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Employers should also keep in mind that the Civil Code regulations are superseded by collective bargaining agreements if they are applicable in the situation.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.
Companies can hire employees in Italy through their own entity, by registering the foreign business as the employer, or through an authorised employer of record (EOR). The first two routes keep employment with the company. With an EOR, the provider employs the person and runs local payroll.
A business that hires directly signs the contract and manages pay, contributions and employment records. A foreign company can do this without opening a subsidiary, but it must complete the necessary Italian employer, social-security and workplace-accident insurance registrations. This will generally include registration with the Istituto Nazionale della Previdenza Sociale (INPS) and, where applicable, the Istituto Nazionale per l’Assicurazione contro gli Infortuni sul Lavoro (INAIL). Tax-withholding requirements must also be assessed separately.
An EOR handles the contract, salary and contributions while the client manages daily work. Under Italian law, this structure will generally operate as somministrazione di Lavoro, the supply of agency workers, rather than as a separately regulated “EOR” model. The provider needs Ministry of Labour authorisation to assign staff to clients. Pay, hours and benefits follow the relevant Contratto Collettivo Nazionale di Lavoro or CCNL (national collective labour agreement).
The employee must receive pay and working conditions at least as good as those of staff doing similar work at the client company. The client is generally jointly liable with the authorised agency for unpaid wages or social-security contributions, relating to the assignment, subject to the applicable statutory rules.
No, a foreign company can hire employees in Italy without opening a local entity. It can register as the employer itself or use an authorised EOR, which signs the employment contract and employs the person.
For direct employment, the foreign company generally needs an Italian tax code and the registrations required by INPS, INAIL and the employment authorities. Depending on the company’s location and circumstances, it may also need to appoint an authorised local intermediary or social-security representative and establish an appropriate Italian payroll process. It remains responsible for the employee’s contract, pay and working conditions.
With an EOR, the provider runs payroll and pays the required contributions. The client chooses the employee and directs the work. It must also give agency staff the same workplace safety, prevention and protection measures that apply to its own employees. The provider must be an authorised employment agency, and the arrangement must comply with the rules governing somministrazione di lavoro. A company may still open an entity for wider commercial reasons, but employment alone does not require one.
Hiring an employee in Italy can take a few weeks when the company already thas the registrations needed to employ staff locally. Companies hiring directly in Italy for the first time may need longer to complete the required employer registrations before the employee can start.
The timeline also needs to account for preparing the employment contract, identifying the correct CCNL and employee classification, setting up payroll and completing the required pre-employment notification. The mandatory hiring communication generally needs to be filed no later than the day before employment starts. If the employee needs Italian work authorisation, this adds a separate immigration process.
For companies without an established employment setup in Italy, an EOR in Italy can shorten the hiring process because the provider already has the local infrastructure needed to employ staff. EOR onboarding can typically take around 3–14 days once the candidate has been selected and the required information is available.
Any notice period the employee needs to serve with their current employer can extend the actual start date.
Companies can use EOR services in Italy when entering the market without a local entity, hiring a small number of employees, testing a new market, accessing specialist talent, building a team before establishing an entity, or managing employees as part of a wider international workforce.
An EOR can also be useful when a company has an Italian entity but does not yet have the local HR and payroll capability needed for a particular hire or workforce program.
Italy has another important consideration: employment terms are heavily influenced by the applicable CCNL (collective bargaining agreement). The employee’s classification can affect minimum pay, working hours, notice periods, additional salary payments and benefits. A local provider can help apply the appropriate requirements when the employee is hired.
For international companies, an EOR in Italy can therefore be used as either a market-entry option or a longer-term way to employ a smaller Italian workforce without building a full local employment operation.
Companies choose an EOR in Italy because it lets them hire more quickly and with less internal setup than registering as a foreign employer or building local payroll. The provider is already able to employ staff locally, so the company can move from an accepted offer to contract and onboarding without completing its own employer registrations first.
The EOR also gives HR and finance one local process for the employment contract, payroll, contributions, required benefits, payslips and employee questions. It applies the correct collective labour agreement classification, which determines minimum pay, working hours, allowances, extra salary months, benefit-fund contributions and TFR accruals.
