Customer Stories — 14 min
Thanks to major innovations in communications and technology, many companies are looking beyond geographical boundaries to find talent. You may have found your ideal candidate in Italy, but before you start hiring employees in Italy, you have to open your own local entity and navigate a maze of government regulations.
From maintaining compliance with local labor laws to managing ongoing HR processes — international hiring is an expensive process and can take many months.
Enter EORs. An employer of record service gives you everything you need to hire workers from Italy or elsewhere in the world. You can use EORs to fulfill every legal requirement needed to start building your team in Italy. An EOR also handles many HR functions including onboarding, taxes, benefits, and payroll, which makes it easier for you to manage your employees quickly and compliantly.
In this article, we’ll take you through Italy’s labor laws, explain the benefits of an EOR, and how you can choose a provider to support your global hiring needs.
Instead of creating your own legal entity and navigating the complicated process of hiring in Italy, you can find a trustworthy EOR to do it all on your behalf. Use the following steps to help you find an EOR provider that’s best qualified to help you expand into Italy.
Step 1: Weigh up the pros and cons of each potential partner
Apart from registering a local entity, you'll have to handle onboarding, taxes, payroll, intellectual property management, and several other processes that are part of international hiring. There are dozens of EOR providers to choose from, each offering a different combination of services. First, you have to identify your pain points and use those as a checklist to choose an employer of record that offers the best value for your money. Ideally, an employer of record should help you:
Stay compliant with local labor rules
Manage payroll and ensure that your team gets paid on time
Secure your data and intellectual property and invention rights
Stay compliant with local labor rules, and
Integrate with the rest of your HR stack to simplify managing salaries, raises, benefits, and payroll taxes.
Step 2: Take the time to select the most appropriate EOR service provider
It’s not unusual for EOR providers to use third-party companies to provide legal entities for employers like you. If the EOR doesn’t own its own entity in Italy and is partner-dependent, it could lead to unstable prices, low levels of security or compliance, and poor quality support, as these would depend on external agencies. That’s why it’s essential to make sure that your selected EOR owns its legal entity in the country you wish to hire from.
Step 3: Check the reviews, testimonials, and coverage of your shortlist of providers
To uncover more insights about how the EOR operates and how it treats its clients, read client testimonials on third-party review sites like Trustpilot, G2, and Saasworthy. You could also check the company websites, read independent reviews, and browse online press coverage to get a feel of how the company works, and whether it’s the right fit for your needs.
Step 4: Ensure that the EOR solution for Italy will provide a best-in-class employee experience
Since the EOR hires for you and is the first point of contact for your employees, check to make sure that they’re treating your employees well. For instance, find out whether they process payroll on time, resolve employees’ queries quickly, and provide a smooth onboarding experience for your team.
Step 5: Work with your partner to provide a fair and equitable compensation package
Attract and retain top talent by working with your EOR to offer your potential recruits a modern and competitive benefits package that is compliant with local laws. They should also factor in the employee’s role, skill set, and experience level.
Salaries for remote roles can vary wildly depending on the local cost of living and an employee’s skill level. An employer of record can help you figure out a fair salary for any role you’re hiring for, by reviewing the labor market rates, experience level, and the individual’s skill.
Step 6: Make sure your partner will maintain data security for your business
Your intellectual property can help you stay ahead of the competition and create leverage at a liquidity event (e.g. an IPO or a sale). An EOR should ensure your employment contracts specify that employees willingly transfer any inventions and intellectual property they create for the wages you pay them. Additionally, an employer of record partner should have systems in place designed to safeguard your data from hacking and other risks to security.
The processes involved in creating a legal entity and getting the necessary permits to hire employees in Italy can take several weeks. And of course, you’ll also need to set up a payroll system, manage compensation and benefits, and stay compliant with changing regulations.
An employer of record maintains a local entity on your behalf and helps you:
Onboard new employees
Manage benefits, compensation, and occupational insurance for your employees
Manage employment paperwork and agreements and file it with the relevant authorities
Process payroll taxes on your behalf
Conduct background checks on new hires
Manage the termination process to ensure employees are only let go as the law provides
Prices vary depending on the kind of services provided, the location of the workers, and the number of workers you wish to hire. Generally, EOR providers charge as low as $599 per month to upwards of $2,000 per employee per month.
Foreign companies hiring in Italy might face a dilemma between choosing older EOR providers that charge high, enterprise rates versus newer providers that cost less but may not guarantee the same quality of service.
Remote offers a complete employer of record service that helps you manage payroll, benefits, and compliance for your international team, all for an affordable, flat price.
Compare Remote to other EOR providers to help you make the best choice for your business without breaking the bank.
