Guide to hiring employees in Italy

Employee Benefits in Italy

Mandatory benefits

The following benefits are statutory in Italy:

• Leave entitlements
• Work-related injury and illness insurance
• Parental leave
• Overtime pay
• Pension plans
• Minimum wage requirements
• Retirement contributions

In Italy, pension requirements are regularly adjusted based on its average life expectancy, which is one of the world’s highest.
At present (2022), the minimum age of retirement is 67 for both male and female employees who have spent a minimum of 20 years in paid employment.

If a pension does not equate to at least 1.5 times the legal, social allowance for older adults, an employee will not be eligible until they are 71, following five years of contributions.

Employees can claim early pension status under the following conditions:

• Women must have been in employment for 41 years and ten months
• Men must have been in employment for 42 years and ten months

Supplementary benefits

Employers should also look to offer supplementary benefits that are both value- and lifestyle-forward. For example, consider providing the following:

• Flexible working hours
• Mental health and personal wellness support
• Professional development stipends

Source: Pexels/Vlada Karpovich

Types of leave available in Italy

Annual leave

Employees in Italy are eligible for a minimum of 22 days of paid leave per year. In addition, they are entitled to 88 hours of permission from their 5th year of employment.

Those in a management position are allowed a minimum of 30 days’ paid leave per year, with 32 hours of permission if they are in full-time employment.

In addition to the above, collective bargaining agreements and individual employment contract terms between the employer and employee may stipulate longer annual leave periods. 

As well as statutory annual leave, employees are entitled by Italian employment law to one rest day per week (usually on Sundays) and one rest day for each public holiday (these are listed below).

Normal pay should be received during annual leave and public holidays.

Public holidays

Italy observes the following public holidays:

• New Year’s Day
• Epiphany
• Easter Sunday
• Easter Monday
• Liberation Day
• International Workers’ Day
• Republic Day
• Assumption Day
• All Saint’s Day
• Immaculate Conception
• Christmas Day
• St. Stephen’s Day

Employees are entitled to one rest day for each municipality for the relevant Patron Saint’s day.

Sick leave

Sick leave in Italy is generally paid up to a maximum of 180 days per year. In some sectors, employees are granted a public indemnity. This is 50% of their average daily wages for the first 20 days and 66.66% for subsequent days. For most categories of employees, the indemnities are paid for by the employer on behalf of the public offices. This reduces the number of contributions paid monthly. 

Maternity leave

Pregnant employees are entitled to maternity leave, regardless of their length of service.
Pregnant subordinate employees are required to take five months of maternity leave. This can be taken from two months before childbirth to three months after. During maternity leave, the employee is entitled to 80% of their regular pay; this comes from the social security authorities, and the period is classed as actual work time. The employer should make up the difference in remuneration, meaning that the employee gets their normal monthly salary during maternity leave.

When returning to work, the employer must give the employee the same position, duties and tasks they carried out. Employees cannot be dismissed from the beginning of the pregnancy to one year after birth (this is known as the protected period).
Employees with an income of less than €8,145 can have their maternity indemnity increased by three months.

Maternity leave can be converted into paternity leave under the following circumstances:

• The child’s mother becomes seriously ill or dies
• The mother abandons the child
• The father is granted full custody of the child in court

Paternity leave

Employees taking paternity leave are entitled to their normal terms and conditions of employment. However, collective agreements and contracts may provide more flexibility on this matter.

Both parents are allowed to take further leave up until the child is 12 years old, with no qualifying period of employment required. The total amount of leave taken by both parents must not exceed 11 months.

Adoption leave

Regardless of their length of service, employees are entitled to adoption leave when adopting a child, both from Italy or from overseas. Adoption leave may only be taken by one of the adoptive parents.

An employee who adopts a child nationally is entitled to paid adoption leave for five months after the placement of the child with them. An employee adopting a child from overseas may start the five months’ paid adoption leave before the child has arrived in Italy. This is in compliance with the foreign adoption procedure. Any remaining leave can be taken immediately following the child’s arrival in Italy.

Leave for the care of dependents 

Employees are entitled to time off to care for dependents. Employers cannot dismiss an employee during this type of leave.

