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Employer of Record in Italy

Several factors come into play when hiring in another country. Italy is no different. Many of these often-time-consuming considerations are addressed from the get-go with the help of an employer of record (EoR).

From HR and administrative tasks like onboarding, payroll, and even employee management, to regulatory and tax-related concerns, an EoR takes care of the challenges you will encounter when expanding in Italy.

Access to HR and compliance experts in the region alone provides significant boosts to both efficiency and confidence, saving you time from spending considerable resources. With an EoR to guide your organisation, you can seamlessly scale your local workforce without worrying about potential delays and regulatory issues.

The question is not whether to seek EoR services, but which provider to choose. CXC, as a reliable provider, has over 30 years of experience operating within the EU and Italy in particular.

This guide will highlight the most important information you will need to navigate the employment landscape of Italy, including hiring practices, employee background checks, payroll set up and more.

Hiring in Italy

Understanding the ins and outs of Italy’s hiring systems and processes is the first step to capitalising on the country’s myriad talent offerings. Here are a few of the key points to remember about Italy’s employment laws and regulations:

Employment contracts and terms in Italy

According to national bargaining agreements and Legislative Decree No. 104/2022, employers are required to present detailed employment contracts to prospective employees. These written agreements need to clearly outline key pieces of information such as compensation, employee level, work schedule, benefits, paid time off, probationary and notice periods, holidays, and termination conditions. Salary should be stated in Euros as well.

Additionally, before the employee begins their employment, companies are expected to report the terms of the contract to the Ministry of Work through a mandatory online form called “UniLav..” This informs the National Social Security Institute, the National Institute for Insurance against Accidents at Work, and the Labor Inspectorate of the newly established work relationship. Failure to abide by this regulation can result in fines.

Anti-discrimination and anti-harassment laws in Italy

Italy expressly prohibits any kind of discrimination as outlined in Section 3 of the Italian Constitution. In the workplace, employees are protected by the Worker’s Statute (Lawno. 300 of 20 May 1970), which forbids employment discrimination based on characteristics such as rage, religion, gender, language, disability, sexual orientation, nationality, union participation, and political preferences.

These sentiments are further enforced by several other laws, namely Legislative Decrees no. 215 of 9 July 2003, no. 216 of 9 July 2003, and no. 198 of 11 April 2006 that follow the European Directives on Equal Treatment in Employment and Occupation. These directives deem it unlawful to apply any discriminatory selection criteria for employment. Apart from hiring in Italy, this also applies to promotions, terminations, and acceptance into apprenticeship programmes.

Harassment on grounds of race, religion, disability, and several other protected characteristics of a person is also not tolerated in the country. If harassment takes place in the workplace, and the employer is aware of it, they may be held liable, especially if no measures have been taken to stop the act or behaviour. Sexual harassment is similarly prohibited.

In line with this, companies can establish their own systems, procedures, and policies to prevent harassment in the workplace. These are usually stated in the employee handbook and codes of conduct. Employers and employees both are expected to abide by these internal regulations.

Minimum wage in Italy

While there is no statutory minimum wage in Italy, individual sectors commonly have a set minimum hourly rate and standard contract negotiated by trade unions at a national level, outlined in the corresponding national collective agreements or NCAs.

Background checks in Italy

A pre-employment background check is a standard practice in Italy. However, there are limitations to what companies can investigate regarding their candidates. Understanding these limitations will ensure further compliance.

Employers are generally required to notify or, in some cases, ask prospective employees for their consent when it comes to collecting and processing personal information. It is also important to note that all information gathered should be directly relevant to the role in question.

Handling of all data throughout the pre-employment process should be in accordance with the EU’s General Data Protection Regulation (GDPR), as well as the Italian Data Protection Code.

Anti-discrimination in pre-employment background checks in Italy

The Workers’ Statute does not allow employers to make inquiries into their prospective employees’ political, religious, or union opinions and participation. Circumstances outside a person’s professional aptitude, such as age, sexual orientation, nationality, and race, are also prohibited from being investigated. This protection extends to inquiries made by companies through a third party.

Employee health checks in Italy

Employers also cannot inquire directly into an employee’s physical ability to perform their job. Instead, an occupational doctor is required to directly investigate these matters.

Prospective employees will be required to undergo a medical examination conducted by occupational doctors. Workers who do not undergo this check may not be hired by employers. Companies can also opt to test for drug and alcohol use if the potential responsibilities of candidates expose third parties to security, safety, and health risks.

Tests that check whether a potential worker is pregnant are strictly prohibited as well.

Employee credit checks in Italy

Employers are prohibited by law from going through a candidate’s financial records, credit reports, and any other similar documents for recruitment purposes. According to Legislative Decree no. 196 of June 2003, conducting these types of checks will violate the prospective employees’ right to privacy.

Criminal background check in Italy

It is generally prohibited for an employer to perform a criminal background check in Italy when assessing candidates. Instead, employees can be asked to provide proof of their good legal standing. A “Certificato Del Casellario Giudiziale” from the Ministry of Justice is one of these documents.

There are a few exceptions wherein employers can access a candidate’s criminal records. Usually, it would have to be permitted by relevant collective bargaining agreements. In some specific use cases, the law also grants this permission. An example would be when the prospective employee will have to work with minors in the course of performing their duties.