Understanding how Italy’s employment laws work in practice will help you navigate salaries, benefits, and compliance for your Italian team so that you can avoid getting into legal trouble. There are strong protections for employees under Italian employment law, so you’ll have to make a commitment to hiring workers fairly and safely. Remote’s guide to hiring in Italy goes into detail explaining how to hire employees. In the following sections, we’ll explain Italy’s key labor laws around contracts, holidays, and terminating an employment relationship.
Verbal and written contracts are equally valid under Italian law, although certain clauses (non-compete agreements, probation periods, and contract time frames) need to be specified in writing.
Written contracts provide better liability protection and should specify:
The identities of both parties
The designated workplace
The date the contract comes into effect
The duration of the contract and specifying whether it’s temporary or indefinite
Length of paid holiday
Working hours, and
The length of the notice period required to terminate the contract
Italian employment laws specify certain labor standards that employers are required to comply with so that they can provide a dignified working environment for their employees. These include:
Protecting employees from any form of discrimination due to race, religion, nationality, ideology, political affiliation, sex, financial, social, membership in a trade union, or disability, or age.
Limiting working hours to 48 hours a week
Paying salaries on time
Providing safe and dignified working conditions
Respecting collective bargaining agreements regarding salaries, working hours, and benefits
Employee taxes in Italy are levied at a progressive rate and range from 23% to 43% which are to be withheld and remitted by the employer.
Security contributions are paid at around 40% of the employee’s salary. The employer contributes around 30% towards this, while the employee contributes the remaining 10%. The employer contributes 33% of the total rate towards the National Pension Scheme, while the rest is paid into the following social security funds:
Sickness fund (not applicable to executives)
Social mobility fund (not applicable to executives)
Temporary unemployment compensation fund (not applicable to executives)
To attract talented professionals in Italy, it’s important to understand local expectations and requirements so that you can offer a competitive compensation and benefits package.
Workers in Italy are entitled to a range of employee benefits including leave entitlements, parental leave, overtime pay, minimum wage requirements, and more.
There’s no fixed statutory minimum wage in Italy. However, different industries may set a minimum wage according to the workers’ classification through collective bargaining agreements.
The general working week is 40 hours, although the maximum number of working hours can be specified in the employment agreement or by industry-specific collective bargaining agreements. All overtime work must be paid to employees accordingly.
Expectant mothers are entitled to 20 weeks of paid maternity leave starting eight weeks before and 12 weeks after delivery, with benefits paid by social security.
Fathers are entitled to seven days of paid paternity leave within five months of the delivery.
Employees are entitled to four weeks of paid vacation annually; full-time employees are also entitled to 13 public holidays a year.
Depending on the employment contract and worker classification, the sick leave entitlement can vary. Generally, employees can receive 100 percent of their wages for the first three days of sick leave (dropping to 66 percent for the third instance of sick leave in a year and 50 percent for the fourth.)
Italy offers universal healthcare coverage funded by social security contributions, but you can still offer private health coverage to give your employees more choice over where they get their health services.
Employees can only be let go without notice if there’s a serious breach of contract. Otherwise, employers need to provide prior notice to dismiss employees for economic or organizational reasons. Notice periods range from 10 to 180 days, depending on an employee’s tenure with the employer’s organization.
At Remote, we’re committed to helping companies hire the world’s best brains wherever they’re based
Beyond handsome salaries, the right mix of benefits and perks will promote a better work-life balance for your team and help you stay compliant with labor rules. Learn more about the global benefits Remote can offer your distributed workforce.
Self-employed individuals (or contractors) and employees are treated differently in Italy. You’ll have to be careful about assigning the right worker classification status because there can be serious consequences associated with misclassification. Misclassified employees can file for damages and if found guilty, the employer will have to face fines and penalties. They will be liable to pay the difference in the taxes, benefits, and social security contributions they should have made on the employee’s behalf.
If you’re worried about worker misclassification, the best thing to do is to work with an EOR that can help you classify your workers correctly. Remote has a team of in-house experts who have in-depth knowledge of Italian employment laws. We can work with you to mitigate misclassification risks and ensure compliance with local regulations.
To check your employee misclassification risk, use our free Misclassification Calculator.
The process of global hiring and onboarding employees in Italy can seem daunting. Opening a local entity abroad is no mean feat. You’ll have to spend a significant amount of time and resources setting up operations, understanding local laws, and streamlining HR operations.
Remote makes it possible to build a remote team without getting bogged down going back and forth on issues like payroll, filing employment paperwork, and paying any necessary taxes to the authorities. Remote provides a full-stack global hiring infrastructure that’s designed to help you:
Get started with hiring employees in Italy or globally
Manage payroll, benefits, and compliance
Onboard new employees seamlessly
Pay any necessary taxes, duties, and levies
Secure your data security, intellectual property, and invention rights
Partner with a team of legal experts that’ll help you stay compliant with changing Italian labor laws
To make the best decision for your business, compare Remote to other employers of record services. If you’re ready to start onboarding employees in Italy, get started with Remote and hire your dream team today!
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