy is a manufacturing hub, where the most profitable investments occur internationally in sectors like machinery, fashion, automation, etc. 

Any company that wants to expand into the Italian market must follow Italian labor law and work on creating contractual employment agreements. 

Navigating these contracts can often require professional assistance, and you can always partner with an EOR in Italy.

Skuad’s Italy EOR (Employer Of Record) solution helps your business expand into Italy without setting up an entity. 

Its global HR platform makes onboarding remote teams and managing their payrolls and other related tasks seamless.

Skuad’s international network helps you grow your business in the country by adhering to all the local laws. 

Italy’s skilled population and robust economy make it an ideal destination for businesses seeking to grow into new markets. 

Looking to know how to hire and pay remote employees in Italy?

With Skuad’s experience in the Italian industry, you can now get your team in Italy up and running faster than ever before.

Before you hire employees in Italy without setting up an entity, you also need a reliable and accurate cost calculator, like the one offered by Skuad. 

Cost calculation here is simple, quick, and easy—just fill in the country details and estimated gross annual salary. You'll get your estimate in a heartbeat!

Italy at a glance (Facts about country)

• Population: 59.289,343 
• Currency: Euro 
• Capital city: Rome
• Languages spoken: Italian, French‍
• GDP: USD 2,049.74billion

Employment in Italy

The Italian labor market is closely regulated and disproportionately prejudiced towards employee rights, making it difficult to navigate. 

Employers must comply with a plethora of regulatory provisions based on the form of employee and contract in question, and compliance with Italian labor and work legislation is often an expensive process. 

However, the global economic crisis has compelled Italian legislators to support fiscal, social, and legal changes to improve labor market flexibility in Italy.

In Italy, employee contracts of employment and labor associations are governed (in order of precedence) by:

• The Italian Constitution
• The Civil Code Employment and labor matters governed under Section III (‘On the employment relationship’), Articles 2094-2134
• Italy has comprehensive employment and labor legislation established by the Italian parliament.
• Regulations assigned by officials other than the parliament and government
• Italian Collective Bargaining Agreements
• Custom and practice for issues not governed by statutory provisions or by mutual agreements. Customs are more favorable to employees over statutory provisions but do not prevail over individual employment agreements.

Hire Employees in Italy

The recruitment process in Italy is straightforward. Once the hiring needs are identified, and the job description is announced, employers must either use an internal team or partner agency to find suitable talent for the role. 

Professional social networking apps such as LinkedIn are immensely popular with recruiters for finding the best talent for every role.

Some other well-known websites include:

• Indeed
• Glassdoor
• Info jobs
• The Local

Hiring through an employment website, social media posts or advertisements in Italy has its advantages, such as the availability of many prospective candidates from a diverse set of experience pools. 

It takes away the risk of not finding the right candidate or a shortage of talent in the job pool. 

On the flip side, organizations may have to go through a monotonous procedure of filtering several applications and selecting prospective candidates most suitable for the job. 

This is usually a challenging process, especially during initial screening.

Apps like LinkedIn and Monster still have an inadequate influence in Italy and cannot be the sole platform to source talent, especially if you need talented and experienced professionals.

Steps to hire in Italy

Italy follows a straightforward procedure while hiring candidates:

• Candidates who fulfill all the criteria mentioned in the job description go through a primary background check in Italy or an employment screening before being shortlisted. 
• The shortlisted candidates are interviewed through a series of panels, like technical rounds and HR rounds, to better evaluate their aptitude for the job and analyze if they are a perfect match for the company and its culture.
• After a final evaluation, the most suitable candidates are selected and offered a letter of intent or employment letter. Finally, upon successful negotiation and signing, the candidates are on board as the company's rightful employees.

You may either hire employees by setting up an entity, or as a simpler alternative use an EOR, like Skuad.

Set up an entity in Italy

Italy, a country steeped in history and renowned for its cultural vibrancy, presents a captivating landscape for establishing a business entity.  

