When hiring workers in Italy, ensuring their benefits package complies with the country's labor laws, including the European Union, the Italian Civil Code, and local collective bargaining agreements, is vital to avoiding fines and penalties. Italian workers already receive benefits from the government, like healthcare, but employers must still offer specific statutory benefits.
Here's everything you need to know to stay compliant with statutory requirements under Italian labor laws and additional benefits you can add to your employment contracts as incentives.
What employee benefits are mandatory in Italy?
In Italy, labor rights are highly valued. The national collective agreements between trade unions and employers' associations establish specific employment law terms. Foreign employers can choose to adhere to the terms of a collective bargaining agreement (CBA) by including them in their employment contracts.
Italian law mandates employees receive certain statutory employee benefits. Employers can choose to offer more than the mandatory benefits to attract and retain top talent.
Additionally, it's important to remember that these benefits are mandatory for full-time employees. The Jobs Act of 2014 guarantees certain state-provided benefits to contractors, so it's crucial to classify your workers correctly and provide the appropriate benefits package. Below is an overview of all the benefits employers must provide to comply with labor laws in Italy.
Social security contributions
Both employers and employees have to pay into social security, with rates of around 30% and 10%, respectively. It's important to know that not paying into social security is against the law in Italy. Employers who don't follow the law can be fined up to EUR 50,000 and/or go to jail for up to three years. An Employer of Record (EOR), like Rippling, can calculate these contributions along with income tax, and take the right amount out of employees' paychecks.
In Italy, the usual workweek is 40 hours, made up of eight-hour days. However, employees can work up to 48 hours per week, including overtime, over four months. Employers must pay for any overtime, as outlined in the employment contract and CBA (usually an additional 15% to 50% increase to the employee's hourly rate of pay). Workers in Italy cannot work more than 250 overtime working hours per year.
Annual leave entitlements
Italian workers are entitled to paid leave, including a minimum of four weeks of paid vacation leave annually and 12 paid public holidays. It’s important to note that the minimum paid annual leave cannot be substituted with payment unless the employment contract is terminated.
Employers must pay their employee's full salary during the first three days of sick leave. These days are called "waiting days" unless the sickness comes back. After the third day, employees receive part of their sick pay from the Istituto Nazionale della Previdenza Sociale (INPS) and part from their employer. It covers up to 180 days of paid sick leave per year.
Female employees are entitled to five months of paid maternity leave, two months before and three months after giving birth. This leave is paid at 80% of the employee's salary by INPS through the employer, with the employer covering the remaining amount. Adoptive parents are also eligible for this leave. Additionally, mothers of multiples or premature births can receive an extra 12 weeks of leave.
Both parents can split up to 10 months of voluntary leave before their child is 12 by giving 15 days' notice at their company. During the 10 months, they get 30% of their wages for the first six months, and the remaining four months are unpaid leave.
In Italy, new fathers are entitled to 10 days of government-paid leave, which must be taken within five months of the child's birth. The paternity leave can be taken consecutively or non-consecutively and is compensated at the same rate as the employee's regular salary.
Italy has no national mandatory minimum wage, but depending on your industry, you may find guidance set through collective bargaining agreements.
In Italy, employees receive 14 salary payments each year instead of 12, including a bonus payment during Christmas and another one during summer, known as the 13th and 14th months' salaries.
In Italy, all employees are entitled to severance pay called trattamento di fine rapporto (TFR), regardless of the reason for leaving their job. This pay is accumulated during their employment and amounts to 7% of their gross salary, which their employer pays.
Work-related accident insurance
Employers in Italy must pay insurance premiums for their employees to cover work-related accidents and injuries. The INAIL manages the insurance policies and handles claim payments.
Employers contribute 33% of their employees' salaries to their pension, while employees contribute about 9%. Employers handle all contributions and deduct the employees' shares from their paychecks.
What employee benefits are optional in Italy?
Supplemental health insurance
In Italy, the National Health Service (SSN) oversees the national health insurance program, which is financed through direct and indirect taxation from both employers and employees. The employee receives low or no-cost treatment. Certain employers may also provide private insurance options to their employees, allowing them to choose their own doctor and cover any medical expenses not covered by the social security system.
Pension plans and retirement savings plans
Consider offering a private pension plan or retirement savings program to your employees in addition to the Italian pension schemes. You can fund it through various methods, such as matching their contributions or deducting money from their paychecks, to help them save money at higher interest rates.
Additional paid time off
You could offer extra time off if you want to attract top professionals in a competitive industry. This could include more paid vacation days, sick leave, or personal days—or you could implement a flexible leave policy.
Other employee benefits to offer as an employer
Other benefits and incentives for full-time Italian employees include:
- Childcare vouchers or other types of care assistance
- Company cars, car insurance, petrol allowances, or public transportation allowances
- Work-from-home or flexible work policies
- Gym or travel discounts
- Professional development and access to training programs or courses
How to hire employees overseas and offer them affordable benefits in minutes—with Rippling
Running a global workforce isn't easy. It can be a challenge for global companies just to keep their benefits compliant—let alone managing offer letters, equipment, payroll, and everything else global employees and contractors need.
That's why, if you're going to hire employees, contractors, or remote workers globally, you need Rippling. Rippling makes it easy to onboard, manage, and pay employees and contractors around the world—in one system that's always compliant with local employment laws and regulations.
Disclaimer: Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.