Attracting talent in Italy

According to Gallup’s State of the Global Workforce report, Europe has the least engaged employees in the world. Italy was among the countries with the lowest engagement ratings, not even reaching the threshold of 10% for engaged employees.

With that in mind, companies looking to expand their business to Italy and hire top Italian talent need to consider their benefits packages from an employee engagement perspective.

Employee engagement initiatives can bring many advantages to an organisation. For example, an engaged workforce is typically more productive and motivated, and engaged employees are less likely to churn from a company. They can also improve workplace morale, as employees who are engaged will likely have a more positive attitude towards their work.

Here are some ways in which companies can improve employee engagement:

Offer employee development opportunities 

Employees who feel like they are learning and growing in their careers are more likely to be motivated and engaged. Therefore, it’s important to offer a clear pathway to your staff through professional development plans or mentoring programmes.

Provide reward schemes 

Recognising and rewarding hard work is a simple but effective way to keep engagement levels high. Employees who feel appreciated at work will doubtless be more productive and feel more satisfied in their jobs.

Involve staff in decision-making processes

Employees who feel as though they are involved in the company’s key decision-making processes are more likely to be productive and engaged. Allowing employees to have a say in how the organisation operates is a strong way to keep them engaged. This can be done through company surveys and skip-level meetings to discuss ideas.

Source: Pexels/fauxels

Termination of employment in Italy

Employment contracts in Italy cannot be terminated without a justified reason, according to Italian labor law. Some of these reasons include breach of contract, re-organisation or economic reasons.  

Employees in Italy cannot resign through a simple resignation letter; they must complete a formal resignation procedure in order to end an employment relationship. Exceptions include:

• Consensual resolution with a formal agreement
  
  
• Parents of sons under the age of 3 (in this case, the formal resignation happens care of the Ministry of Labor local offices)

Dismissal in Italy should be conducted as part of a formal, complex procedure overseen by the law. Grounds for dismissal in Italy include the following:

• Justified objective reasons such as redundancy due to economic, production or organisational reasons.
  
  
• Justified subjective reasons such as serious misconduct in breach of the employee's contractual obligations.
  
  
• Just cause, such as circumstances that prevent the continuation, even on a temporary basis, of the employment relationship, such as the employee's gross misconduct.

Notice Period

An employee’s minimum notice period should be set out in the applicable collective bargaining agreement based on their service length, level and position. The notice period required for a resignation is typically shorter than for a dismissal.

In the case of individual dismissals, employers can choose to make a payment in lieu of the notice period. Social security payments must be paid in this instance. Employees with fixed-term contracts or who are under probationary periods are not required to provide notice. 

Probationary period

A probationary period can be included in the employment agreement. This period must be agreed upon by both parties in writing.

A probationary period must not exceed six months in any event.

Severance pay

Employers must cover severance payment in all cases of dismissal or resignation. The amount to be paid is equal to the sum of each annual salary divided by 13.5.

Collective dismissals 

Collective dismissal occurs when an employer with more than 15 workers intends to terminate the employment of at least five employees within a single work unit or from multiple work units within the same province within 120 days. 

Collective redundancy procedures are as follows:

The employer must:

• Notify the works council and the Employment office
•  
• Inform the appropriate employee representatives and trade unions
  
  
• Notify the labour authorities 

The following information must be provided:

• Reasons for making the redundancies
  
  
• The technical, organisational or economic reasons why it is impossible to avoid, wholly or in part, making the redundancies
  
  
• The number of redundant employees, along with their job descriptions
  
  
• The timeline for redundancies made
  
  
• Any measures taken regarding the redundant employees
  
  
• The proposed method for calculating redundancy payments other than those conferred by law or CBAs

For employees hired before 7 March 2015, if it is proven that there is unfair dismissal, the affected employees can be reinstated to their original position and be paid a reinstatement indemnification amounting to a maximum of 12 months' salary.

For employees hired after 7 March 2015, reinstatement and payment of a reinstatement indemnification can only be provided after an oral- dismissal or discriminatory dismissal.

In other cases of unlawful dismissal, the employer is only required to pay a reinstatement indemnification (between a minimum of six and a maximum of 36 months’ salary). The amount paid is subject to the employee's length of service, the lack of reasons behind the dismissal, and the number of damages suffered by the employee. The dismissal is then effective.