Its rich heritage, strong infrastructure, and strategic location within Europe offer immense potential for growth and success. 

Notably, Italy's workforce is known for its dedication and expertise in various fields, making it attractive for companies seeking skilled professionals internationally.

However, like any other country, Italy presents its own set of challenges when hiring employees. Navigating the intricacies of Italian bureaucracy, understanding the nuances of labor laws, and potentially dealing with economic fluctuations can be complex.

Here are a few things to keep in mind before you hire remote employees in Italy:

Pros

• Prime location within Europe for accessing major markets.
• Rich cultural heritage and tourism draw business opportunities.
• Highly skilled workforce in various fields.
• Benefits of EU membership and access to the single market.
• Government support for businesses through incentives and programs.
• Well-developed infrastructure for efficient operations.
• Globally recognized food and wine industry presents potential.
• Strong presence in creative industries like fashion and design.
• High quality of life for individuals and businesses.

Cons

• Complex bureaucratic processes can be time-consuming.
• Protective labor laws can lead to higher labor costs.
• Competitive business environment requiring strong strategies.
• Language barriers may exist, though English is used in business.

Such issues can be easily taken care of by choosing an efficient EOR. Among all the Italy employer of record companies, Skuad can be your perfect match. 

Skuad simplifies everything from hiring to Italy payroll, and much more. 

A foreign company seeking a work permit for its employees in Italy must first establish its Italian subsidiary/branch/representative office. 

After that, this Italian entity can apply for a work permit. 

The entire procedure consists of three steps: 

1. Authorization requests are made by the employers to the Immigration Single Desk (ISD).
2. Visa requests are made by prospective employees in their home country.
3. The work permit is requested and delivered.

These steps require a thorough knowledge of the entire process and an understanding of the workings of the local authorities to avoid any reworks in the application process. 

Companies providing EOR solutions, such as Skuad, can greatly help.

Talk to us now to learn more about our EOR solutions.

Using an Employer of Record (EOR) in Italy

Hiring talented employees in a short span is not an easy task. 

Partnering with an Employer of Record like Skuad in Italy is your best option, giving your organization enough time to focus on other aspects of international expansions like project management and inventory management. 

The EOR takes care of all the compliance and legal issues while helping you ramp up hiring using their knowledge of domestic employment practices and virtual onboarding tools. 

The best EORs also facilitate the e-signing of documents to enable faster onboarding.

Not only does Skuad help in rapid recruitment, but it assists in other Human Resources-related functions such as: 

• Payroll management 
• Time management
• Expense management
• Security and Compliance
• Tax filing

These features make up a faster, affordable, and more seamless experience for the organization and the candidate.

Skuad and its local partners also handle all legal procedures on your behalf as an Employer of Record. 

As a local third-party organization, we become the legal employer of your new talent as well, while you continue to manage the employee's day-to-day operations. 

We make certain that your new employee meets all local legal requirements, including the payment of taxes and social security benefits. 

This enables you to satisfy your worldwide employment demands with utmost ease while hiring individuals in countries where you do not have a legal company. 

Learn more about Skuad’s Employer of Record solutions here.

What is an EOR in Italy

An Employer of Record is the perfect way to access the Italian workspace without setting up a subsidiary unit. It has many benefits, including eliminating the need to create a separate entity, opening up time and money to concentrate on other facets of growth plans, and simplifying legal compliance. 

With Skuad’s experience, company expansion has become a cost-saving and quicker process. 

You don't have to create a separate team responsible for all workforce management processes. 

Although companies may set up an organization to engage their personnel, the management of employees, payroll management, and navigating regulatory obstacles can be time-consuming. 

Why wait? Book a demo to leverage Skuad’s solutions for your business.

Outsourcing employment through an EOR in Italy

Working with an Employer of Record will save you time in the whole recruiting process, including payroll processing, tax management, and similar processes.

Some additional benefits of working with a reputed EOR such as Skuad include tailor-made contracts, establishing all processes in compliance with local laws, easy amendment of existing contracts, and convenient e-signing of documents.

