Hire and manage employees in Italy

Employer of Record (EOR) vs. entity

The first step is deciding whether you’ll hire employees in Italy through an EOR or your own entity.

• Legal entity in Italy. Establishing a legal entity in Italy requires registering with local authorities, knowledge of the language, culture, and local collective bargaining agreements. Additionally, you need to get guidance from local experts on how to comply with tax, employee classification, and labor laws. Failing to get this country-specific expertise can create impactful compliance risks for your company.
• Italian EOR. An EOR operates as an employer on a company’s behalf, which saves you from the work involved in setting up your own entity. This third-party service allows you to hire full-time Italian employees, and handles all legal requirements for compliance with Italian laws for payroll, contracts, and benefits. EOR services also calculate and withhold taxes, onboard and manage employees, and run payroll on your behalf.

Choosing between an EOR or your own entity will depend on your company’s size, resources, and growth plans. Here are the pros and cons of each:

Rippling can help you compliantly hire and onboard Italian employees in 90 seconds—learn more about EORs and the steps to hiring in Italy our guide.

Classifying Italian workers: employees vs. contractors

In Italy, you must classify workers correctly. Drop the ball, and misclassification can lead to pricey lawsuits, fines, and penalties.

Our in-depth guide teaches you what you need to know about classifying Italian employees and maintaining compliance with employment laws. Here’s a brief overview of the ways Italian law differentiates employees and independent contractors:

Work permits for Italian employees

Ensuring your potential employees have the proper work authorization in Italy is a necessity. Italian citizens and citizens of the European Union, EEA, and Switzerland do not require a work visa. But in order for a foreign national to legally work in Italy, they must receive a permit issued by the Italian authorities. The Italian government recently approved a digital nomad visa, which allows remote workers to stay for up to one year. But processes for work permits in Italy vary and are ever-changing. See our guide on work permits in Italy for more details on applications and eligibility.

New hire onboarding checklist

There are several essential tasks to complete when onboarding new employees—from paperwork to prepping for their first day. Onboarding is also the ideal opportunity for establishing a strong and successful relationship with your new employee.

Want to make sure you’re providing the best onboarding experience? Here’s a breakdown of a typical onboarding, with tasks for each stage of the process:

Before their first day

• Complete a background check 
• Confirm their eligibility
• Send the offer letter
• Complete necessary paperwork
• Prepare for tax withholdings
• Enroll them in benefits
• Add them to payroll
• Order and configure their devices
• Set up their accounts.
• Schedule their orientation

On Day 1

• Make sure their workspace is ready 
• Send a company-wide “welcome to the team” email
• Give them an agenda to get started
• Schedule a meeting with their onboarding mentor
• Give them an office tour

During their first 90 days

• Schedule any necessary and additional training
• Assign work and help them set goals 
• Schedule regular check-ins
• Ask for their feedback on how to improve the onboarding experience

For a complete list of onboarding essentials, read our guide on new hire onboarding in Italy.

What to include in an offer letter in Italy

Offer letters (or employment contracts) set the stage for the employment relationship. The letter needs to be legally compliant and should serve as a reference point for negotiations with your potential new hire.

The following should be included in your offer letter:

• Title, description, and start date
• Trial or probation period 
• Working hours 
• Compensation and benefits (salary, holiday leave, health coverage, etc.)
• Confidentiality agreements 
• Termination policy 
• Non-compete and non-solicit clauses 

Check out our full guide to creating legally compliant job offer letters in Italy.

NDAs and confidentiality agreements in Italy

Non-disclosure agreements are used by employers to protect confidential information, intellectual property, and trade agreements. Italian laws offer some protection for the safeguarding of this information—but in order to fully protect your company’s information and intellectual property, you need an NDA.

What you need to know about NDAs in Italy:

• The information the parties consider confidential must be clearly identifiable. In other words, the NDA must be specific.
• A penalty clause is recommended. This encourages employees to comply and helps to mitigate the risk of disclosures around business know-how.
• You may not be able to prove unfair competition without an NDA. The Italian Civil Code provides some protections but not enough to ensure the safety of your company.

Learn more about NDAs and their enforceability in our primer on NDAs in Italy.

