After an employee’s relationship with an employer in Italy ends, both parties must follow certain guidelines and procedures to ensure compliance with local labor laws and regulations.
In this guide, we will provide everything you need to know when offboarding a worker in Italy. This includes the notice period, waivers, termination, post-termination restraints, and more.
Having a notice period is standard practice when ending an employment relationship. In Italy, the following variables may affect the length of the period:
According to the Italian Civil Code, when an employer terminates the employment contracts, employees are entitled to at least 15 days of notice if they have been with the company less than six months, and at least 30 days if they have been employed there for more than six months.
Employers should also keep in mind that the Civil Code regulations are superseded by collective bargaining agreements if they are applicable in the situation.
For example, a few major NCBAs in Italy outline how the notice period can range from 30 days to four months if the employee initiates the end of employment or 30 days to 12 months if the employer decides to terminate the contract.
Notice periods may be shortened in certain cases. One of the most common uses of this change is when both the employer and employee decide to end the employment contract, and either shorten the notice period or forego it entirely.
Another case in which shortening or waiving the notice period is acceptable is when employment is terminated because of severe breach of company policies. An employee committing a serious offense, such as gross misconduct can trigger immediate termination proceedings. In these cases, no notice period is required.
Temporary agency workers (lavoratori in somministrazione) are employed by an agency and assigned to work for a third-party company for a fixed period. The resignation or notice period for these workers follows the terms set by their employment contract with the agency, rather than the company where they are assigned.
Typically, there is no mandatory notice period for resignations, unless specified in the individual contract or relevant collective bargaining agreement that governs the specific sector.
That said, early termination by the agency or the company using the worker’s services may require compensation to the worker for the remaining contract period. Italian labor law, particularly Legislative Decree 276/2003, regulates temporary agency work, ensuring workers have similar rights to direct employees, but the specific terms for resignation and notice depend on the contract and agency policies.
Whether the end of employment is caused by termination or resignation, in Italy, employees are entitled to receive severance pay or Trattamento di Fine Rapporto (TFR).
The value of the TFR is based on the employee’s annual salary divided by 13.5. A 1.5% is added for every year of employment, as well as adjustments made in accordance with inflation.
In some cases, a part of the employee’s yearly salary is also set aside to eventually be included in the TFR.
The TFR is paid out in full when the employee’s contract is terminated, regardless of the reason. If the worker retires, they also receive the pay in full. For employees who need funds for substantial medical expenses or purchasing a home, they may come into an agreement with their employer about advance TFR payments.
The end of employment in Italy can be initiated by either the employee or employer.
In Italy, the dismissal of an employee may be based on one of the following reasons:
The termination of an employee has to be presented in written form and signed by the company’s legal representation. These documents can be served via telegram.
When they decide to resign from their position, employees in Italy are advised to follow an online procedure through the Ministry of Labor and Social Policy – Directorate-General for Information Systems, Technological Innovation, Data Monitoring and Communication.
Employees should also comply with the notice period outlined in the applicable collective bargaining agreement in the industry.
In Italy, the employer and employee can come to a mutual agreement where both parties agree to end the employment contract. The technical Italian term is “rinunzie e transazioni” or settlement agreement.
These agreements usually include the following clauses:
Since these agreements are typically initiated by the employer, they are only considered in effect once the employee agrees as well. This happens only after the employee signs the agreement.
There is generally no obligation, requirement, or cause to involve trade unions when creating or signing these kinds of agreements since they technically count as private deals between parties. If an administrative, judicial, or union office is present during signing, the agreement is automatically rendered unchallengeable.
Some reasonable post-termination restraints may be enforced in Italy if they protect the employer’s legitimate business interests.
These written agreements between employees and companies are signed for the former to avoid taking on work that will be in direct competition with the latter once their employment relationship concludes.
According to Article 2125 of the Civil Code, non-compete agreements should not be longer than three years for regular employees and five years for managers. The agreements also need to detail which activities may be considered as competitive and prohibited. It is expected to include a provision that outlines compensation because of the resulting reduction in scope for the employee as well.
There is no legal regulation of non-solicitation agreements for both customers and employees. This is why it is important to clearly outline these agreements within the employment contract.
Non-solicitation agreements in Italy are usually included in the non-competition clauses in employment contracts. This also means that most of these agreements last as long as the non-compete ones. However, they can also have a different duration as long as it is properly stated in the agreement.