Onboarding & Agreements

So, how can an employer of record service in Italy proceed? Here’s a definitive overview: 

What is onboarding

Employee onboarding is a process in which new hires are familiarized with the company. This process includes introducing the new joiner to the team and making them aware of the company policies, and work culture.

After a successful onboarding, the new employees become aware of the organization’s expectations, like skills, dedication, communication, attitude, etc. This step is crucial as it makes the fresh hires feel welcome and important, thus ensuring higher employee retention.

Before moving on to the Italian onboarding process, let us see the types of employment agreements in Italy. 

Types of employment agreements

Whatever path you choose, you are not required to walk it alone. Employers of record firms that offer global employment solutions handle all legal concerns associated with recruiting overseas employees on your behalf. 

Talk to us if you want to know more about Skuad’s Employers of Record service in Italy.

How to successfully onboard employees in Italy

Onboarding in Italy requires a multifaceted approach that takes care of cultural nuances and legal requirements. 

Here is how you can plan the process of hiring and onboarding to get new employees acquainted with the new work culture in Italy:

• Conduct background research: Adhere to Italian privacy laws and verify education history, professional experience, and any other qualifications relevant to the role.

• Build relationships: Italian workplaces value strong interpersonal relationships. Encourage new hires to actively participate in team activities, social events, and coffee breaks to build rapport and foster a sense of belonging.

• Send offer letter: While not legally mandated, it is highly recommended that you provide a written offer letter in Italian. It serves as a clear, documented record of the employment terms and demonstrates professionalism.

• Completing necessary paperwork: Ensure all required legal agreements, including employment contracts, are drafted and signed according to Italian labor law.

• Provide welcome package: Provide a comprehensive welcome packet translated into Italian, outlining company policies, benefits, and expectations.

• Enroll them in benefits: Comply with Italian labor laws and enroll employees in mandatory benefits, including social security (INPS), health insurance (SSN), and paid vacation. Consider offering additional benefits, such as private health insurance, company-sponsored training programs, or other benefits as per company policy.

• Adding them to Italian Payroll regulations: Add the new recruitments to the Italian payroll.

• Register for a mentorship program: Pair new hires with experienced Italian colleagues who can guide them through company culture, navigate internal processes, and provide support.

• Localized training: Offer training programs tailored to the Italian workplace, including cultural sensitivity, legal compliance, and industry-specific knowledge relevant to the Italian market.

• Encourage team bonding: Organize team lunches, social events, and cultural outings to encourage interaction and help new hires build relationships with their colleagues.

• Open feedback: Build an environment where new hires feel comfortable providing feedback and asking questions.

Recognize that adjusting to a new work environment and culture takes time. Be patient and flexible in your approach, offering ongoing support throughout the onboarding process.

Onboarding Checklist

Here’s a comprehensive checklist for you, which ensures zero mistakes:

• Introducing the employee to the workplace, and their teams, with a welcome email.

• A welcome gift or a package can make them feel worthy and appreciated.

• A clear outline of their first week. This ensures clarity and outlines their journey.

• Assign a mentor who can be their guide and buddy. A mentor will give the new employee much-needed guidance, give them an office tour, and build connections with the team.

• An introduction of the stakeholders, which gives them an idea of who the points of contact are.

• Schedule a feedback session and a check-in plan so that the new hires can understand the expectations and share their issues.

Probation Period

Statutory probation in Italy is six months for Quadro and level I and two months for all the other levels. The probationary period can be longer for employees under 18 years old and for employees who are being promoted to a higher-level position.

Taxes

The Italian Revenue Agency is in charge of overseeing taxes in the country. 

The tax year and the calendar year run in sync, which begins on January 1 and ends on December 31. 

A taxpayer has to file the Modello Redditi PF or Modello 730 to declare their income.

