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Employment in Italy

The Italian labour market is highly regulated and skewed heavily towards employee-rights, making it notoriously tricky to navigate. There are numerous legislative requirements for employers to comply with, depending on the type of employee and contract that is of concern, and compliance with Italian labour and employment regulations is often costly and time-consuming. However, the global economic downturn has forced Italian lawmakers to embrace political, social and legal reform in order to enhance flexibility within the Italian job market.

Key points on employment in Italy

Some key points to note on the Italian labour market:

– Each industry has a National Collective Bargaining Agreement that regulates the employment relationship

– Companies with more than 15 employees come under the umbrella of the Workers’ Statute

– A collective dismissal is triggered when at least five dismissals are served within 120 days. Executives are now included in this count

In Italy, individual contracts of employment and labour relationships are governed [in order of priority] by:

1. The Constitution

2. The Civil Code: Employment and labour matters are regulated under Section III (“On the employment relationship”), articles 2094-2134.

3. Laws enacted by Parliament: Italy has extensive employment and labour legislation

4. Regulations issued by authorities other than Parliament and the government.

5. National Collective Bargaining Agreements

6. Custom and practice – for issues not governed by legal provisions or by the collective agreements. Customs more favourable to employees prevail over legal provisions, but do not prevail over individual employment agreements.

Employees in Italy have a basic right to establish and join a Trade Union association in the workplace or perform Union activity. This right is protected by the anti-discriminatory provisions (Articles 14-17 of Law no. 300/70, i.e. “Workers’ Statute”). “Rappresentanze Sindacali Unitarie” (RSU) were established by national agreement in 1993 and reformed in 2014. RSUs are formed by a general election among the workforce. The Unions compete in the election and are represented in proportion to the votes they have received.

Alternatively, a union can establish its own Rappresentanza Sindacale Unitaria (RSA).

Both the RSA and RSU are involved in collective bargaining and the verification of the correct application of laws and collective agreements. They have both information and consultation rights, as laid down both by collective bargaining and by law. Both unions are generally consulted with regards to issues such as overtime levels, employment policy, hiring policy or corporate restructuring.

Hiring in Italy? Here's our latest article on employment in Italy.
  1. Contracts

    Generally, all employment contracts in Italy are required to be in writing. Given Italy is a member of the European Union (EU), the country is also subject to various EU directives and legislation.

    As such, European Union Directive No. 533/91 requires that information on the main terms and conditions of employment relationships be evidenced in writing in the employment contract and provided to the employee within 30 days of hiring. In general, individual employment contracts must specify:-

    1. Parties to the employment agreement;

    2. The starting date of the employment and the duration of the trial period, if any;

    3. The expiration date, if the employment is for a fixed term (where these contracts are permitted by law);

    4. The salary, method for calculation of the salary, frequency of payment, and any particular term or condition related to the salary and fringe benefits;

    5. Working hours;

    6. Annual entitlement to paid holiday leave; and

    7. Employee’s duties and the related work “category” as established by the Civil Code under article 2095.

    Employment contracts in Italy are usually for an unlimited duration, however fixed-term and open-ended contracts are also available.

    Specific types of contracts

    A. Part-time contracts

    Part-time employment contracts must be in writing. All contracts must also specify the hours of work (e.g. by day, week, month and year). Pay and other entitlements of part-time employees are normally pro-rated according to rates of full-time equivalents.

    Ancillary clauses can also be added to give the employer a greater degree of flexibility. Some examples include:-

    • “elastic clauses” (clausole elastiche) which permit an employer to increase working time,
    • “flexible clauses” (clausole flessibili) which permit an employer to vary working hours during the day.

     B. Fixed-Term Contract (Legislative Decree no. 368/2001)

    Companies can hire employees on a fixed-term contract for a limited period of time. Fixed-term contracts can last up to 36 months, including any extension. A maximum of 8 extensions/renewals are permitted. Renewals can be made between the same parties, for the same duties and for a further limited period of time. However, a certain time gap has to lie between the renewals:  10 days if the previous contract had a duration of less than six months; 20 days if the previous contract had a duration of more than six months. Where the above mentioned interruption periods are not complied with, the new contract will be considered as an open-ended one.

    Quantitative limits are usually set by the labour authorities, however the law states that the overall number of fixed-term contracts may not exceed 20% of the permanent workforce. Fixed-term contracts also cannot be used to replace workers on strike or to replace employees temporarily laid-off or involved in collective dismissals in the past few months.

    Contracts may be carried over for a limited period of time after the expiration of the term. However, the grace period may not exceed either 30 days (less than 6 months) or 50 days (if more than 6 months). If the grace period has lapsed, the employment is automatically regarded as an open-ended one.

    C. “Cn Call” jobs (“Lavoro a Chiamata o intermittente” , Legislative Decree no. 276/2003)

    “On call” job contracts are contracts where an employee declares his/her availability to work over a certain period of time, during which he/she can be called in – even for a few days only – with short-term notice.

    In some cases, the contract may provide that the employee is bound to work if called in by the employer. In this instance, the employee is eligible to an additional 20% of the wage set by the National Collective Agreements (NCA)s.

    D. Apprenticeship (“Apprendistato” , Legislative Decree no. 276/2003)

    An apprenticeship is a type of open-ended contract, specifically focussed on vocational training. An employer can hire apprentices within certain quantitative thresholds (usually depending on the number of employees hired) and is responsible for ensuring that the apprentice acquires the relevant professional skills and qualification.

    E. Temporary agency contracts (“Contratto di somministrazione di lavoro”)

    Temporary contracts (both fixed-term or open end basis) can only be agreed with qualified employment agencies. Workers must be subject to the same legal and economic conditions available to employees of the user company. Similar to fixed-term contracts, employers may not use staff supply contracts to replace workers on strike or to replace employees temporarily laid-off or involved in collective dismissals in the previous few months. The overall number of temporary contracts may not exceed the 20% of the workforce hired on permanent basis, unless different thresholds are set under collective bargaining agreements.

Outsourcing Employment Through a GEO Employer of Record Service

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Italy. For companies which intend to employ their staff directly through their incorporated Italian entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Italy.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Italy.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in Italy

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Italy

– the company needs help with tax, employment, immigration and payroll compliance in Italy



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