Quick facts

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Italy, known for its diverse economy, is a significant global player in sectors such as automotive, fashion, and manufacturing. With strong labor protections, Italian labor law regulates employment contracts, working hours, and a comprehensive social security system. Collective labor agreements (CLAs) play a significant role in setting employment standards across industries.

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Employment Contracts

Italian companies offer both fixed-term and indefinite contracts. Fixed-term contracts are limited to 24 months and may be extended up to 4 years with legitimate reasons. After this period, a fixed-term contract automatically becomes indefinite. Employment terms are governed by collective bargaining agreements (CBAs) specific to various sectors.

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Probation Period

The probation period in Italy is determined by collective agreements but is capped at 6 months. During probation, either party can terminate the contract immediately without providing notice or severance.

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Working Hours

The standard workweek in Italy is 48 hours on average, over a 17-week period. Overtime cannot exceed 250 hours annually. A premium applies to work done at night (15% surcharge), on Sundays (30% surcharge), and on public holidays (50% surcharge).

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Vacation Days

Employees are entitled to 22 days of paid leave per year, while “Quadro” employees receive 26 days. Employees also accumulate 32 hours of leave for the first two years, which increases to 56 hours after four years.

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Sick Leave

Statutory sick pay begins from the fourth day of illness and can last up to 180 days per year. For the first 3 days, employees do not receive statutory sick pay unless provided by their contract. Between days 4 and 20, employees receive 50% of their average daily pay, which increases to 66.66% from the 21st day. Sick pay is recorded as an adjustment to the employer’s social security contributions.

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Wages and Salary Payment

In Italy, salaries are generally paid on the 25th of each month via bank transfer. There is no national minimum wage; instead, minimum pay is specified within each sector’s CBA. Many employees also receive a 13th-month salary as a Christmas bonus, with some sectors granting a 14th-month salary in the summer.

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Public Holidays

Italy observes 11 national holidays plus 1 regional holiday. Major holidays include:

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• January 1: New Year’s Day
• April 25: Liberation Day
• May 1: Labor Day
• December 25-26: Christmas

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When a holiday falls on a Sunday, it is observed on the following Monday, or employees receive additional pay.

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Employer Taxes

Employers in Italy contribute approximately 30% of the employee’s salary toward social security, which covers pensions, healthcare, and other mandatory benefits.

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Employee Taxes

Employee social security contributions total 10% of gross salary. Personal income tax rates in Italy are progressive, ranging from 23% to 43% based on income:

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• Up to €15,000: 23%
• €15,001 to €28,000: 25%
• €28,001 to €50,000: 35%
• Over €50,000: 43%

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Notice Period

The notice period varies depending on the employee’s role:

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• Level 1–7 employees: 30 days from either party
• Quadro employees: 60 days from the employer, 45 days from the employee

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Notice periods commence from the 15th or end of the month.

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Termination and Severance Pay

Termination requires a justified reason, such as a contract breach or economic necessity. Employers must set aside 7% of the employee’s salary annually as end-of-service compensation, known as TFR (trattamento di fine rapporto). TFR is paid out upon termination, regardless of the reason.