Employer tax obligations

Employers in Italy have a range of tax obligations to ensure compliance with the country's complex legal framework. These obligations encompass various areas, including:

Social security contributions

Employers must contribute to the National Institute for Social Security (INPS) on behalf of their employees. Contribution rates vary based on factors like employee salary and the type of social security benefit (e.g., pensions, healthcare).

Social security contributions in Italy are calculated based on an employee’s gross income. Both the employer and employee are responsible for this fund. 

• 40% of the employee’s income goes to the social security fund.
• The employer contributes 30%.
• The remaining amount is paid by the employee.

Employee tax deductions

Here are the employee income tax details:

It should be noted that by the end of the fiscal year 2016, an extra 3% tax will be levied on wages exceeding EUR 300,000.

VAT

Companies operating in Italy must register for VAT if their turnover exceeds certain thresholds. Individuals (individuals, partnerships, companies with share capital, or an institution) who make taxable supplies of goods and services under the Italian Value Added Tax (VAT) regime must apply for an Italian VAT number before doing business.

The new VAT rates have increased to 24% in 2016, 25% in 2017, and 25.5% in 2018.

Other tax contributions and incentives

Certain regions in Italy may impose additional taxes, such as regional production taxes. Regional taxes on profits derived from economic activities in Italy apply to both resident and non-resident businesses.

Non-residents are only eligible for the International Road Assessment Programme (IRAP) if their operations are carried on over three months via a permanent establishment.

Here’s a list of the additional tax:

• Individual Tax Credits: Italy provides tax credits such as a basic tax credit of EUR 200 and a children’s tax credit of up to EUR 400.
• Incentives for Human Capital: High-net-worth individuals moving their tax residence to Italy can apply a substitute tax on their foreign income, amounting to €100,000 annually.
• Investment Incentives: Various tax credits and incentives are available for companies investing in tangible and intangible capital goods, such as a tax credit of up to 20%.‍
• Industria 4.0 Plan: Innovation investors receive tax credits amounting to 30% of the invested sum, up to €1M for individuals.

Compliance

Legal landscape

Employers in Italy must be aware of the Workers' Statute (Statuto dei Lavoratori). It was enacted in 1970 and provides fundamental worker rights, including the right to organization, union representation, and protection from discrimination. 

The Italian Constitution mentions every other compliance that an employer must be aware of. 

It provides mandates regarding working hours, basic pay, overtime, leave policy in Italy, and likewise.

Employee/Contractor classification

Your firm employs full-time employees who devote their working hours to your tasks. They are not paid on a project basis but rather on a set salary, and they often use your company's resources to do their task. In exchange, the employer must pay income tax and social and other benefits to the employee and manage their day-to-day operations. In most cases, if you wish to discontinue your working relationship with your employee, you must provide a termination notice.

Contractors, on the other hand, typically operate on a freelance basis, which means they only work when needed and have other clients. They are paid by the project and just work for you for the required hours. As a result, they are liable for their taxes, and you are not required to pay any benefits to them. They also often employ their resources, which keeps their clients' costs cheap. Depending on the contract, work can frequently be canceled at any moment or with only a short notice period.

Both alternatives have many advantages. Individual demands must be considered while determining the best option for your company. 

Hiring a contractor is generally the best option if you need an overseas contractor fast to assist with a temporary job. On the other hand, if you need long-term assistance to enter a certain market or maintain expertise in-house, you should consider employing a full-time employee.

Employment contracts

All employment contracts in Italy must be in writing. Furthermore, Italy is a member of the European Union (EU), which means it adheres to all the EU directives and legislation.

According to European Union Directive No. 533/91, information on all the terms and conditions of employment is mandatory. The employee should receive the employment contract within 30 days of recruitment. The employment contract must mention all the company's terms and conditions.

Individual employment contracts in Italy must specify the following points:

• Parties to the job contract.
• The starting date of a job, and the entire duration of the probation period, if any.
• An expiration date for a fixed term of employment in Italy.
• Method of calculating payrolls, payment frequency, and other terms and conditions related to salary.
• Daily work hours.
• Paid leaves, if any.
• Employee responsibility and related work categories are listed in the Civil Code under Article 2095.

