Focus on…
Employment in Italy: fulfilments due by the employers
![Employment in Italy: fulfilments due by the employers](/cdn-cgi/image/width=1920/https://www.legal500.com/wp-content/uploads/sites/18/2021/07/employment-focus-on.jpg)
Any foreign employer willing to hire personnel in Italy is obliged to put in place several fulfilments that can be summarized as follows:
- registering with the Italian labour authorities (I.e., INAIL, INPS and Local employment office);
- running a monthly payroll in compliance with the law and to the chosen National collective bargaining agreement (“NCBA”), if any;
- submitting monthly and annual reports to labour and social security authorities to declare salaries paid, taxes and social contributions withheld, etc.
Employment regulation: law and NCBA
A) Italian Law and NCBA Basic rules regarding rights and obligations of employer-employee relationship in Italy can be found in the Constitution, in the Italian Civil Code (“Codice Civile”), which includes a special section on employment matters, and in the Workers’ Statute (“Statuto dei Lavoratori”), i.e., Law no. 300/1970 as modified by subsequent legislation. Terms and conditions of employment are also governed by NCBA(s) signed periodically between the trade unions and the employers’ associations of the same sector. It is however worth mentioning that the NCBA(s) are not statutory sources of law but are private contracts between trade unions and employers’ associations and are not legally binding for all employers. In principle, they are not binding, as employers - with the exception of those that are members of the employers’ associations – are free to decide whether to have the employment contracts governed by national collective agreements, or not. Notwithstanding the above, the application of a NCBA has the advantage of establishing a set of common rules (e.g., notice period, length of the probationary period, sickness leave and working hours etc.) for companies operating in the same industry, e.g., trade, credit, metal industry, chemical industry, etc. Moreover, unanimous case law identifies the treatment provided by the collective agreement entered into for a specific industry as the minimum and mandatory standard treatment applicable to the employees concerned. B) Professional categories and classification of the employees According to Italian Law, the employees are divided in the following four professional categories (from the highest to the lowest):- Executives (“Dirigenti”).
- Middle managers (“Quadri”);
- White-collar employees (“Impiegati”) and
- Blue-collar employees (“Operai”).
- 3 months, for employees not assigned to managing functions;
- 6 months, for all other employees.
Social security and employment costs
The payment of social security contribution is one of the duties of any company employing workers in Italy. Indeed, employees are currently entitled to a 33% pension contribution rate, plus a further 3-5% contribution rate to fund “protected events” such as illness, maternity and unemployment that is generally referred to as “minor contributions”. In principle, about 1/3 of the global contribution percentage is charged on the employee and directly withheld by the employer through the monthly payslip, whereas the remaining 2/3 is borne by the employer. Moreover, it must be observed that under certain circumstances the contribution rates applies within an annual “cap”, yearly determined by the INPS and currently slightly higher than EUR 110,000. In addition to social security contributions, the employer must bear further costs related to the employment, for instance:- the work accidents insurance, whose cost depends on the employees’ gross salaries, the kind of activity carried out by the workforce and the related potential risks;
- the payment of contributions due to complementary healthcare funds or private pension scheme that could be provided for by the applicable NCBA;
- the severance indemnity payment (“trattamento di fine rapporto” or “TFR”, in Italian parlance) due to the employee upon the employment termination.
Transfer to Italy and relevant fulfilments due by the employees
- EU regulations and Italian residency
- Extra-EU workers