An Employer of Record (EOR) acts as the legal employer for workers, handling HR responsibilities like payroll, taxes, and compliance, while the company directs the employees’ day-to-day tasks. This setup allows businesses to hire globally without establishing a local entity.
Hiring workers from Italy offers benefits due to their high level of education, technical skills, and proficiency in multiple languages. Italy is recognized for its strong talent in engineering, fashion, and culinary arts.
Employment in Italy has grown, with employed individuals increasing from around 507,000 to 520,517 (+2.6%) between 2018 and 2023, reaching a record high, according to EURES. However, Lightcast reports a significant challenge in hiring talent due to an all-time high in job vacancies, suggesting a worsening talent shortage.
To use an EOR in Italy, there are 6 basic steps to ensure you are set up properly.
- Find talent to hire in Italy
- Compare using an EOR to setting up a legal entity in Italy
- Get the information needed from your talent
- Choose an EOR provider with expertise in Italy
- Communicate your hiring needs to the EOR
- Have the EOR set up the contracts and hiring procedure
An EOR manages payroll, taxes, and benefits administration, ensuring compliance with local laws and regulations, thus simplifying the employment process for companies.
Different labor laws in Italy, such as those governing work hours, termination processes, and mandatory employee benefits, must be considered when hiring remotely. The hiring process in Italy involves identifying talent, ensuring compliance with local employment laws, and executing contracts, typically facilitated by an EOR for companies without a local presence.
1. Find talent to hire in Italy
Businesses should explore a variety of channels to find talent to hire in Italy, emphasizing both local and global platforms to maximize reach. TrovoLavoro, recognized as one of Italy’s largest job boards by Workello, offers extensive listings catering to diverse industries. Careerjet, with its strong global presence, also serves as a crucial resource for employers, particularly for those seeking international candidates; its Italy-specific platform garners over 100,000 monthly visits, indicating a robust market for talent.
LinkedIn remains an essential tool for talent acquisition. It allows companies to search for candidates actively seeking opportunities and to headhunt passive candidates. Its widespread use among professionals in Italy makes it a valuable platform for networking and direct outreach.
Specialized recruitment agencies, such as Airswift, provide tailored solutions for industries requiring specific expertise, particularly in technical and STEM fields. These agencies manage the complexities of sourcing and vetting candidates, significantly easing the hiring process for companies.
Job posting websites like Glassdoor and Indeed offer another avenue for employers to advertise openings. These platforms are popular among job seekers, making them an important part of a comprehensive recruitment strategy.
Considering local job boards and regional networks can be advantageous for businesses focusing on hiring within specific regions or industries. Italy’s industrial activity is concentrated in certain areas, such as Milan, for finance and fashion, making a targeted search strategy crucial.
2. Compare using an EOR to setting up a legal entity in Italy
When working with employees in Italy, you need to consider working with an EOR to set up your legal entity. An Employer of Record offers a quicker, less complex route to hiring local staff, bypassing the need for a formal company presence. This approach suits companies looking to test the Italian market or expand quickly without significant upfront investment.
An EOR manages all local employment laws, tax, and compliance issues, assuming responsibility for hired employees. This setup allows companies to start operations in weeks, compared to the months required to establish a legal entity.
On the other hand, setting up a legal entity in Italy offers greater control and the ability to customize business operations and policies. However, establishing a legal entity involves complex registration processes, significant upfront fees, and a deeper understanding of local laws and tax regulations.
In comparison, using an EOR is generally less expensive. It involves less risk, making it a suitable option for small to medium-sized businesses or those in the initial stages of market exploration. It eliminates the need for a local expert or dedicated legal and tax teams, as the EOR handles these aspects. However, it offers limited flexibility in tailoring employment contracts and benefits to specific company policies.
