Globalization Partners provides employer of record services for customers that want to hire employees and run payroll without first establishing a branch office or subsidiary in Italy. Your candidate is hired via...
Globalization Partners provides employer of record services for customers that want to hire employees and run payroll without first establishing a branch office or subsidiary in Italy. Your candidate is hired via Globalization Partners’ Italy PEO in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. The individual is assigned to work on your team, working on your company’s behalf exactly as if he or she were your employee to fulfill your in-country requirements.
Globalization Partners provides employer of record services for customers that want to hire employees and run payroll without first establishing a branch office or subsidiary in Italy. Your candidate is hired via Globalization Partners’ Italy PEO in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. The individual is assigned to work on your team, working on your company’s behalf exactly as if he or she were your employee to fulfill your in-country requirements.
Our solution and Global PEO service enables customers to run payroll in Italy while HR services, tax, and compliance management matters are lifted from their shoulders onto ours. As a Global PEO expert, we manage employment contract best practices, statutory and market norm benefits, and employee expenses, as well as severance and termination if required. We also keep you apprised of changes to local employment laws in Italy.
Your new employee is productive sooner, has a better hiring experience and is 100% dedicated to your team. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. Globalization Partners allows you to harness the talent of the brightest people in 187 countries around the world, quickly and painlessly.
Contents
Hiring in Italy
CBAs, or Collective Bargaining Agreements, between trade unions and employers’ associations are common in all sectors. National CBAs are only binding on a company if the company is a member of the relevant employers’ association. If a company is not a member, it does not have to apply the rules agreed to via CBA. However, the agreement applies if reference is made to it in the employment contract or the employer adopts its terms.
When negotiating terms of an employment contract with an employee in Italy, it may be useful to keep the following in mind:
Employment Contracts in Italy
It is legally required to put a strong employment contract in place in Italy which spells out the terms of the employee’s compensation, benefits, and termination requirements. An employment contract in Italy should always state the salary and any compensation amounts in Euros rather than a foreign currency.
Working Hours in Italy
The normal work week for an employee consists of 40 hours.
An employee whose working hours exceed 6 hours per day is entitled to a rest break. Typically CBAs regulate rest breaks but where no CBA applies, a rest break cannot be less than 10 minutes.
Holidays in Italy
New Year’s Day
Epiphany Easter
Sunday Easter
Monday Easter
Liberation Day
International Worker’s Day / Labor Day
Republic Day
Assumption Day
All Saints’ Day
Immaculate Conception
Christmas Day
St. Stephen’s Day
Saint Patron Day of the work-place
Note that if a public holiday falls on a Sunday, the day is carried over to Monday or paid.
Vacation Days in Italy
According to the CBA Globalization Partners is operating under in Italy, employees are granted 22 days of vacation, plus 32 hours of paid leave.
In addition to the vacation days, employees are entitled to enjoy hourly paid leave as follows:
With seniority up to 2 years 32 hours per year
With a seniority from 2 to 4 years 78 hours per year
With a seniority over 4 years 104 hours per year
Italy Sick Leave
Compensation is paid by INPS equal to 50% of the salary from the 4th to the 20th day of illness and compensation equal to 66.67% of the salary is paid by INPS from the 21st to the 180th day. The employer integrates the INPS’ allowance of up to 100% of the salary for the first 3 days of illness, up to 75% of the salary from the 4th to the 20th day, and up to 100% of the salary from the 21st day onwards.
The supplement paid by the employer for the first 3 days of illness is paid at 100% of the salary for the first two events of illness during the year, 66% of the salary for the third one, and 50% of the salary for the fourth event, while it ceases to be paid from fifth disease event.
Maternity/Paternity Leave in Italy
Female employees are entitled to maternity leave for two months prior to and three months following the expected date of childbirth. Throughout the maternity leave, a daily allowance is granted equal to 80% of the last salary paid through the social security system (INPS).
Fathers are entitled to 10 days of parental leave.
Health Insurance in Italy
National health insurance in Italy is managed by the National Health Service (SSN) and funded through direct taxation as well as indirect taxation by employers and employees. Upon registering with the Local Health Service, a social security number and a health card are issued. The health card entitles the employee to low or no-cost treatment.
Private health insurance coverage is also available. With private insurance, individuals can freely choose their own doctor and specialist, be treated at private hospitals, etc. Many residents have a private health insurance policy which pays the portion of medical bills that isn’t paid by social security.
Italy Supplementary Benefits
Some companies provide allowances for company cars, mobile phones, and meal vouchers. High tech firms often provide training.
Termination/Severance in Italy
As a general rule, probationary periods cannot be longer than 6 months. All the probationary periods may be agreed to in writing in the employment contract. The actual length of time for the probation period is fixed by the Collective Bargaining Agreements (CBAs) applied by the employer.
Permanent employment contracts cannot be terminated without a justified reason. Justified reasons include breach of contract, or economic or reorganization reasons. If an employee is dismissed for breach of contract, the employer must follow a disciplinary procedure that will involve writing a letter to the employee that sets out the facts behind their alleged breach of contract and allowing the employee time to justify their actions. If the employer still wishes to proceed to dismissal, it must then confirm the dismissal in writing, setting out why the employee’s justifications have not been accepted.
If the dismissal is due to economic reasons, the employer must follow a special procedure provided by the NCBA applied.
During employment, employers must set aside an annual amount equivalent to around 7% of the employee’s pay, to be paid to the employee on termination as an “end of service allowance”, called “trattamento di fine rapporto” (TFR). This amount of money is mandatory and is due in any case of termination of employment (including resignation, and dismissal for just cause or death). TFR is calculated on the basis of the employee’s wages, taking into account not only his/her basic wage, but also any other compensation periodically paid to him/her.
Paying Taxes in Italy
Income tax in Italy is progressive, meaning the higher the income, the higher the rate of tax payable. In 2015, the tax rate for an individual was between 23-43%.
While there are different rates for social security contributions, based on industry sector and for management level, the standard contribution for employees is 10% of gross salary and employers contribute about 35% of the employee’s salary.
Why Globalization Partners
Establishing a branch office or subsidiary in Italy to engage a small team is time-consuming, expensive and complex. Italian labor law has strong worker protections, requiring great attention to detail and an understanding of local best practices. Globalization Partners makes it painless and easy to expand into Italy. We can help you hire your candidate of choice, handle HR matters and payroll, and ensure that you’re in compliance with local laws, without the burden of setting up a foreign branch office or subsidiary. Our Italy PEO and Global Employer of Record model provides you peace of mind so that you can focus on running your company.
If you would like to discuss how Globalization Partners can provide a seamless employee leasing or PEO solution for hiring employees in Italy, please contact us.
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