Fines/Penalties

Any non-compliance with the mandates of Italian Labor Law attracts hefty fines and penalties.  

• Non-compliance fines: The Italian National Institute for Insurance against Accidents at Work (INAIL) can impose fines and penalties on employers for serious non-compliance with safety regulations.
• Dismissal penalties: Employees dismissed without “just cause” (serious misconduct) or justified reason can result in significant fines for employers. Compensation and damages may also be awarded to the affected employee.

They can go up to  €400.000 or a 3-month arrest. 

IP protection

In Italy, the employer usually owns the IP or Intellectual Property created by any employee during their employment. However, certain exceptions can be made if there is a written agreement.

Payroll

To set up payroll in Italy, you must be mindful of the local laws and the acts that regulate those rules. Knowing your employee profile is important, and it will help you understand which laws are applicable and need to be complied with.

Taxation is another process that you need to be vigilant about. Working with an EOR such as Skuad will help you save precious time and initial expenses so that you can focus on expanding your business operations. 

Best ways to pay employees in Italy

Here are some of the ideal Payroll Italy processing options:

Skuad EOR handles all facets of payroll for Italian employees, including taxes, withholding tax, social security contributions, and other legal provisions. Skuad EOR becomes the Employer of Record and hires employees on the client’s behalf.

Employees are paid annually, with payroll and social security deducted at the source and billed to local governments. Skuad EOR bills the customer annually before the payroll date.

Benefits & Compensation

Employees hired through Employer of Record companies in Italy are entitled to several benefits, which are discussed below.

Employee Benefits

According to Italian Employment laws, the employee is entitled to a list of benefits in Italy:

• Social Security contributions: Employees and employers contribute to Social Security, which provides benefits like pensions, healthcare, and disability insurance.
• Private health insurance: Some employers offer private health insurance to supplement the national healthcare system.
• Life insurance: This may be provided by the employer or offered as a benefit.
• Retirement savings plans: Employers may offer various retirement savings plans, often with tax benefits.
• Transportation benefits: Some employers provide transportation assistance, like subsidies for public transport.

Government Benefits

Italy is well known for its govt backed financial support that includes the following:

• Reddito di Cittadinanza (Citizenship Income): Financial support for low-income families, designed to combat poverty and promote employment.
• Social Allowance (Assegno Sociale): A non-contributory benefit for those with insufficient income, managed by the National Institute for Social Security (INPS).
• Single and Universal Allowance for Children: Financial aid for families with dependent children, based on the ISEE income indicator.
• Pensions: Part of the welfare system, covering retirement and disability pensions.
• Unemployment Benefits: Financial assistance for those who lose their jobs

Insurance Benefits

Public Health Insurance: Italy's National Health Service provides universal coverage, but many employers offer supplemental health insurance plans. 

To obtain this insurance, the employee must be registered with the National Health Service (Servizio Sanitario Nazionale or SSN).

The two most important types of public health insurance available in Italy are Assistenza Sanitaria Integrata (SSN) and Assistenza Integrativa (ASI). 

While the former is basic insurance that covers most medical expenses, the latter is additional insurance that needs to be bought. 

The cost of insurance is variable and depends upon income and employment status. 

Workplace Accident Insurance: Coverage for work-related accidents, required by law

‍Disability Insurance: State-provided insurance that covers disabilities resulting from workplace accidents or illness

Worker Rights

Knowing these rules will help an organization save time and effort in its expansion process in Italy. Hence, partnering with an Employer of Record (EOR) in Italy like Skuad can help you gain an advantage while hiring a workforce in Italy remotely.

Working hours

Working hours should not exceed 8 hours per day or 40 hours per week.