| Factor | Employer of Record | Setting Up Legal Entity in Italy |
|---|---|---|
| Setup Time | 1-2 weeks | 2-3 months |
| Initial Cost | Low (typically only employee costs) | High (€5,000 – €10,000+) |
| Ongoing Cost | Moderate (EOR fees + employee costs) | Variable (operational costs, compliance, etc.) |
| Complexity | Low (EOR handles most administrative tasks) | High (requires understanding of Italian business laws) |
| Control over Operations | Limited (company directs daily work, EOR handles employment) | Full (complete control over all aspects of business) |
| Compliance Management | Handled by EOR (payroll, taxes, social security) | Company Responsibility (requires local expertise) |
| Scalability | Highly Flexible (easy to add or remove employees) | Less Flexible (changes may require legal procedures) |
| Local Expertise Required | Minimal (EOR provides guidance) | Extensive (need for local legal and tax advisors) |
| Suitable for | Market entry, testing Italian market, short to medium-term projects | Long-term presence, full operations, strategic expansion |
| Risk | Lower (EOR assumes employer liabilities) | Higher (company bears all legal and financial risks) |
| Customization of Employment Terms | Limited (must adhere to EOR’s policies) | Extensive (can create company-specific policies) |
| Handling of Labor Contracts | Managed by EOR | Company must navigate complex Italian labor laws |
| Termination Process | Simpler (EOR manages notice periods and severance) | More complex (company must handle directly) |
| Entity Registration | Not required | Necessary (VAT number, Chamber of Commerce registration) |
3. Get the information needed from your talent
To hire employees in Italy, you’ll need their personal information, employment contract details, and tax code, among other things. Remember, it’s important to collect this data before the employee starts working.
Typically, you’ll need the following essential personal information.
- employee’s full name
- address
- date of birth
- alphanumeric tax identifier known as a Codice Fiscale
Additionally, you’ll need their bank account details for salary payments and a comprehensive job description, including title, duties, and place of work. Employment contracts in Italy must be provided in writing, detailing the contract type, start date, salary, work hours, and other employment conditions.
4. Choose an EOR provider with expertise in Italy
When choosing an EOR provider to work with in Italy, it is crucial to select one with deep expertise in the Italian market and a strong understanding of local labor laws to ensure compliance and smooth business operations. Evaluate the provider’s experience managing employee onboarding, payroll, and legal compliance in Italy. Look for a provider with a proven track record of working successfully with companies similar to yours, and check their reputation through client case studies or reviews.
Assess the range of services offered to see if they align with your needs, such as visa and work permit support, employee benefits management, and payroll processing. It is important to choose a provider that offers comprehensive employment services and is flexible enough to adapt to changes in Italian labor laws.
Consider the provider’s technology and platforms, ensuring they offer secure, user-friendly systems with strong data protection measures. Evaluate their pricing models, looking for transparency in fees, whether they charge a fixed monthly fee or a percentage of the employee’s salary, and assess the cost-effectiveness for your business.
Finally, choose an EOR provider that demonstrates a commitment to staying up-to-date with Italian employment laws and can provide proper guidance and support to ensure your business remains compliant while operating in Italy.
5. Communicate your hiring needs to the EOR
It’s important to communicate your hiring needs to the EOR to ensure the process aligns with company goals and legal requirements. Providing a detailed job description, including title, responsibilities, required qualifications, and skills, is key.
Specify the job’s expected start date, location, and whether it’s remote or onsite. Outline the proposed salary, bonuses, commission structures, and other compensation benefits. Clarify the contract length, whether permanent or probationary, and detail the working hours, including any flexibility or shift requirements.
Discuss the company culture, growth plans, and how the position fits into future expansion. Specify equipment needs and onboarding procedures. By accurately representing these aspects, the EOR can find the right talent and ensure legal and administrative compliance.
6. Have the EOR set up the contracts and hiring procedure
Once you’ve chosen which provider to work with and communicated all of your hiring needs, the EOR will set up the contracts and hiring procedure, ensuring compliance with local labor laws and employment practices.
The EOR drafts employment contracts that adhere to Italian labor laws, including specific terms regarding job details, working hours, and termination procedures. They’ll manage the necessary documentation for tax, social security, and payroll setup, adhering to mandatory withholdings and reporting requirements. The EOR also registers employment with relevant Italian authorities, such as ANPAL, to ensure the company is properly licensed and authorized to operate and hire employees in Italy.
The EOR assists in obtaining work permits and visas for foreign employees, collects personal and bank account information for payroll, and outlines the onboarding procedures in accordance with Italian employment laws. They’ll ensure your company complies with collective bargaining agreements, if applicable, and adjusts contracts and practices as laws and agreements change. Additionally, the EOR administers benefits and handles formal onboarding, including the introduction to company systems and culture.
What help does an EOR provide in Italian payroll, taxes, and benefits administration?
