Employer of Record in Italy

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

Businesses can only operate smoothly in Italy if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Italy below, to avoid any compliance issues.

Employment Contract Requirements

Italy does not mandate written employment contracts; oral agreements suffice. However, certain clauses must be documented, with employers required to inform employees the following in writing within the first 30 days of starting employment:

• Identification of both parties
• Starting date and and employment duration (for temporary contracts)
• Workplace and working hours
• Job description
• Base salary (including compensation or benefits)
• Probation period (if applicable)
• Total number and duration of paid holidays
• Notice periods for employment termination
• Legal grounds
• Reference to collective agreements

Onboarding Process

We can help you get a new employee started in Italy quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

In Italy, employers must adhere to strict regulations surrounding working hours and overtime to ensure legal compliance and promote employee well-being. The standard working week is 40 hours, with a maximum of 48 hours, including overtime, allowed under exceptional circumstances.

Overtime work is subject to specific limits, and any hours beyond the typical workweek require fair compensation. Employers should be aware that overtime compensation is generally set at a minimum of 15% above the regular hourly rate for work from the 41st to 48th hour per week, with collective agreements potentially offering higher rates, particularly for weekend or public holiday work.

Employers must also ensure that employees are given adequate rest periods, including a minimum 11-hour break between shifts and required meal breaks for workdays longer than 6 hours. Special regulations apply to night shifts and weekend work, with additional compensation for these hours.

In Italy, there is no statutory national minimum wage as of 2025. Instead, minimum wages are established through sector-specific collective bargaining agreements (CBAs) negotiated between trade unions and employer associations.

These agreements set baseline wages for different industries, with average hourly rates ranging from €7 to €9. The absence of a universal minimum wage means that wage standards vary significantly based on industry, region, and specific employment agreements in place. While discussions about implementing a statutory minimum wage have taken place, including support from some political, social and academic groups for adopting a €9.00/hour minimum wage, no formal legislation has been enacted, and the CBA system remains the primary mechanism for wage determination.

Employers in Italy must ensure compliance with the relevant CBAs applicable to their industry, as these agreements dictate minimum wages, working conditions, and employment rights. Economic factors such as inflation, employment trends, and government policies influence wage negotiations, potentially leading to adjustments in wage standards over time. Additionally, expatriates, interns, and trainees are also subject to CBA provisions, with some agreements allowing unpaid internships under specific conditions. Given the decentralized wage-setting structure, employers should regularly review sector-specific CBAs to maintain compliance and uphold fair labor practices.

Growing your team in Italy is exciting, but it’s not without challenges. Local labor laws are often nuanced, and hiring without the right legal structure or processes can lead to misclassification, non-compliance penalties, or disputes. An Employer of Record removes that risk by acting as the legal employer on your behalf, taking full responsibility for compliance, contracts, payroll, and employee benefits.

This gives you the freedom to scale at your own pace, whether you're adding one employee or building out an entire function, without the burden of setting up and managing a local entity. You remain in control of day-to-day responsibilities and performance, while the EOR ensures every hire is legally protected and properly supported. It's a strategic way to expand globally without spreading your internal team too thin or exposing your business to legal liabilities in unfamiliar markets.

Navigating payroll taxes in Italy involves understanding progressive income tax rates, social security contributions, and local levies such as regional and municipal taxes. Employers must calculate and withhold taxes accurately, comply with reporting obligations to agencies like INPS and Agenzia delle Entrate, and adhere to strict deadlines to avoid penalties.

Properly setting up payroll requires registration with relevant authorities and adherence to Italian labor laws. Leveraging payroll management software can help employers consolidate payroll data, ensure timely submissions, and maintain compliance with Italy's complex tax regulations.

Employees expect to be paid accurately, on time, and in full compliance with local standards. When you're hiring in Italy, providing a smooth payroll experience is critical to retention and trust. An Employer of Record ensures that employees receive what they’re owed, without errors, delays, or confusion about taxes or benefits.