Minimum wage

• The Italy minimum wage varies with industry, region, or sector.
• The average minimum wage in Italy is between €7-9 per hour.
• This wage can reach as high as €12.95 per hour in industries like finance and insurance, while it is around €7.7 per hour in an industry like agriculture.

Specific labor laws

The Italian Constitution provides every rule and regulation related to employment in the country.

Notice period

• During probation, the notice period in Italy is 30 days.
• After probation, the notice period increases based on service length, employee position, etc.

Resignation & Termination by Employee

Termination by employer

Severance pay

• Severance pay is mandatory in Italy, locally known as trattamento di fine rapporto (TFR in Italy).
• It is calculated as a percentage based on an employee's annual salary, which increases yearly.

Working conditions

• Italy has a very employee-oriented employment structure and working conditions. 
• The constitution fixes working hours in Italy at 40 per week.
• Italian leave policy is also structured by the Constitution, offering a range of mandatory and optional leaves to employees.
• The Constitution also provides strict guidelines regarding employee termination and off-boarding.

Bonuses

Bonuses are generally given at the employer's discretion, such as a 13th-month salary at Christmas, but they are sometimes mandated by contracts or collective bargaining agreements as well, such as vacation pay in the summer.

Anti-discrimination laws/acts

Italian legislation against workplace discrimination has diverse origins. The primary law source is the Italian Constitution, which states that 'all people have an equal social dignity before the law, regardless of their sex, race, language, religion, political ideas, personal or socioeconomic circumstances.' The Constitution also stipulates that individuals with the same work have a right to equal remuneration.

If an employer is found accountable for discrimination based on the protected qualities, the employer may be penalized. An Italian court can also mandate that any employment discrimination rulings be published in a major newspaper.

Health & Safety

• Health and safety measures are a must in Italy.
• Every employer is bound to ensure workplace safety, both physical and psychological.

Remote & Hybrid Work

A remote working policy is a set of rules or provisions that guide when or how an employee can work remotely. 

Such policies vary globally, and an employer of record in Italy can help you with compliance.

Flexible work arrangement

Italy doesn’t have any specific regulations governing employees working abroad or doing remote or hybrid work. Such working scenarios can be fixed after discussion between the parties.

Technology requirements

• Employer requirements: The employer must ensure a safe remote & hybrid working environment where the company can ensure zero data breaches. The employer must also provide the hardware and software requirements for a work mode, such as a desktop, laptop or headphones.
• Employee requirements: Employees engaged in a remote or hybrid working model must ensure that they take the utmost care of the devices provided. To ensure accurate and smooth work, employees should also ensure a stable internet connection.

Infrastructure requirements

• The infrastructural elements that support remote working conditions include a home office set-up, a reliable network connection, and essential tools and gadgets like laptops.
• The employer must be supportive and provide the required assistance with technology.

Salary

As of 2024, An Italian employee earns €32,450 per year, which can largely vary with the job sector, region, or employer. 

It can further fluctuate depending on the job market demands, the country's economic condition, and overall development.

Budgeting for your new hires is a crucial step for business expansion. We understand that it is extremely difficult to understand the average salary in multiple countries. 

Thus, Skuad offers an attractive tool, the salary calculator, which simplifies payroll calculation and gives you the required salary insights in Italy.

Leave Policy

Here are the details of the Italian leave policy:

Annual Leave Entitlements for Overseas Employees

• An employee is legally authorized 22 days of leave every year. It is calculated on the number of months worked per year.
• Within the first two years of employment, the entitlement is 32 hours (4 days) of paid leave per year. The employee can take the hours in bulk as well if required or per hours needed (for example, doctor appointments, etc.).
• From 3rd year of employment, the paid hourly leave is increased to 64 hours (8 days)
• From the 5th year to 104 hours (13 days)

Sick Leave

The statutory minimum sick leave in Italy is three days, and the maximum is six months.

Maternity Leave

• In Italy, mandatory maternity leave is for a total of 5 months and can be taken 3 months before the birth.
• Leave is extended in the case of premature birth or suspended in the case of the infant's hospital stay to benefit from the time not taken during pregnancy or prolonged hospital stay.