The EOR will provide support in all Italian payroll, taxes, and benefits administration, ensuring compliance with complex local laws. It calculates and processes employee salaries, withholds the correct tax amounts, and handles social security contributions.
The EOR payslips reflect mandatory withholdings for income tax and social insurance, adhering to Italian regulations like the Certificazione Unica for income reporting and the Gestione Separata for freelance or independent contractor contributions. It files monthly and annual tax returns with Italian authorities, including the Agenzia delle Entrate, and manages municipal tax requirements.
For benefits, the EOR enrolls employees in statutory programs, such as the national health service (Servizio Sanitario Nazionale), and administers supplemental benefits like private health insurance. It manages statutory paid time off, sick pay according to INPS (Istituto Nazionale della Previdenza Sociale) guidelines, and ensures correct accrual and payout of vacation and severance pay, in line with the Jobs Act and other labor laws.
When do you need an EOR to hire in Italy?
Working with Italian freelancers can be done without a legal entity, but hiring employees in Italy typically requires establishing a legal presence.
An EOR is usually necessary when a company needs to control the work, including setting hours, providing tools, and defining work processes. Such a level of control suggests an employer-employee relationship, subject to Italy’s employment laws, including tax, social security, and benefits obligations.
An EOR is ideal for projects requiring a dedicated team integrated into the company’s culture and processes. This setup ensures the proper classification of workers as employees rather than independent contractors, avoiding misclassification risks.
If the work involves regularity and continuity, similar to that of a permanent employee, an EOR is suitable. This is compared to engaging freelancers or contractors working independently on specific, limited-term projects.
When a company’s operation in Italy grows beyond a few freelancers or requires customizing HR policies and processes to fit the local culture and legal requirements, an EOR provides the necessary infrastructure and legal compliance.
What are the best EOR providers to use in Italy?
| EOR Provider | Why It’s a Good Fit for Italy |
|---|---|
| Deel | – Extensive global coverage including Italy – Expertise in navigating Italy’s complex labor laws and regulations – 24/7 customer support with dedicated account managers, helpful for managing time differences |
| Remote | – Strong focus on employee experience, important in Italy’s employee-centric work culture – Proprietary IP protection measures, valuable for tech companies expanding to Italy – Comprehensive coverage in 180+ countries, including Italy |
| Remofirst | – Competitive pricing, starting from $199 per employee/month, attractive for cost-conscious businesses – Offers services in 180+ countries, including Italy – Provides employment contracts, payroll, and tax compliance services, essential for navigating Italian labor regulations |
| Multiplier | – Competitive pricing starting at $400 per employee/month for EOR services – Covers 150+ countries, including Italy – Offers comprehensive benefits management, crucial for meeting Italy’s mandatory employee benefits requirements |
What labor laws do you need to consider when hiring in Italy?
When hiring in Italy, a few key labor laws must be considered, reflecting the country’s protective stance on employee rights. Italy’s approach to labor laws is generally protective, offering extensive employee protections considered more stringent than those in many other countries.
This protective nature ensures that employees receive significant benefits and safeguards, particularly regarding employment contracts, working hours and paid holidays, taxes, and severance pay.
Employment contracts
Employment contracts in Italy are governed by national labor laws and the European Union directives, ensuring workers’ rights and statutory benefits. The Italian employment contract, or “contratto di lavoro,” must specify job details, including position, duties, working hours, salary, and termination conditions. These contracts are typically in writing, providing a clear agreement between employer and employee (European Union Directive 91/533/EEC).
Italy offers various types of employment contracts, each serving different needs and offering different levels of job security and benefits. The most common types are:
- Permanent Contracts (Contratto a Tempo Indeterminato): Offer the highest level of job security with unlimited duration. These contracts do not have a specified end date, providing continuous employment until retirement or termination by either party. They are extendable and include all statutory benefits.
- Fixed-Term Contracts (Contratto a Tempo Determinato): These are for specific, limited periods, not exceeding 36 months, including any extensions. They’re used for temporary increases in work or to replace absent employees. Fixed-term contracts can be converted to permanent contracts under certain conditions.
- Apprenticeship Contracts (Contratto di Apprendistato): These contracts combine work with training and aim to facilitate young people’s entry into the labor market, offering reduced working hours and specific training paths.
- Intermittent Contracts (Contratto a Tempo Intermittente): Allow employers to call workers as needed. This is suitable for jobs where work is not continuous but occurs at certain times or seasons.