Running background checks on Italian employees

There are strict regulations for background checks in Italy. The Italian Data Protection Code and the European Union’s GDPR rules regulate companies from gathering excessive personal information from employees. Failure to comply can result in fines. 

The type of background screening you can conduct is dependent on the role you’re hiring for. Commonly run background checks include:

• Criminal background check 
• Employment history verification
• Education verification
• Social media screening

See our full guide for more details and common mistakes to avoid during the screening process.

Paying employees in Italy

Once you’ve decided between an EOR or establishing your own local entity, you’ll need to select a payroll solution.

The next steps are:

• Double-check that employees are correctly classified.
• Collect employee information, including name, date of birth, date of hire, contact, and bank information.
• Input the remuneration amount in EUR or USD. Get written permission from the employee if you’re planning to pay them in a different currency.
• Ensure that you’re adhering to statutory requirements when calculating payroll deductions and tax rates.
• Run payroll.

Read more about paying employees in Italy with our step-by-step guide.

Mandatory employee benefits in Italy

In Italy, you must offer benefits packages that comply with labor laws and local collective bargaining agreements. Failing to comply with the legal obligations of providing statutory benefits can result in consequences like penalties and fines. Additionally, benefits are a great way to make your company stand out to prospective hires and boost retention of employees. 

Mandatory benefits in Italy include:

• Social security. Both employee and employer pay into social security in Italy. Rippling’s EOR can calculate contributions and taxes on your behalf.
• Overtime pay. The work week in Italy is typically 40 hours segmented out in eight-hour days. Employers must pay for any overtime and workers cannot work more than 250 hours overtime per year. 
• Annual leave entitlement. Workers in Italy are entitled to paid leave which includes a minimum of four weeks of paid vacation leave annually and 12 paid public holidays.
• Sick leave. Employers must pay the worker’s full salary during the first three days of sick leave. 

To learn about all the mandatory benefits—including maternity leave, paternity leave, holiday bonuses and more—read our guide to offering benefits in Italy.

Managing remote employees’ computers and apps

There are endless factors to consider when onboarding global employees—shipping computers, establishing and securing employee accounts, and effectively managing applications throughout the entire employee lifecycle to name a few. Managing the supply and remote maintenance of devices poses significant challenges in the age of global employment. 

It is the responsibility of the employer to ensure that their employees are ready to go on their first day with all the apps and tools they need to work with the rest of their team. 

With Rippling, you can:

• Speedily set up all your employees’ accounts
• Ensure that employees have access and permissions for all the tools they need
• Streamline the process of setting up, managing, and disabling employee applications with a centralized platform

Check out our guide to learn more about setting up and managing remote workers’ devices.

Protecting company IP in Italy

When providing new employees with access to company applications and sensitive information, it’s important to take the proper precautions and get ahead of any risks. And to safeguard your company's original ideas, you need to address intellectual property protections explicitly within the employee agreement. 

This includes clearly defining ownership of IP created by the employee, establishing rights for commercial use, implementing confidentiality agreements to protect trade secrets, and incorporating any other provisions you need to ensure comprehensive protection.

Three important takeaways are below—and you can learn more in our beginner’s guide to IP law in Italy.

• Italian law on trade secrets is one of the most protective in Europe.
• Employers own the IP rights to their employees’ inventions
• Worker classification is vital to IP protection.

Complying with Italian labor laws

Navigating Italy’s labor and employment laws can be complex given the local laws, EU directives, and Worker’s Statute. Here are some must-know starter points for staying compliant with labor standards in Italy:

• Oral employee contracts are valid within 30 days of start date.
• Severance pay is required in all terminations, regardless of cause.
• Collective bargaining agreements set many of the employee rights.

Get a thorough understanding of all the regulations and their nuances, from notice periods to time off, in our guide.

Terminating employees in Italy

Italian employees are safeguarded from unfair individual dismissals by the Italian Civil Code and collective bargaining agreements. Acceptable grounds for firing an employee in Italy include:

• Just cause. Theft, lying, causing harm to someone, and displaying gross negligence are all considered serious misconduct and quality as just cause.
• Justified reasoning. Redundancy, relocation of the business, or poor performance are all considered justified reasoning.

Non-compliance with termination requirements can be costly and detrimental to your overall business health, as well as company morale. Learn more about handling termination in Italy with our full guide to terminations.

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.