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Comprehensive Guide to Hiring Employees in Italy

Italy is well-known as a country that offers a knowledgeable workforce with a 99.35% literacy rate as of 2019. Due to its stable economy and unemployment rate of 9.1%, it is an attractive place for global companies willing to hire and enlarge their workforce. 

The country is the eighth-largest economy in the world and a popular choice for companies to establish their operations. It has the fourth largest labor force in the EU, and around 63% of the working populace contributes to the service sector. The country has dedicated and experienced employees who can provide innovative solutions. Companies can expand their business and access the EU market with a well-trained and affordable workforce.  

In Italy, Employment and labor laws are governed by legislation created in national law and through Collective Bargaining Agreements (CBAs) done between employer’s associations and trade unions.

Italian employment law offers outstanding employee protection and support. Employers planning to hire Italian workers can go through the following guide to properly understand the recruitment process in Italy.

Things to Know Before Hiring in Italy

Establishing a business and hiring talented personnel in a foreign country takes time and effort. Check pre-employment requirements before you start the recruitment and selection in Italy.

1. Types of contracts

When considering the hiring process in Italy, you should be familiar with the laws, collective agreements on employment, and various types of contracts. The four major types of employment contracts are discussed below.

i. Permanent contract

Also called Contratto a tempo indeterminato, a permanent contract is quite flexible. It is regarded as the ideal standard when you recruit employees in Italy. It covers an in-depth description of the employees’ duties and aspects like notice period, paid leave, and other benefits.

In Italy, employment laws govern the levels of salary provided to various types of permanent contracts (for example -junior and senior positions).

ii. Fixed-term contract

Its alternate name is Contratto a tempo determinato. It has an expiration date and is meant to be used for projects that run within a fixed timeframe. You can renew a fixed-term contract up to five times. However, it can’t be extended beyond 36 months, whether you try to do it in a single agreement or successive renewals.

iii. Intermittent labor contract

It controls the type of professional assignments that are only obligatory for a specific time duration, for example, a particular season. It can entail up to 400 working days within three years.

Intermittent employees should receive economic treatment (for example, hourly pay) similar to fixed or permanent-term employees working on the same job duties. Usually, this kind of contract applies to employees younger than 24 or older than 55.

iv. Apprenticeship contract

It helps you to hire young employees in age groups of 15 to 25 years or 18 to 29 years, based on the type of apprenticeship. Generally, the duration of this contract ranges from 18 months to four years. The Apprenticeship contract offers lower pay than fixed and permanent-term contracts. The reason is the employer has to provide enough professional training to the new employees.

Various financial incentives are available for employers who recruit apprentices. These include tax deductions in social security costs. Apprenticeship contracts are not reclaimable. If the employer wants to recruit employees at the end of the agreement, they must provide them with a permanent position.

2. Minimum wage

There is no minimum wage in Italy by Law. However, it is decided through collective bargaining agreements at the sectoral level. 

As per Article 36 of the Constitution, wages are directly proportional to the quality and quantity of work. It should be high enough to support the quality of life. 

3. Demanding skills in Italy (based on job areas)

The private sector in Italy boasts a myriad of job opportunities. Critical skills like teamwork, good communication, time management, etc., make candidates eligible to unlock promising job prospects. 

Here are the top skills and areas that notice a significant growth rate:

  • Healthcare
  • Business services
  • Technicians
  • Distribution and transport
  • Elementary teachers

4. Workweek

The standard workweek in Italy is 40 hours. Those working hours surpassing this are paid at overtime rates, and it is mentioned in a CBA.

5. Social Security

Employers are also responsible for the social security and taxes deducted from an employee’s salary. Contributions for employer and employee are as follows:

  • Employer’s contribution: Around 30%
  • Employee contribution: Around 10% 

The Cost of Hiring an Employee in Italy

When hiring an employee in Italy, you must consider the employee and other associated costs with the recruitment process. Prominently, the cost of labor depends on the position and industry. In Italy, the average hourly cost of labor is 29.3 as of 2021, which is higher than the average hourly cost of labor in the EU. 

The process of hiring people in Italy also covers other expenses, including:

  • Consulting with an Italian law organization to help you stay legally compliant all through the hiring process
  • Advertising job positions (except for in the case of free postings)
  • Recruiting through a hiring agency
  • Paying an internal hiring committee
  • Paying referral bonuses to employees with networks in Italy
  • Traveling costs to and from Italy, including meals, hotel stays, and transportation
  • Collaborating with a translator to draft documents or simplify conversations
  • Using a background check service for selecting candidates

Some factors that demand the most cost of hiring:

  • Onboarding and training cost
  • Minimum wage/ monthly salary
  • Expenses related to the interview process
  • Opportunity costs
  • Time spent in the execution

What Does a Company Need to Hire Employees in Italy?

