Global HR Compliance in Italy

Hiring in Italy requires more than issuing a compliant contract or running monthly payroll. It means operating within a tightly regulated labour environment shaped by EU directives, national legislation, and sector-specific collective agreements. Employment protections are high, and administrative missteps—even unintentional—can quickly escalate into legal or financial liabilities.

Foreign companies hiring in Italy must therefore be strategic, not only about talent acquisition but about employment structuring, local enforcement trends, and long-term workforce management. This guide outlines the key rules you need to know when hiring or terminating workers in Italy.

Employment Contracts in Italy

All employment relationships must be governed by a written contract. There are two primary types:

• Open-ended (permanent) contracts – The standard form of employment. These contracts offer employees the highest level of job protection and are subject to strict termination rules.
• Fixed-term contracts – Allowed under specific legal conditions and must not exceed 12 months, though they can be extended up to 24 months under limited circumstances. A valid business reason must always be stated.

A third, regulated form is the temporary agency contract, where a staffing agency remains the legal employer but assigns workers to the end company. These arrangements are heavily regulated and require compliance with collective agreements governing equal treatment and benefits.

All contracts must be in writing and include:

• Start date and job title
• Working hours and pay terms
• Workplace location
• Notice periods
• Applicable collective agreement
• Social security registration

Probation Period

Italian law allows for a probationary period, typically:

• Up to 6 months for management roles
• Up to 3 months for other employees

During this time, either party may terminate the contract without notice or severance. The probation clause must be explicitly written into the contract.

Working Hours and Overtime

Standard working hours are 40 hours per week. Most collective agreements, however, reduce this to 37–39 hours.

Maximum legal working hours, including overtime, may not exceed 48 hours per week averaged over four months.

• Overtime pay is typically 15–30% above regular pay, depending on the collective agreement.
• Rest breaks: Employees must receive at least 11 consecutive hours of rest every 24 hours and one full day off per week.

Annual Leave and Holidays

Employees are entitled to a minimum of 4 weeks’ paid annual leave, with at least two weeks taken consecutively if requested. Many collective agreements provide additional days.

Italy also observes 12 public holidays, which may vary by region. If an employee is required to work on a public holiday, compensation is typically at 200% of the normal wage or an equivalent day off.

Sick Leave

Sick leave is protected by law and governed primarily by the collective agreement. Generally:

• The employer pays for the first days of sick leave.
• From a set point (e.g., day 4 or day 6), INPS (the national social security agency) pays a percentage of the salary.
• Employees are protected from dismissal for the entire protected illness period, which can extend up to 180 days or longer depending on tenure and sector.

A medical certificate from a recognised doctor is required and must be electronically submitted to INPS.

Maternity Leave

• Compulsory maternity leave: 5 months (typically 2 before and 3 after childbirth).
• During this time, employees receive 80% of their salary, covered by INPS and often topped up by employers.

Paternity Leave

• Mandatory 10 days of paid paternity leave must be taken within 5 months of birth.
• Optional additional days may be available under collective agreements or if transferred from the mother.

Parental Leave

• Up to 6 months (extendable to 10 months jointly between parents), partially paid depending on the duration and the parent’s income.

Termination Rules in Italy

Justified grounds are required: Employers cannot terminate an employment contract arbitrarily. Grounds for dismissal must fall under one of three categories:

1. Economic (objective) reasons – e.g., redundancy, business closure, restructuring.
2. Disciplinary (subjective) reasons – e.g., breach of contract, poor performance.
3. Just cause (giusta causa) – e.g., theft, violence, or gross misconduct that breaks the trust relationship.

Notice Periods

Minimum statutory notice periods apply, based on the employee’s length of service and job classification. However, most are defined in national collective agreements.

Mutual Agreement

Termination by mutual consent is possible and must be formalised via the public labour office to be legally binding.

Severance Pay (TFR)

Every employee is entitled to Trattamento di Fine Rapporto (TFR), a deferred payment made upon termination, regardless of the reason. The amount accrues annually and is approximately one month’s pay for each year of service, adjusted by inflation.

This is separate from:

• Indemnity in lieu of notice, if notice is not given
• Additional severance, negotiated in mutual terminations or redundancy situations.

Social Security and Statutory Contributions

Employers must register employees with INPS and pay statutory contributions for:

• Pension
• Unemployment
• Maternity and family benefits
• Work injury insurance (managed by INAIL)

The total employer contribution rate is around 30–35% of gross salary, depending on the sector and type of contract.

Why Employers Choose to Hire in Italy

Despite high employment costs and bureaucracy, Italy offers access to:

• A highly educated, specialised workforce (particularly in design, engineering, fashion, pharma, and luxury sectors)
• Strategic location within the EU for pan-European business
• Stable labour relations in certain sectors, thanks to collective bargaining structures

However, strict worker protections and complex compliance rules make it critical to have the right legal employment structure in place from the outset.

How Acumen International Can Help You Hire in Italy

Acumen International acts as your Global Employer of Record in Italy, allowing you to:

• Hire local or foreign talent without setting up a local entity
• Stay compliant with Italian labour, tax, and immigration laws
• Manage contracts, payroll, benefits, and HR admin on your behalf
• Receive strategic guidance on collective agreement requirements, probation terms, and local enforcement norms
• Coordinate immigration processes and relocation support for expatriates

Whether you’re testing the market or scaling a team, our infrastructure ensures every hire is legally sound, locally compliant, and fully supported.