Employer of Record (EOR) in Italy: How to Hire, What It Costs, and How to Stay Compliant

An Employer of Record (EOR) in Italy lets a foreign company hire Italian employees legally without setting up a local entity. The EOR becomes the legal employer — running payroll, withholding IRPEF, and paying INPS contributions — while you keep operational control. Italy has two features that surprise foreign employers: there is no statutory minimum wage (pay floors come from sector collective agreements), and salaries are paid 13 or 14 times a year — so real employer cost runs roughly 45–55% above gross.

Italy offers a large, skilled workforce and access to the wider EU market, but its employment framework — built on the Civil Code and hundreds of national collective agreements — is complex. An EOR is a fast, low-risk way to enter the market, handling contracts, payroll, and compliance while you focus on operations.

Key benefits of hiring in Italy through an EOR

• No need to establish a legal entity in Italy
• Full compliance with Italian labour and tax laws
• Quick market entry and reduced administrative burden
• Complete operational control over your local team
• Flexible exit strategy if you later set up your own subsidiary

Why choose an EOR in Italy?

An EOR lets your company build a local team quickly while remaining fully compliant with strict Italian employment rules. It acts as the legal employer while you retain operational control — ideal for sales, marketing, business development, and service roles without incorporating and taking on Italian payroll and CCNL compliance directly.

How much does it cost to employ someone in Italy in 2026?

On top of gross salary, an Italian employer pays about 29–32% in INPS social security, plus a TFR severance accrual of roughly 7.4% set aside each year. Crucially, salaries are paid a mandatory 13th month (and a 14th under some agreements), so the annual bill is 13–14× the monthly figure — total employer cost typically lands 45–55% above gross. The example below uses €2,500/month gross.

Italy at a glance

Employment framework

Employment contracts

Employment is governed by the Italian Civil Code and the applicable national collective agreement (CCNL). All employees must have a written contract in Italian stating job title and duties, salary and benefits, working hours, duration, probation, and workplace. Contracts are typically indefinite (tempo indeterminato) — the standard, most secure form — or fixed-term (tempo determinato), permitted under conditions, usually up to 12–24 months.

Probation period

Typically 3–6 months for permanent roles, as set by the applicable CCNL, and shorter for temporary or project-based contracts.

Working hours & overtime

The standard week is 40 hours, usually Monday–Friday, with a 48-hour average ceiling including overtime. Overtime is compensated at premium rates or with time off, as defined by the CCNL.

Minimum wage & collective agreements

Italy is one of only a handful of EU countries with no statutory minimum wage. Instead, around 992 national collective agreements (CCNL) set sector-specific pay floors — roughly €7–14 per hour — covering about 97% of the workforce. Article 36 of the Constitution guarantees fair pay, and courts use CCNL rates as the benchmark. A proposed €9/hour statutory minimum has been debated since 2023 but is not in force. Choosing the correct CCNL for the role is essential; an EOR handles this.

13th and 14th month & TFR

Every employee receives a mandatory 13th-month salary (tredicesima), paid in December, and many CCNLs also require a 14th month (quattordicesima) in June or July. Separately, employers accrue TFR (Trattamento di Fine Rapporto) of about 7.4% of annual pay — roughly one month’s salary for each year worked — paid to the employee on leaving, for any reason.

Payroll & taxation

Income tax (IRPEF) 2026

IRPEF is progressive across three brackets. The 2026 Budget Law cut the middle rate from 35% to 33%:

On top of national IRPEF, regions add a surtax of about 1.2–3.3% and municipalities up to 0.9%, based on the employee’s residence. A no-tax area of roughly €8,500 applies via the employment tax credit, and the structural cuneo fiscale (tax-wedge) relief raises net pay for incomes up to about €40,000.

Social contributions (INPS)

Both sides contribute to INPS: employees pay about 9.5% of gross, and employers about 29–32% depending on sector and company size. Employers and employees also fund the National Health Service (SSN).

Employee benefits & leave

• Annual leave: a statutory minimum of 4 weeks (20 days), with many CCNLs granting more (around 26 days).
• Public holidays: 12 national and religious holidays.
• Sick leave: the employer pays the first 3 days, after which 75–100% is shared with INPS; job protection (comporto) runs for a period set by the CCNL.
• Maternity leave: a mandatory 5 months (80% paid by INPS, often topped up to 100% by the CCNL), starting up to 2 months before birth.
• Paternity leave: 10 days mandatory, plus shared parental leave.
• Healthcare & pension: universal SSN coverage and the state pension, with many employers adding private health insurance and supplementary pension funds.

Termination & notice periods

Italian law strictly regulates dismissal and protects against unfair termination. Grounds are just cause (misconduct), justified reason (economic or organisational), or mutual agreement. Notice periods are set by the applicable CCNL and vary by category and seniority — broadly from about 1–2 months under 5 years’ service up to 2–4 months (or more) over 10 years. On any termination, the accrued TFR is paid out. An EOR manages grounds, procedure, notice, and TFR.

Work permits & immigration

EU/EEA and Swiss citizens work freely in Italy. Non-EU nationals generally need a work and residence permit, most commonly under the annual quota system (Decreto Flussi) or specific routes such as the EU Blue Card and intra-company transfers. An EOR can coordinate permit applications and registration with the Italian authorities.

NDA & IP rights

Confidentiality clauses are enforceable where reasonable. Non-competition agreements (patto di non concorrenza) are valid only if limited in time, geography, and scope and supported by specific compensation. Intellectual property created during employment generally belongs to the employer.

What changed for 2026

• Lower middle tax rate: the 2026 Budget Law cut the second IRPEF bracket (€28,001–€50,000) from 35% to 33%, saving middle earners up to €440 a year.
• Tax-wedge relief made structural: the cuneo fiscale reduction continues, lifting net pay for lower and middle incomes.
• Impatriate regime: the reformed inbound-worker regime (50% exemption for five years) applies to qualifying new residents.
• Productivity bonuses: the substitute tax on productivity bonuses is reduced, with a higher exempt cap — improving net pay on variable compensation.
• Still no statutory minimum wage: pay floors remain set by CCNLs; the €9/hour proposal was not enacted.

Frequently asked questions