Employer of Record in Italy

Brain Source International helps you save time and reduce costs by allowing you to hire in Italy without establishing an entity. Our Employer of Record (EOR) solution handles onboarding, payroll, immigration, and benefits so you can hire your employees faster and grow your business compliantly.

What is an Employer of Record in Italy?

An Employer of Record (EOR) in Italy is a strategic partner that acts as the legal employer for your employees residing in Italy. The EOR takes on all employment responsibilities and liabilities on your behalf, handling payroll, benefits, taxes, and regulatory compliance.

By partnering with an EOR, you can hire employees in Italy without the need to establish a local entity or navigate complex labor laws.

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General Information

• Capital: Rome
• Currency: Euro (EUR)
• Fiscal Year: 1 January – 31 December
• Payroll Frequency: Monthly

Minimum Wage

General: Italy does not have a statutory minimum wage. Instead, minimum wages are typically determined by each sector through the national collective agreements (NCAs), which establish wage levels for different contractual positions.

Payroll

Payroll Cycle: In Italy, the payroll cycle is monthly, with payments required to be made no later than the 15th of the following month.

13th Salary

Under Italian law, salaries are distributed in 12 monthly installments. An additional 13th installment, known as the “tredicesima,” is paid out annually alongside the December salary. Certain National Collective Agreements (NCAs) may also include a 14th installment, typically paid in June.

Taxation

Would you like to know the approximate cost of employment in Italy?

Working Hours

General: Standard working hours in Italy are 8 hours per day, 40 hours per week.

Overtime: All work exceeding the standard weekly hours is compensated as overtime, governed by the terms of the employment contract or collective agreements. Overtime limits and compensation are typically determined by the applicable National Collective Agreement (NCA).

Leave

Annual Leave (Vacation):

Minimum leave is determined by the applicable collective agreement, which generally provides paid annual leave of not less than four weeks per year.

Public Holidays

If a public holiday falls on a Sunday, it is either carried over to Monday or compensated with pay in lieu. Besides the national holidays listed below, there may also be regional holidays that employees are entitled to observe.

Sick Days

In Italy, employees are entitled to paid sick leave, which is covered initially by the employer and later by the government. For the first two periods of illness each year, the employer pays 100% of the regular salary for the first three days. For the third sickness period, the rate drops to 66%, and for the fourth, it reduces to 50%. Any additional sick leave beyond the fourth period within the same year is unpaid.

Starting from the fourth day of sickness, employees continue to receive 100% of their regular salary, with 50% paid by the employer and 50% by the government from day 4 to day 21. After the 22nd day, the government covers 66% of the salary, while the employer’s share reduces to 34%. A medical certificate from a doctor is required from the first day of illness.

Maternity Leave

All female employees in Italy are entitled to five months of paid maternity leave, typically starting two months before the due date and continuing for three months after childbirth. However, this period can be adjusted: maternity leave can begin earlier if the work poses a risk to the mother’s or child’s health, or it can be delayed until after childbirth. During maternity leave, the employee receives 80% of her regular salary, paid by the employer and later reimbursed by the INPS (National Social Security Institute).

After maternity leave, new mothers can take up to six months of unpaid parental leave. Alternatively, if a mother chooses not to take parental leave, she has the option to work a reduced schedule of six hours per day until the child turns one year old.

For mothers whose income was less than 8,145 EUR prior to taking maternity leave, the maternity allowance will be extended by an additional three months.

Paternity Leave

The father is entitled to receive 100.00% of the regular salary and compulsory paternity leave of 10 days within five months of the child’s birth.

Parental Leave

In Italy, employees are entitled to take up to 10 months of unpaid parental leave.

As of January 1, 2023, a new law provides an additional month of parental leave, paid at 80% of the employee’s salary. This enhanced parental leave must be used by either parent, and it must be taken before the child reaches six years of age.

Other Leave

Bereavement Leave – In the event of the death or serious illness of a family member (up to the second degree), employees are entitled to up to 3 days of paid leave per year. This leave must be taken within seven days of the event.

Employees are required to provide relevant documentation and must inform the employer in advance about the event and the intended dates for the leave.

Wedding Leave – Employees are entitled to a one-time paid leave of 15 calendar days for their marriage.

FAQs for Employer of Record in Italy

1. What is an Employer of Record in Italy?

An Employer of Record (EOR), such as Brain Source International, manages employment responsibilities like onboarding, payroll, benefits, and compliance. This allows businesses to legally hire talent in Italy and other countries without setting up a local entity.

2. Is Employer of Record legal in Italy?

Yes, the Employer of Record model is fully legal in Italy as long as the EOR agency is authorized by the Ministry of Labor. Working with unauthorized agencies can lead to legal issues and penalties.

3. What is the EU Employer of Record?

An EU Employer of Record serves as the legal employer for your workforce in Europe. They handle all HR-related functions, including hiring, payroll processing, and managing benefits and taxes, ensuring compliance with local regulations. In Italy, this includes adhering to specific tax laws and employee benefits requirements.

4. What is the difference between a PEO and an EOR?

The key distinction is that a PEO (Professional Employer Organization) operates as a co-employer, sharing employment responsibilities, while an EOR acts as the legal employer on behalf of the company. A PEO provides supportive HR services like payroll, while an EOR takes full responsibility for HR operations, including hiring, compliance, and recruitment.

5. What are the benefits of an EOR?

The advantages of using an EOR in Italy include:

• Quick and compliant market entry: Skip the need for establishing a local entity.
• Cost savings: Eliminate expenses related to entity setup and maintenance.
• Streamlined HR processes: EORs handle onboarding, payroll, taxes, and benefits.
• Legal and financial risk reduction: Ensures compliance with Italian labor laws.
  This is especially beneficial in Italy’s complex labor market, where compliance is critical.

6. What are the workplace laws in Italy?

Italian workplace laws regulate areas such as:

• Working hours and overtime
• Minimum wage and overtime pay
• Termination and probation periods
• Anti-discrimination measures: Protecting employees against discrimination based on gender, race, religion, or disability.