Since these agreements are a contractual undertaking, they can extend to both customers and employees that may not have had dealings with the employee who is leaving the company. This means the agreement may be enforced regardless of whether the soliciting party has ties with the customer or employee being solicited.
In mutual separation agreements in Italy, waivers play a crucial role in establishing the terms of the agreement. Typically, these are included to provide incentive to both parties, making it more appealing to sign and fulfill the agreement.
One of the primary elements of a separation agreement is the waiver of claims by the employee. This clause ensures that the employee agrees not to pursue any legal action against the employer for any rights or claims connected to the employment relationship or its termination.
Typically, the employee waives all claims relating to seniority, salary discrepancies, unpaid bonuses, and any outstanding remuneration. This can also include waivers on issues like tax withholdings, reimbursement of expenses, and differences in how salary items were calculated.
The waiver may also cover indemnities and any potential claims for damages, including non-material damages such as those under Sections 2043, 2059, 2087, 2103, and 2116 of the Italian Civil Code. These sections refer particularly to the following:
By signing this waiver, the employee agrees not to bring forward any claims related to their employment, which provides the employer with a significant level of legal protection. This clause is beneficial for both parties as it provides closure to any lingering issues regarding compensation or potential legal disputes.
In return for the employee’s waiver of claims, the employer typically agrees to waive any potential claims against the employee, excluding cases of fraud or misconduct that were unknown at the time of the agreement.
This mutual waiver ensures that both parties can move on without concerns of future legal action, providing a clean break for the employment relationship.
As part of the separation agreement, the employer is usually required to pay an incentive to leave. This payment acts as compensation for the employee’s waiver of claims and is often a full and final settlement of any additional claims the employee might have. This settlement amount can include severance pay, bonuses, or other forms of compensation that the employee would be entitled to, ensuring that all financial obligations are settled at the time of termination.
It’s important to note that these agreements must comply with Italian labor laws and any applicable collective bargaining agreements. Employers must ensure that the terms of the separation agreement are fair and meet the minimum standards set by law. Failure to do so can result in the agreement being challenged in court, potentially leading to additional claims or compensation.
The transfer of undertakings is governed by Section 2112 of the Italian Civil Code and Section 47 of Law no. 428 of 29 December 1990. These provisions, along with Legislative Decree no. 276 of 10 September 2003, establish a legal framework designed to protect employees during business transfers.
The primary goal of these laws is to provide stability to workers by ensuring that their employee rights are preserved even when the ownership of the company changes. This means that when a business is transferred to a new employer, the terms and conditions of employment must remain intact, and the transfer itself does not justify the termination of employees or a decline in their working conditions.
Italian law also imposes obligations on both the transferor (the seller of the business) and the transferee (the buyer). The transferor and transferee are jointly liable for fulfilling workers’ financial claims, such as unpaid wages or benefits, at the time of the transfer.
This joint liability is intended to ensure that employees do not lose out on their entitlements due to the change in employer. Additionally, the transferee must continue to apply the terms of the relevant collective bargaining agreement that was in effect under the transferor, unless more favorable terms are agreed upon.
For businesses with more than 15 employees, Section 47 of Law no. 428/1990 requires both the transferor and transferee to provide written notice to employee representative bodies, such as staff representatives or trade unions, at least 25 days before the transfer is finalized.
This notice must detail the reasons for the transfer, its economic and legal impact on employees, and any measures the new employer plans to implement. If there are no employee representatives, the notice must be delivered to the most representative trade unions in the sector.
Since employee rights in Italy are protected by several laws and regulations, the involvement of workers’ unions is important during any business transfer.
Once employee representatives receive notice of the transfer, they have seven days to request joint consultations with the transferor and transferee. These consultations are aimed at discussing the implications of the transfer and negotiating any necessary protections for employees.
Although the law requires consultation, it does not mandate that an agreement be reached. If the parties fail to come to an agreement within ten days, the consultation process is considered complete, and the transfer can proceed as planned.
Failure to adhere to the information and consultation requirements may be deemed an anti-union practice under Section 28 of Law no. 300 of 20 May 1970, potentially resulting in legal action from the trade unions.