- Part-time Contracts (Contratto di Lavoro a Tempo Parziale): Offer flexibility, allowing employees to work fewer hours than a full-time schedule, with salary and benefits adjusted accordingly.
Key elements of an employment contract in Italy include the starting date, notice periods for termination, and details on probationary periods, which typically last up to 6 months for permanent positions. Contracts must also reference applicable collective bargaining agreements, which can provide additional rights and benefits beyond the statutory minimum.
Working hours and paid holidays
In Italy, the standard workweek caps at 40 hours. Work beyond this is overtime, generally limited to 8 extra hours weekly, varying by sector agreements. Overtime pay is at least 110% of the base rate, often reaching 130%.
Employees enjoy a minimum of 4 weeks paid annual leave, plus 11 national and 1 local public holiday, totaling around 12 paid holidays. Each public holiday warrants an additional paid leave day.
Collective Bargaining Agreements (CBAs) may offer benefits beyond these minimums. Employers need employee consent, ideally written, for changes to work hours or holiday rights. Leave and work hour terms can differ by employee category, reflecting Italy’s commitment to safeguarding worker rights.
Social security compensates maternity leave at 80% of the salary. Women get 5 months off (2 months before birth plus 3 months after). For sick leave, employers cover the full salary for the first three days, then 50% from the fourth to the twentieth day, and 67% up to the 180th day.
Taxes
Based on income levels in Italy, individual income tax rates range from 23% to 45%, with an additional regional tax of 1.23% to 3.33%. Employers contribute about 40% of an employee’s pension and social security salary, while employees pitch in roughly 10%. Corporate income tax stands at 24%, plus a regional tax on productive activities at 3.9%.
Employers’ mandatory contributions include payments to INPS for social security and INAIL for workplace accident insurance. Italy’s public and private healthcare is mainly funded by social security and corporate taxes, ensuring basic services are free for residents.
Termination and severance pay
In Italy, termination notice periods vary by service length and employee level, typically ranging from 1 to 2 months for those with under 5 years of service. Specifics can extend from 10 to 75 days as outlined in relevant Collective Bargaining Agreements (CBAs).
Employers calculate severance pay monthly based on the formula (Annual gross salary / 13.5) + (1.5% * years of employment) + inflation compensation, which is mandated in any termination scenario. The Trattamento di Fine Rapporto (TFR) represents a compulsory severance contribution payable upon employment cessation for any reason.
Termination procedures in Italy require valid, communicated reasons for dismissal. Managers face a maximum 6-month probation, regular employees 3 months, during which contracts can end without notice. Collective dismissals trigger specific rules if they involve significant employee numbers within a set period. Italian law fiercely guards against unfair dismissal, with potential outcomes including employee reinstatement or substantial compensation.
How does the hiring process work in Italy?
Employers must follow a structured process and adhere to national labor laws and regulations when hiring staff in Italy. Initially, they identify the vacancy and define the job’s requirements. They advertise the position through various channels to reach a wide pool of candidates.
Interested individuals submit their applications, which the employer reviews to shortlist qualified candidates. These candidates then undergo interviews and, in some cases, testing to assess their suitability for the position. Employers may also conduct background checks and request references to verify the candidates’ qualifications and experience.
Upon selecting a candidate, the employer issues a formal job offer detailing the role’s terms and conditions. If the candidate accepts, both parties sign a contract that must comply with Italian employment law and specify salary, working hours, and job responsibilities.
Before the new hire starts, the employer must complete mandatory administrative tasks, including registering the employee with the Italian Social Security Agency (INPS) and the National Insurance Against Accidents at Work (INAIL). Additionally, the employer must report the new hire to the local labor office (Direzione Territoriale del Lavoro).
Employers are generally required to communicate the hiring of new employees to the local job center (Centro per l’Impiego) within a few days of the start date. This step is crucial for compliance with Italian labor laws.
Is Italy a relatively easy country to hire employees remotely through an EOR?
No, Italy is considered a relatively complex country for hiring employees remotely through an Employer of Record (EOR) due to its stringent labor laws and regulations. Italy’s labor market includes protective employment laws, strict termination and severance rules, and a comprehensive social security system, all adding significant layers of complexity for employers.
The country’s mandatory contributions to social security and taxes, governed by local laws and collective bargaining agreements across different industries, set it apart from the rules around hiring through an EOR in other countries.