Paternity Leave

• Mandatory paternity leave in Italy is ten days, which is increased to 20 for multiple births.
• In Italy, special alternative paternity leave can be taken. It is taken either as an alternative to the mother and can be for the full duration or split with the mother.
• A father employee can also take an additional day off as an ‘optional paternity leave.’

Paid Public Holidays

The public holidays in Italy for 2024 are as follows:

• January 1, New Year's Day
• January 6, Epiphany
• March 31, Easter Sunday
• April 1, Easter Monday
• April 25, Liberation Day
• May 1, International Workers' Day
• June 2, Republic Day
• August 15, Assumption Day
• November 1, All Saints' Day
• December 7, Santo Patrono
• December 8, Immaculate Conception
• December 25, Christmas Day
• December 26, St Stephen's Day

Wedding Leave

• Employees outside the probation period can take up to 15 days of wedding leave.
• It is available for employees working in an organization with more than 15 employees.

Parental Leave

• Employees with children of up to 12 years can avail parental leaves of up to 10 months.
• If the employee is an only parent or a parent with sole custody, the leave duration can be 11 months.
• In case of adoption or foster care, parental leaves are applicable.
• The parental leave can be extended to 3 years if the child has a serious disability.

Study Leave

• Employees in Itlay are eligible for up to 2 years of unpaid study leaves.
• Additionally, employees who are studying can apply for 150-hour paid leave within 3 years. Such employees are also eligible for a one-day paid leave for their examination.

Other leaves

• Leaves for disability: Three paid monthly leaves are available for employees who care for a person with a serious disability.
• Leave for blood donors: On the day of blood donation, employees are entitled to leave.
• Leave for mountain and speleological rescue: Members or volunteers of the National Alpine and Speleological Rescue Corps of the Italian Alpine Club (CAI) can take paid leave if the organization arranges drills or operations.

Leave Expiry

If work continues for ten days after the expiry of the leave, the employer must pay 20% more; for twenty days beyond the termination date, 40% more; and only then is the contract eligible to be turned into an indefinite one.

Background Checks

Background checks are legal in Italy, although the country has strict regulations regarding data protection. Although it is not a legal requirement to run an employee background check, most employers conduct them to assure data authenticity. 

The most common background checks are for criminal records, employment history verification, and educational degree verification. However, acquiring any personal, sensitive data is illegal, and so is accessing medical or financial records. 

An employer of record service provider in Italy can help you in these scenarios, to ensure you can conduct employee background screening, by staying within the legal boundaries.

Once the candidate fits into the specifics, they are granted an employment visa to work in Italy. 

Types Of Visas In Italy

Work Permits

As an EU member, Italy permits people from other EU member states to work without a visa or permit. 

European Economic Area (EEA) country citizens are also free to work in Italy. 

Any workers who are not citizens of the European Union or the EEA need a ‘Nulla Osta (invariable visa)’ working visa. 

In Italy, a working visa, a national or D-Visa, falls under the ‘long-stay category.’ It is worth noting that an Italian work visa only allows workers to enter the country. They must obtain a residency permit on arrival to remain in Italy. 

Trust Skuad to take care of your work permit requirements. Call us to know more.

Termination & Offboardings

Termination Grounds

According to Italian law, an employee can be terminated on the following grounds:

1. ‘Just Cause’ is described as a severe violation of the employee’s duties or other behavior that renders the continuity of the working relationship impossible.
2. ‘Justified Grounds’ include:
   1. A violation of duties by employees that is not severe enough to constitute cause, such as failure to comply with critical orders from the administration, injury to machinery and facilities, or poor performance (related to ‘subjective causes’ for dismissal). 
   2. Dismissals must always be in writing and must provide a detailed explanation of why they were created.