In cases of financial crisis or bankruptcy, the rules around business transfers are slightly different. Section 47, paragraph 4 bis of Law no. 428/1990 states that if the transferor is in a state of financial crisis or insolvency, the usual protections of Section 2112 may be limited.
If the transferor is bankrupt or in severe financial distress, Section 47, paragraph 5 specifies that Section 2112 does not apply. In such cases, employees may lose some of the protections they would ordinarily enjoy, unless the trade unions and the employer negotiate specific terms to preserve certain rights.
There are many different ways an employment contract can come to an end. But whatever the situation, you need to understand the rules that cover the end of employment in Italy — or you could end up facing legal issues.
Our solutions ensure your business is protected from risk when a relationship with a worker comes to an end — whatever the reason. We can also help you to avoid missed opportunities by re-deploying talent where possible.
Employers generally need a valid reason, a written dismissal letter and the required procedure for termination of employment in Italy. A dismissal can follow serious misconduct; a substantial breach of employment duties or genuine business reasons connected with production or the organisation of work.
The employer must explain the reasons in the dismissal letter. For disciplinary dismissal, the employer must first put the allegations to the employee in writing and allow the employee to respond. The employee can seek assistance from a trade union representative, and the employer must allow at least five days after the written allegations before imposing the sanction.
Just cause permits dismissal without notice because the conduct makes continued employment impossible. Other justified dismissals normally require notice or payment in its place. Employers also need to respect protections against discriminatory dismissal and dismissal connected with pregnancy or protected family rights. Different rules apply to executives and employees in a valid probation period. For certain business-related dismissals involving employees hired before 7 March 2015, larger employers may also need to complete a prior conciliation procedure before the Labour Inspectorate.
Yes, the notice period in Italy generally follows the employee’s collective bargaining agreement when an indefinite employment relationship ends. The period depends on the employee’s classification and length of service, with separate rules often applying to dismissal and resignation.
For example, the commerce agreement gives a level four employee 20 days’ dismissal notice with up to five years of service. That rises to 30 days with five to 10 years and 45 days with more than 10 years. The resignation periods for that classification are shorter, so the employer must use the correct table for the exit.
The employer can end employment immediately by paying the remuneration due for the notice period instead. Valid just cause allows dismissal without notice or notice pay. A fixed-term contract normally ends on its agreed expiry date, rather than through the notice rules for indefinite employment.
An employer that omits a required notice period in Italy must pay the employee the remuneration they would have earned during the unserved period. This payment replaces the missing notice and applies when the employer ends an indefinite employment relationship immediately without valid just cause.
The employer must identify the notice entitlement under the applicable collective bargaining agreement. The employee’s classification and length of service affect that entitlement. If the employee works only part of the required notice, the payment covers the remaining period, rather than the full notice period again.
Notice pay and the justification for dismissal are separate issues. Paying for omitted notice does not make an unsupported or discriminatory dismissal lawful. The employee can still challenge the dismissal itself and seek the remedy that applies to the employment relationship. Valid just cause removes the notice entitlement, but the employer must establish that the reason meets that standard.
Employers must settle earned wages, unused accrued leave, contractual salary entitlements and the remaining end-of-employment payment at the end of contracts in Italy. Notice pay is also due where the employer ends employment without serving the required notice and has no valid just cause.
The final salary covers pay earned up to the employee’s last day of employment. Payroll must also account for accrued additional salary payments required by the collective bargaining agreement. For employees covered by the commerce agreement, this includes the relevant portions of the 13th and 14th month salaries.
Unused accrued annual leave can be paid when employment ends, even though the statutory minimum cannot normally be exchanged for cash during employment. Unused contractual paid-leave hours, bonuses, commissions and expenses may also need to be settled where they have accrued under the contract or CCNL.
Employees build up Trattamento di Fine Rapporto (TFR), an end-of-employment payment, while working for the employer. They receive the remaining balance when employment ends, whatever the reason for leaving. Depending on where the TFR was held, payment may involve the employer, the INPS Treasury Fund or both. Money already transferred to a supplementary pension fund follows that fund’s withdrawal rules. Any compensation awarded for unlawful dismissal is paid on top of the employee’s ordinary final payments.
Yes, TFR in Italy is mandatory. Employees earn an end-of-employment payment while working for the employer and receive the remaining balance when they leave. This applies whether they resign, retire, are dismissed or reach the end of a fixed-term contract.