Key Ways an EOR Supports Payroll in Italy:

• Reliable Salary Payments: Ensures employees are paid promptly in local currency.
• Clear Payslips & Documentation: Provides employees with compliant, understandable records.
• Correct Benefits & Contributions: Delivers legally mandated contributions and any changes in compensation, like bonuses.
• Payroll Setup & Processing: Handles salary calculations, tax withholdings, and local reporting obligations.
• Boosts Employee Confidence: Builds trust with compliant, consistent payroll operations.

In Italy, work permits and visas are crucial for employers hiring non-EU foreign workers or relocating employees. The process involves obtaining a work permit, known as a Nulla Osta, submitting applications, and complying with annual quotas under the Decreto Flussi. The primary work visas available include the Self-Employment Visa, Employee Work Visa, Intra-Company Transfer Visa, Seasonal Work Visa, and the EU Blue Card for highly skilled professionals.

Employers are responsible for sponsorship, ensuring all requirements such as valid employment offers, proof of financial stability, and health insurance are met. Additionally, Italy has implemented a digital nomad visa since April 2024, allowing highly qualified remote workers from non-EU countries to live in Italy for up to one year with the possibility of renewal. Adhering to these processes and requirements helps ensure compliance with Italian labor regulations.

In Italy, employees are entitled to a minimum of four weeks (20 working days) of paid annual leave per year, as stipulated by statutory regulations. This entitlement is separate from public holidays, which do not count towards the annual leave. Employers must ensure that employees take at least two consecutive weeks of their annual leave within the year it is accrued, while the remaining leave can be utilized within 18 months from the end of the accrual year.

Additionally, Italian labor laws mandate various types of leave, including sick leave, maternity and paternity leave, and study leave, each governed by specific regulations and collective bargaining agreements. Employers should familiarize themselves with these provisions to ensure compliance and support employee well-being.

In Italy, employers are legally required to provide several mandatory benefits to employees, including social security contributions, which fund pensions and healthcare; paid maternity leave of five months at 80% salary; a minimum of four weeks of paid annual leave; and severance pay upon termination, known as Trattamento di Fine Rapporto (TFR).

To attract and retain top talent, many employers also offer supplemental benefits such as private health insurance, meal vouchers, and performance-based bonuses. It's crucial for employers to comply with these statutory requirements and consider additional perks to remain competitive in the Italian labor market.

In Italy, failing to provide the correct employee benefits can have serious consequences. Mistakes in benefits administration may result in fines and harm your reputation as an employer. An Employer of Record ensures statutory benefits and leave are handled correctly, every time, and provides comprehensive options for extra perks to reward your team.

Beyond just avoiding legal issues, a well-managed benefits program builds trust with your employees. An EOR ensures benefits are set up quickly during onboarding, updated when employee status changes, and fully compliant with national regulations. They also manage communication with employees, so there’s no confusion around what’s offered and how to access it. This combination of legal compliance and positive employee experience is hard to replicate without local infrastructure. With an EOR, you can offer peace of mind to your team (and to yourself) knowing that your benefits program in Italy is running as it should.

In Italy, employment termination is governed by strict labor laws that outline the legal grounds for dismissal, notice periods, and employee entitlements. Employers can terminate contracts for just cause (severe misconduct), subjective justified reason (breach of contractual obligations), or objective justified reason (economic or organizational factors). Notice periods vary depending on tenure and collective agreements, though immediate termination is allowed in cases of just cause. Additionally, unfair dismissal protections ensure employees can challenge terminations that lack a valid legal basis.

Severance pay, known as "Trattamento di Fine Rapporto" (TFR), is a mandatory entitlement for all employees, regardless of the reason for termination. Employers must also provide a termination letter, final payslip, and other relevant documentation upon dismissal. The termination process requires proper written notice, settlement of outstanding payments, and compliance with legal procedures to avoid disputes. Failure to adhere to these regulations may lead to legal consequences, reinforcing the importance of employer compliance with Italy’s labor laws.