The employer must follow the following guidelines:

• If the business hires up to 15 persons in a single working unit or up to 60 in total across Italy, the employer can either reinstate the fired employee or pay an indemnity (ranging between two-and-a-half and six months pay).
• In such cases, the employee is entitled to reinstatement and reimbursement for losses in at least five months’ salary.
• Failure to reinstate an employee who has been unlawfully fired results in a 15-month pay settlement and penalties against the employer.

Cultural Considerations

• Italian work culture is a mix of simple business moves and carefree chitchats. However, hierarchy plays a very important role in decision-making. While employees are usually consulted and involved in discussions, the most definite decisions are always made by senior executives. 
• Communication between teammates is mostly direct yet polite. Non-verbal cues, such as gestures or facial expressions, play a significant role in communication.
• Building personal relationships is crucial in Italian workplaces. Networking and informal conversations are a common sight in Italian offices.

Professional Employer Organization (PEO)

A Professional Employer Organization (PEO) provides human resources services such as recruiting, payroll management, pension administration, and workforce management. 

However, where it differs from an Employer of Record is that a PEO acts as your co-employer and all final decisions regarding human resource management still rest on your shoulders. 

An EOR, on the other hand, is a third-party organization that acts as the legal employer of your employees in the country of expansion and takes over the burden of Human Resources management for you. 

Skuad offers PEO and EOR services in Italy. As a PEO affiliate, companies can influence the decision-making processes when partnering with Skuad. 

EOR solutions in Skuad do not require organizations to have an agency in the expansion country. Skuad takes over the hassles of working through the various stages of documentation and employment contracts.

Conclusion

The most important part of setting up a remote team in Italy while conducting business expansion is knowing the local laws and how they affect all employment processes. 

The method of growth is based on several factors and rules: 

• Various categories of employees.
• Variations in legislation.
• Understanding the Italian negotiation process.
• Establishing payrolls and tax complexities.

However, instead of setting up an entirely new entity and knowing the consequences of every law on the employment process, it is simpler to work with a trusted and experienced partner who can take care of your HR needs.

This step ensures that the organization’s human resources policies are consistent with the local legal codes and that you are never in error. 

The multinational teams and expertise of Skuad make it easy to recruit skilled personnel in Italy and effectively manage your payroll and pensions. It also supports you with a unified employment platform for compliance and taxation.

Skuad has succeeded in building trust among many distinguished organizations and is looking for ways to make your expansion preparations easier. 

‍Book a demo today and get the boost you need for your company’s growth plans.

FAQs

1) What is an employer of record in Italy?

An Employer of Record (EOR), like Skuad, is responsible for employment tasks such as onboarding, payroll, benefits, and compliance. This enables companies to legally employ talent worldwide without establishing a local entity.

2) Is employer of record legal in Italy?

Yes, employer of record in Italy is completely legal, provided the Ministry of Labor authorizes the EOR agency. Unauthorized agencies can attract legal consequences and penalties.

3) What is the EU employer of record?

An EU employer of record is your legal employer in Europe. They are a team of professionals who oversee all HR-related activities - from hiring employees to processing payroll. An EOR in Italy will also manage taxes and other benefits on the organization’s behalf.

4) What is the difference between a PEO and an EOR?

The fundamental difference between a PEO and an EOR is that the former acts as a co-employer, while the latter is the legal employer on a company’s behalf. A PEO offers supportive resources to a company, like payroll processing. An EOR will handle every HR-related activity, such as hiring and recruitment.

5) What are the benefits of EOR?

The benefits of using an EOR in Italy include quick and compliant market entry, cost savings on setting up a legal entity, streamlined HR and administrative processes, and reduced risk of legal and financial non-compliance. EORs manage employee onboarding, payroll, taxes, and any issues related to employment law, which can be particularly advantageous in the complex Italian labor market.

6) What are the workplace laws in Italy?

Workplace laws in Italy include mandates regarding working hours, minimum wages, overtime and overtime pay, termination and probation guidelines, and more. Employee discrimination based on gender, religion, race, or disability is strictly prohibited.