Each year, the employee earns more of this payment, and amounts earned in earlier years increase through annual adjustments. The employer adds these amounts to the balance instead of paying them out each year. TFR is generally calculated by dividing qualifying annual remuneration by 13.5, subject to the applicable statutory contribution adjustment. Money already transferred to a supplementary pension fund stays in the fund and follows its withdrawal rules. Termination does not necessarily give the employee an immediate right to withdraw the entire pension-fund balance in cash.
An employer cannot withhold accrued TFR because the employee resigns or is dismissed for just cause. Just cause can remove the employee’s right to notice pay, but it does not cancel the end-of-employment payment they have earned.
A court may award separate compensation for unlawful dismissal. The employer and employee can also agree an extra payment as part of a settlement, beyond the amount already earned.
Fixed-term employees normally reach the end of contract in Italy on the agreed expiry date, without either party giving notice. Either party can end it early for just cause. This means a reason so serious that employment cannot continue, even briefly.
Giving notice or paying for a notice period does not, by itself, allow either party to end the contract early. The employer and employee can instead agree an earlier end date. If an employer ends a fixed-term contract early without just cause, the employee may claim damages commonly linked to the remuneration they would have received until the agreed expiry date, subject to the circumstances and mitigation of loss.
If the employee keeps working after the expiry date, the employer must pay 20% above usual pay for the first 10 days and 40% above usual pay for each later day.
The contract becomes permanent if work continues beyond 30 days for a contract shorter than six months, or beyond 50 days for one lasting six months or longer.
Employers can restrict competing work after termination of employment in Italy, but the employee must agree to a written, paid non-compete clause. The agreement must clearly state what work is restricted, where the restriction applies and how long it lasts.
The limit is three years for most employees and five years for senior executives. If the agreement sets a longer period, the legal limit applies instead.
The payment must compensate the employee fairly for the limits on taking other work. The agreement may be invalid if the employer pays too little for the restrictions on the employee’s work. The amount needs to reflect the type of work restricted, the area covered and the length of the restriction.
A clause stopping a former employee from taking clients away serves a different purpose. It protects existing client relationships, rather than preventing the employee from doing competing work.
Just cause allows an employer to dismiss an employee without notice because the misconduct is too serious for them to keep working together, even briefly. This form of termination of employment in Italy requires more than a breach that would justify dismissal with notice.
The employer must consider how serious the conduct was and how it affects the working relationship. The employer must also follow the collective bargaining agreement. If it allows only a lesser penalty for that conduct, the employer cannot dismiss the employee for it.
The employer must still put the allegations in writing and give the employee a chance to respond. It must wait at least five days after the employee receives the allegations before imposing a serious penalty. The employee can ask a trade union representative for help. The dismissal letter must explain the reasons for ending employment.
Compensation for unjustified termination of employment in Italy depends on when the employee was hired, the employer’s size and what was wrong with the dismissal. Courts consider length of service and other factors, including how the employer and employee acted.
For employees hired from 7 March 2015, larger employers generally pay six to 36 months’ pay. Smaller employers generally pay three to 18 months. Following Constitutional Court judgment No. 118/2025, the previous absolute six-month ceiling for small employers no longer applies. The court determines the amount within the applicable range using the last monthly pay used to calculate the employee’s end-of-employment payment.
The larger-employer rules apply where the employer has more than 15 employees at one workplace or within a municipality, more than five in agriculture, or more than 60 nationally.
Some dismissals, including discriminatory dismissals and certain cases where the alleged misconduct or business circumstances did not exist, can require the employer to take the employee back and pay lost wages. Employees hired before 7 March 2015 follow different rules. These rules do not cover senior executives.
Companies can simplify termination workflows in Italy with CXC by having local specialists identify the correct termination requirements before the process begins, including the procedure, notice period and final entitlements that apply to the employee.
This is particularly useful in Italy because the correct approach can change based on the reason for termination, the employee’s classification and the applicable CCNL. Disciplinary dismissals have specific procedural requirements, while notice periods and final entitlements can vary between employees.
CXC supports the local employment and payroll requirements throughout the exit, while the company retains control over the termination decision. With more than 30 years of global workforce experience and support across 100+ countries, CXC can also support businesses managing exits across multiple markets.
Speak to our team to learn more about managing termination of employment in Italy with CXC.
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