As the workforce becomes increasingly globalized, employers have a broader choice of potential hires than ever before. For example, with its excellent education system, Italy offers a promising talent pool worth sourcing from.
Although it has its benefits, hiring overseas requires careful consideration. International employers must be careful to respect local employment laws, manage payroll in various currencies, and be cognizant of mandatory compensation and benefits, which vary between countries.
An employer of record (EOR) is one way companies can address these issues. An EOR is a separate entity that legally employs workers on behalf of another business. The EOR bears responsibility for things like legal compliance, taxes, payroll, benefits, and more.
While an EOR can be convenient, not all EORs are created equal. It's important to do your due diligence when selecting one. Below, discover what hiring managers and HR leaders need to know about using an employer of record in Italy.
A few things to know about hiring in Italy
Every country has its own rules and regulations governing employer-employee relationships, and Italy is no exception. If you're considering hiring in the country where la bella vita is a way of life, it's important to understand the financial, legal, and practical implications.
Salary and taxation
The currency used in Italy is the euro, and workers will expect to be paid in their local currency. Employers are also responsible for withholding income taxes before paying salary to employees. The national income tax rate for 2024 will range between 23 % and 43% of the employee’s gross salary depending on the level of income. In addition, regional income tax (between 1.23% and 3.33%) and municipal income tax (up to 0.9%) may be due, depending on the region and the employee’s place of residence. Further, it's customary to pay a 13th and 14th month salary on top of the usual 12 months of wages. One is paid during the summer holiday and the other is paid at Christmas.
Probation and termination guidelines
Italian law allows a maximum probation period of six months. However, National Collective Bargaining Agreements (“NCBAs”) generally provide for shorter probation periods based on the employee’s level and seniority. During the probation period, the parties may in principle terminate the employment agreement with immediate effect. After the probationary period concludes, regular termination terms apply.
The length of the notice period is fixed by the NCBA provisions applicable to the employer and employee, and will depend on the level and seniority of the employee. Additionally, in all cases of termination of employment, all employees in Italy are entitled to severance pay, known as Trattamento di Fine Rapporto (“TFR”). This accrues through monthly employer contributions throughout their employment at a rate of around 7.4% of the employee’s gross salary.
Working hours and time off
The standard workweek in Italy is 40 hours. Although overtime is possible, it can't exceed 250 hours per year, unless the applicable NCBA provides otherwise.
Employees in Italy have a right to paid annual leave with a minimum of four weeks per year plus 12 public holidays. The applicable NCBA may provide for additional days off.
Benefits of using an employer of record in Italy
As you can see, hiring employees in Italy requires compliance with various employment regulations. From taxes to time off, severance pay, and more, you don't want to run afoul of any labor laws.
Companies wanting to minimize the stress of international hiring will often turn to an EOR to handle these details. The EOR acts as an intermediary between your company and the employees. The workers are formally employed by the EOR, which handles all employment matters for the entire employee lifecycle.
Typical employer of record services include:
- Compliance: The EOR ensures that businesses are operating in line with local labor laws, addressing all compliance issues from social insurance to overtime pay.
- Onboarding: The EOR can get new team members set up in the company, providing administrative onboarding and basic training.
- International payroll: Since workers are formally employed by the EOR, the EOR is responsible for payroll and taxes, as well as issuing payslips.
- Compensation and benefits management: EORs can oversee benefits like time off, parental leave, and health insurance. For instance, Italy has stringent maternity leave requirements, with female employees eligible for five months of paid maternity leave.
- Terminations: The EOR can make sure any terminations are conducted in compliance with local labor laws. For instance, they can ensure that the appropriate severance is paid.
Our guide to EOR operating models provides additional insights into the types of EORs and the various services they provide.
Considerations when selecting an EOR in Italy
An EOR can be a convenient way to streamline international hiring and reduce admin headaches for HR leaders and hiring managers. However, it's important to do some research before working with an EOR.
Availability
First, you want to make sure that the EOR is present in the right countries. Some EORs specialize in specific countries only, meaning you'd have to work with a different EOR for every country you hire in. A global employment platform like Oyster can be a convenient alternative in such cases.
Services and tools
You also want to be clear about exactly what kind of support the EOR offers. What tasks can the organization do for you? Do you need help with hiring only, or do you require support for the entire employment lifecycle?
Software is another consideration. Ideally, the EOR will have a platform you can access that gives you comprehensive oversight of your international employees. This ensures that you're always up to date on each worker's status.
Pricing
Finally, you want to consider the price. While EORs can be useful, they aren't cheap. Given that hiring internationally in countries like Italy can be expensive, you probably want to minimize such added costs.
How much does it cost to hire in Italy?
Check out our Italy employment cost calculator for a detailed breakdown of taxes and contributions that you might have to pay on top of an employee’s salary.
Oyster as your hiring partner in Italy
An EOR isn't your only option when hiring in Italy. As an end-to-end global employment solution, Oyster can serve as the legal employer of your international workforce, including in Italy, and handle everything from hiring to benefits. Recognized as a category leader by G2, Oyster offers an easy-to-use software platform that gives you greater control over your international hiring.
Curious how Oyster can help you? Learn more about our global talent management system and what it can do for you. You can even book a demo before you commit. Let’s get started.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.
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