Hiring employees and other types of workers in Italy

Employees fit into various classifications in Italy, depending on equally varying factors. This includes employment conditions, contractual arrangements, and job responsibilities. Each classification also has corresponding entitlements and obligations. The following are the most common classifications in the country:

Permanent employees in Italy (Lavoratori a tempo indeterminato)

These employees have open-ended contracts with their employers. Since their employment does not have a set duration, workers who fall under this category generally experience a high level of job security. These employees also enjoy several labor protections, including notice periods and, in case of termination, severance packages.

Fixed-term employees in Italy (Lavoratori a tempo determinato)

Compared to permanent employees, the employment contracts of fixed-term workers outline a specific employment duration. People who fall under this category usually have a temporary or project-based arrangement with their employers. They are also entitled to worker rights such as leave credits and the potential for contract renewal, the conditions of which are usually also highlighted in their initial agreement.

Part-time employees in Italy (Lavoratori a tempo parziale)

The standard full-time working hours in Italy are 40 hours every week, or eight hours per day. Part-time employees work fewer hours than that. Their benefits and entitlements are also prorated based on the hours they work. This classification allows both employers and employees more flexibility. For workers, this can mean having time to focus on other priorities.

Seasonal employees in Italy (Lavoratori stagionali)

Employees who are hired to work during a specific season or period fall under this classification. This type of worker is common in tourism and agriculture. The contracts for seasonal employees usually expire when the relevant peak season ends. Based on the nature of the work, employees under this category may be entitled to certain benefits. Some seasonal workers also experience recurring employment with the same employers.

Apprentices in Italy (Apprendisti)

Individuals who fall under this category work while they undergo specific vocational training programs. They are usually younger workers who have only started entering the job market. Aside from the experience and skills they gain in their programs, apprentices are also usually subject to rules and regulations based on the industry they are in. Their contracts also usually have set durations and requirements to be met.

Independent contractors in Italy (Indipendenti)

Businesses generally hire independent contractors in Italy to address a specific need. These workers usually belong in industries such as IT, creative, and trades and services. Being independent contractors, they typically set their own schedules, work using their own tools and software, and even engage with other clients. Consequently, contractors are also rarely entitled to employee benefits.

Job positions in Italy

Employees in Italy can also be classified based on job positions. These four are the usual categories:

  • Manual work or blue collar worker (Operaio): These operational positions generally require fewer formal qualifications compared to other types.
  • Office worker (Impiegato): These are usually office worker positions that do not hold leadership roles and require intermediate formal qualifications.
  • Manager (Quadro): Specialist roles and managerial positions usually fall under this category. They require considerable qualifications in most cases, such as specialised skill sets or leadership experience.
  • Executive (Dirigenti): Executives and senior leadership roles are classified as dirigenti. They are usually exempt from labor regulations that cover other types of employees.

Language requirements in Italy

While there is no statutory language requirement in workplaces, all documents should be in the official language of Italy – Italian. The country is also known for having fewer than average English speakers compared to its neighbors. For this reason, it is important to have someone who understands and communicates in the Italian language when working within the country.

Aside from Italian, German is another common language in Italy. In some northern provinces of the country, many people communicate using the language.

That said, one of the several advantages of working with an EoR is having that local presence in the region – a partner who has experience, not just with the nuances of the local language, but with both customs and regulations as well.

Corporate presence requirements and payroll setup in Italy

Italy has consistently been one of the most complex countries when it comes to payroll, according to the Global Payroll Complexity Index or GCPI. In the most recent report, the Global Payroll Association ranked the country in the top five in terms of complexity of both setting up and running payroll.

One of the major reasons for the complexity is the multitude of collective bargaining agreements spanning most industries in the country. This also impacts the diversity of social security contributions required for each employee. Income taxation can also be complicated, considering that it may be levied in three varying levels – municipal, regional, and national.

Running payroll in Italy

To properly set up payroll in Italy, companies need to register with the Tax Agency (Agenzia delle entrate), the National Social Security Institute (Instituto Nazaionale Previdenza Sociale), the National Institute for Insurance Against Accidents at Work (Instituto Nazionale per l'Assicurazione contro gli Infortuni sul Lavoro), and the Labour Office (Centro per I’Impiego).

This means companies will need to register a legal entity within Italy first before being able to engage with both local employees and the employment authorities —A process that can be both resource-intensive and time-consuming. This is also one of the many reasons businesses would rather seek the help of a trusted EoR, such as CXC, to bypass these challenges.

An EoR enables you to focus on your core business while tasks involving payroll, tax, and other compliance-related activities are duly covered.

Hire talent in Italy with our EoR solution

Hiring talent in Italy usually means setting up a legal entity, which can be costly and time-consuming. As an employer, you can avoid this hassle by working with an Employer of Record (EoR), like CXC.

Through our EoR solution, you can confidently hire employees in Italy without worrying about compliance issues. We’ll handle everything from payroll to benefits to employment contracts on your behalf — so all you have to think about is finding the right person for the job.

Speak to our team of experts and find out how much time and resources you can save, and how easy and quick it can be to start building your team in Italy compliantly.

Compliantly hire workers anywhere with CXC

With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.

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