This is especially useful during market entry, while an entity or direct-employment setup is still being built, or when internal teams do not yet run Italian payroll. The client continues to choose the employee, set the role and manage performance and daily work, while the EOR handles the employment administration.
An employer of record in may charge approximately USD 199-699 per employee per month. This is an indicative commercial range rather than a regulated or standard Italian fee, and actual quotations may be substantially higher or structured as a percentage of payroll. The employee’s salary, employer contributions, extra salary months, required benefits and end-of-employment payment are separate costs paid on top of this service fee.
The monthly fee usually covers the provider’s work as the employer, including the employment contract, payroll and employee support. Onboarding, immigration assistance, optional benefits and additional HR services can change the price. Headcount and the length of the commercial agreement can also affect the quote.
The employee’s role and classification under the applicable national collective labour agreement, known as a CCNL, shape the remaining employment costs. They determine minimum pay, allowances, overtime or shift payments and required benefit-fund contributions. The provider also accrues Trattamento di Fine Rapporto (TFR), an end-of-employment payment that builds up each year. The client funds TFR and any extra salary months required by the agreement.
An EOR in Italy employs the worker, while a PEO provides payroll or HR support to a company that remains the employer. The difference is who employs the person and who must pay the salary and contributions.
The EOR signs the employment contract, pays the employee and handles payroll, contributions and contract changes. When the employee works under the client’s direction, the provider needs Ministry authorisation to assign staff to clients. The arrangement is generally governed by Italy’s rules on somministrazione di lavoro, irrespective of the “EOR” label used commercially. The client manages the role and looks after workplace safety.
With a conventional PEO service, the client employs the person through its own entity or foreign-employer registration. The PEO may run payroll, administer benefits and support HR, but the client signs the contract and remains responsible for the employment terms. Providers sometimes use “global PEO” to describe an EOR service. The contracts should therefore state who employs the worker and what the provider will handle.
Yes, EOR services in Italy can support fixed-term and permanent workers, but the provider must be authorised by the Ministry of Labour and listed in the national employment-agency register before assigning staff to a client. The worker’s employment contract and client assignment are separate, so a fixed-duration project does not always require fixed-term employment.
For example, the provider may employ a worker permanently and place them with a client for a defined project. It can also use a fixed-term employment contract. Before doing so, it checks earlier contracts, renewals and extensions because these can limit the term available. The employee receives the assignment’s start date and expected duration in writing.
The relevant labour agreement can add further conditions. Italian rules also limit the share of agency workers a client can use, although the applicable calculation and exemptions depend on whether the agency employment and assignment are fixed term or indefinite and on the relevant collective agreement. As a general statutory rule, fixed-term employees and fixed-term agency workers together are subject to a 30% limit calculated against the client’s permanent workforce, although collective agreements and statutory exemptions can alter the result.
The worker must receive pay and conditions at least as favourable as those of comparable client employees throughout the assignment.
Generally, yes, where the applicable CCNL or employment terms provide a 13th-month salary. The entitlement and calculation should be checked under the specific CCNL rather than treated as an identical statutory payment for every employee. The client funds it as part of the employee’s pay, separately from the provider’s monthly service fee.
The employee earns part of the payment through each month worked. The provider records the amount in payroll and pays it when the client normally pays at the time required by the applicable CCNL, commonly in December.
Some CCNLs also require a 14th-month salary. The employment offer and EOR quote should show how many instalments make up the annual gross salary and when they are paid. This makes the full salary commitment clear from the outset and keeps the extra month from being treated as a discretionary bonus or an unexpected addition to the approved budget.
CXC stands out as an EOR partner for international companies because it combines more than 30 years of global workforce experience with local employment expertise in Italy and support across 100+ countries.
In Italy, that local expertise is important when applying the correct Contratto Collettivo Nazionale di Lavoro (CCNL) and employee classification. These can affect minimum pay, working hours, additional salary payments, benefits, notice periods and other employment terms.
CXC also supports EOR, contractor management and payroll, allowing companies to manage employees and contractors through the same global partner. This can be particularly useful for organisations hiring across several countries or using different workforce models as they grow.
Companies get the scale of an international workforce partner while still having access to local specialists who understand the employment requirements affecting their Italian hires.
Speak to our team to learn more about CXC’s EOR services in Italy.
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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