Italy: A Guideline to Payroll and Employer of Record

Establish your presence globally with Neeyamo as we help you go beyond borders to manage your international payroll and hire new talent in Italy.

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Overview

Legend states that throwing a coin into the Trevi Fountain means you will return to Rome one day, but what's the point in returning to Rome if you can't do business there? 

Neeyamo's global payroll services assist with onboarding and managing employees in Italy, along with processing a firm's payroll and tax services, compliance, benefits, and more. If your organization's expansion plans require you to hire employees in Italy and you lack a physical entity in the country – a key requisite to hire local talent, your solution is right here: the best employer of record services and payroll software for large companies, Neeyamo – Global Payroll Specialists and Employer of Record solutions.

Our Presence

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EMEA
Milan, Italy
Neeyamo Enterprise Solution Pvt S.R.L
Viale Certosa 218 Cap C/O Regus, Italy, MI, Milan, 20156

Tools And Instances

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Global Payroll

Neeyamo’s global payroll solution covering 180+ countries

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Global Work

A tech-based EOR solution to manage your extended workforce

Facts And Stats

Capital

Rome

Currency

Euro (EUR)

Official Language

Italian

Fiscal Year

01 January - 31 December

Date Format

DD/MM/YYYY

Country Calling Code

+39

Other Languages

French, Spanish, Portugese

Time Zone

Central European Summer Time

Global Payroll

Overview

Handling payroll for a widespread workforce can pose a significant challenge for any organization, and the added complication of compliance can worsen things. If companies spend more time processing payroll, it directly impacts day-to-day operations and their overall productivity. The solution to this problem is a Global Payroll Outsourcing company.

Over the years, Neeyamo has observed these complexities and strived to provide a global payroll solution through a single technology platform, Neeyamo Payroll. 

Neeyamo's Payroll 3.0 has set in motion the era of single-touch payroll, which simplifies and accelerates the pace of the payroll process. Neeyamos payroll software provides the perfect solution for all your global payroll needs – for employees working in primary geographies, the long-tail region, remote or internationally located.

Payroll Associations

The Global Payroll Association (GPA) is instrumental in supporting individuals and organizations engaged in payroll and its related functions. These associations offer many advantages that foster professional growth, facilitate networking prospects, encourage knowledge exchange, and promote industry advocacy.

Payroll Taxes

Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare. These are statutory in nature and are levied from both the employer and employee. Additional statutory contributions are made by employers towards aiding both short-term and long-term benefits for their employees.

Employee Taxes

Employees must contribute 10% to Social Security.

The Income Tax bracket is as follows:

Income in EUR % Tax
Upto 28,000 EUR 23%
28,001 to 50,000 EUR 35%
Above 50,000 EUR 43%

 

Employer Taxes

Employer Payroll Contributions

  • Social Security – 29.00% – 32.00%  

  • Injuries at work Insurance- 0.40%  

Payroll Cycle

Overview

Undoubtedly, payroll is a critical process for any organization. The pay cycle in Italy refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.

Frequency

Frequency Cycle in Italy is Monthly.

13th Month Cycle

The additional 13th instalment and the December salary are paid out each year. Some NCAs provide for a 14th monthly instalment, typically paid in June.

Global Work

Overview

What is Employer of Record?

An Employer of Record (EOR) service provider helps you eliminate the hassle of handling complexities while onboarding a new employee in an international location. They help bridge the gap that otherwise mandates organizations to have a locally registered entity and a local bank account before making a job offer to an international hire.

An Employer of record (EOR) service provider acts as a legal employer, facilitates salary payments, and manages other statutory requirements such as health insurance, payroll taxes, and employee benefits, ensuring compliance with local tax laws and regulations. 

The EOR industry allows organizations to focus on collaborating with employees in Italy for operational tasks, with the knowledge that they have a cost-effective solution to support their Global Payroll & Employer of Record - Italy requirements as they continue their global expansion.

HR Mandates and Practices

Minimum Wage

Italy does not have a statutory minimum wage. Instead, minimum wages in Italy are set by collective bargaining agreements at the sectoral level.

Overtime

Work performed more than 40 hours weekly is considered overtime. If it exceeds 48 hours, it requires specific authorization from the Department of Labour. Overtime must be paid with an increase of not less than 10% over the regular rate. However, the Italian courts have ruled that such a provision applies to all the remuneration an employee earns from their employer (i.e., basic pay plus any bonus such as cost of living bonus, allowances for night work or shift work, etc.). In practice, overtime pay is worth about 30% over the basic rate. Many collective agreements provide that overtime pay will be not less than 30%. Still, they can also provide – and often do – that this bonus will be calculated based on a narrower definition than the above. Collective agreements fix special pay increases for overtime on Sundays, other holidays, and night work.

Data Retention Policy

Italy's data retention law authorizes the storage of telecommunications data for up to six years.