Here are several major requirements a company must fulfill to hire employees in Italy:

i. Documents: You must sign a public deed of incorporation and company by-laws in the attendance of a notary.

ii. Tax: You would also have to pay a government grant tax and the registration tax for setting up your company.

iii. Tax codes: Your shareholders and directors need an Italian tax identification number derived from the Agenzia delle Entrate.

iv. Company VAT number: You must submit an online request to obtain a VAT number from the Agenzia delle Entrate.

v. Bank account: You must open a bank account in Italy after your company is formally incorporated. This assists companies in depositing their capital and paying the salaries and the cost of hiring.

vi. License and permit: You must apply for licenses or special permits before recruitment and selection in Italy. 

Various options for Hiring Employees in Italy

Internal hiring: Employers can hire experienced HR teams to recruit appropriate employees. According to the market and industry, HR teams can promote and hire proficient employees in Italy. Recruitment and selection in Italy need time and can be costly.

Outsource: Usually, an EOR is an official employer in Italy and works on your company’s behalf. It allows all legal compliance, including the employment relationship and HR tasks like payroll, onboarding, or termination, to be conveyed to the appointed EOR solutions provider.

The Steps to Hiring in Italy

Follow these steps to hire staff in Italy:

Step 1: Approach job seekers

  • The next step is to advertise the vacant position in your company. 
  • You can create job ads in the Italian language or any other language. 
  • Usually, Italian job seekers look for positions online on leading job aggregator sites and industrial job boards. They can also approach social media channels to post their job ads. You can advertise your job posts at job search websites like 
    • The Local
    • Adzuna
    • Careerjet
    • Linkedin Italy
    • Indeed

Step 2: Conduct interviews and hire employees

In this step, you must evaluate the shortlisted candidates and conduct interviews. You can prepare skill-focused texts before scheduling an interview to shortlist potential employees. 

You can schedule an interview through an internet video call to shortlist remote and on-site applicants. Managers can employ friendly conversation during interviews and ask questions about the job description. Once you find an applicant suitable for the post, you can shortlist the candidate. 

Step 3: Conduct background selection of potential candidates

It is beneficial to conduct background checks when hiring staff in Italy. The background checks will include self-employed professionals, interim personnel, interns, temporary staff, and volunteers.

When performing a background check, employers should conform to the EU General Data Protection Regulations (GDPR). 

Candidates who pass interview rounds and meet the job requirements are entitled to the job.

Step 4: Enter into a contract of employment

After the employees are hired, the next step is to present the job contract to the employees. You must share the employment contract within 30 days of their joining dates. This contract must be aligned with all legal requirements and any pertinent CBA. The employment contract should include the following details:

  • Identity of the employer and employee
  • Joining date
  • Work location
  • Job title or category
  • Fixed-term or permanent duration
  • Probationary period (if applicable)
  • Typical working hours
  • Number of paid holidays
  • Salary
  • Duration of the notice period (in the case of termination)

Step 5: Onboard the new employees

Employers should notify the competent Labor Office (DPLMO) whenever they hire workers.

Go through the drafted employment contract before sharing it with the selected employee. Moreover, you must review any extra information the employees need about their job responsibilities and company policies. You may have to train them to help them start working on their jobs smoothly.

Let Multiplier be Your EOR Platform in Italy

To hire employees in a foreign country, you must comply with all the employment laws and regulations. To simplify the process of hiring employees in Italy, you can contact Multiplier.

Multiplier is a renowned SaaS-based Employer Of Record (EOR) solutions, provider. We employ appropriate talent in Italy without opening a Swedish subsidiary. You can test new markets and set up teams all across the world. 

Multiplier’s integrated services, including Professional Employment Organization (PEO), facilitate contingent workforce management, automated payroll, and smooth employee onboarding. All these benefits are conveyed while strictly obeying Italian labor law and tax regulations. 

Multiplier’s PEO & EOR solutions are the principal choices for any international employers testing new markets and willing to globally scale local teams at a fraction of the cost in 150+ countries.

Frequently Asked Questions

For full-time employees, the standard working hours are 40. The working hours exceeding this are paid at overtime rates, typically specified in a CBA.

Working mothers in Italy are eligible for five months of maternity leave. They can take leave two months before birth and three months after the delivery. The maternity pay is fixed at 80% of the salary and is paid by the state social security provider INPS.

In Italy, employers should set aside funds for severance (TFR) for the employee. It must be paid to them within 6 months of employees leaving the company. TFR is calculated by considering the gross annual salary from January 1st to December 31st and is divided by 13.5. Now subtract the taxable income (social security, pension) and multiply this value by 0.5%.

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