Hiring and Onboarding Requirements

Hiring

Employers must follow their rules and any Italian employment compliance regulations concerning minimum wage, compensation, and time off.

Employment Contract can be expressed or implied orally or in writing. However, it is common practice to provide employees with a written document outlining the main terms of the contract. The agreement should state everything from compensation benefits to termination terms.

Onboarding

  • A brief discussion regarding companies' norms to be obeyed.
  • The company goes through the employment contract before the first day and checks on all the mandatory documents required.
  • Relevant documents, such as a code of conduct, are given to the employee.

Probation

The probationary period is as follows:

  • Six months for executives and high-level employees.
  • Three months for other employees.

Leave

National Holidays

There are 11 national Holidays and one regional holiday.

  • Jan 1: New Year's Day
  • Jan 6: Epiphany
  • Apr 9: Easter Sunday
  • Apr 10: Easter Monday
  • Apr 25: Liberation Day
  • May 1: Labor Day
  • Jun 2: Republic Day
  • Jul 7: Assumption of Mary
  • Aug 12: Feast of the Immaculate Conception
  • Nov 1: All Saints Day
  • Dec 25: Christmas
  • Dec 26: St. Stephen's Day

If a public holiday falls on Sunday, the day is carried over to Monday or paid in lieu.

Sick Leave

The average period is about one year. During this time, the worker is fully paid (by the employer or Social Security). Beyond this period, an employee is usually entitled, under collective agreements, to a further period of unpaid leave.

Maternity Leave

From the beginning of pregnancy to one year after the child's birth, the employee cannot be dismissed (except for just cause). During this period, a woman who resigns has the right to the same indemnities due for dismissals (provided she gives due notice). Maternity leave is compulsory for female workers from two months before until three months after childbirth. Pre-childbirth leave can start earlier than two months if her work is dangerous for her health or the unborn child. On the other hand, it is possible to postpone pre-childbirth leave to increase the leave granted after childbirth.

During compulsory maternity leave, the mother is entitled to 80% of her regular pay from Social Security, and the period is counted as actual work time. Collective agreements usually oblige the employer to make up the difference from the regular wage.

Other Leave

Educational Leave

Student workers have the right to paid days off work to take exams.

Jury Leave

In the case of military service, job security and seniority are guaranteed to all workers.

Special leave

With or without pay or unpaid absences are granted to workers by collective agreements on important family events. For their wedding, a worker usually has the right to 15 days of paid leave.

Parental leave
An additional month of optional maternity leave or, alternatively, paternity leave, paid at 80%, up to the sixth year of the child's life is provided

Termination

Notice Period

Each collective agreement provides the length of the notice period.

The notice period is listed below:

  • Nine months tenure serves 10-75 days.
  • Four years tenure serves 10-75 days.
  • 20 years tenure serves 30-180 days.

Severance Pay

An end-contract indemnity is paid to employees according to general principles of the civil code and as provided by each collective agreement. However, this is paid upon any separation. Upon dismissal, the employer must make a contribution equal to 41% of the monthly unemployment benefit ceiling for the first three years of tenure.

Provisions on access to flexible early retirement treatment 
On an experimental basis for 2023, it will be possible to obtain the right to an early pension upon reaching a minimum age of 62 and a minimum contributory seniority of 41 years

Extension of the Social Pension Advance (APE Sociale).
The right to access the treatment provided by INPS has been extended to 31 December 2023 (until reaching retirement age) for individuals in specific conditions who are at least 63 years of age and are not already entitled to a direct pension. 

Visa

Overview

Non- EU citizen need to have a job to apply for an Italy work visa.

Non-EU nationals require:

  • Italian employer needs to work with you and apply for employee work permits.
  • An Italian work visa is to be applied at the Italian representation. Once you receive an Italy work visa, then you can enter.
  • After entering Italy, apply for a Residence Permit to stay and work legally.

Documents required

  • Italian visa application form.
  • Valid passport/travel document.
  • Pictures.
  • Civil status documents.
  • Copies of previous visas.
  • Travel insurance.
  • Proof of travel.
  • Proof of accommodation.
  • Proof of sufficient financial means.
  • Cover letter.
  • Documents based on employment status.
  • Visa fees.
  • Any additional documents for minors
  • Any additional documents based on the purpose of entry.

Additional requirements

  • Copy of your signed work contract.
  • The original and a copy of your Nulla Osta.
  • Completed Italian Long-Stay Visa Application form.
  • Passport with at least two blank pages, valid for at least three months after the duration of your visa.
  • Passport pictures.
  • Proof of accommodation in Italy.
  • Proof of sufficient financial means.
  • Proof of paid visa fee.
  • Diplomas/other certificates.

Employee Background Checks

Legal and Background Checks

There are no such provisions specified.

Last updated on January 31, 2024

If you have any queries or suggestions, reach out to us at irene.jones@neeyamo.com

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