Italian Employee Benefits
Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Italy might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labor contracts for employees in Italy including local benefits.
When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In Italy, benefits are guaranteed by national legislation as well as collective agreements with trade unions or workers’ councils.
What Compensation Laws exist in Italy?
In Italy, compensation laws are set by national legislation and the civil code, but the types of compensation can vary according to the sector the employees are in, regulations of collective agreements, and the internal regulations of the company.
For example, there is both a 13th month and 14th month pay in Italy, but employee bonuses can be given at the discretion of the employer or can be negotiated as performance clauses in the employment contract.
There are, however, benefits and/or compensation that are guaranteed by national legislation:
- Minimum wage: Italy does not have a government-regulated minimum wage and is one of the few European countries that do not have one. There is no minimum wage at regional level either.
The minimum wage rate is determined by collective bargaining agreements (according to their sectors or industries), or individual contract negotiation – but this is not always applied.
Employees, however, are entitled to a wage that is equal with the quality and quantity of their work and can guarantee a decent lifestyle for themselves and their family.
- Social Security Contributions: Both employers and employees must contribute to National Insurance, which depend on the employee’s salary. Social security contributions are also capped at a certain amount. Social security contributions go towards a variety of funds.
- Termination and Severance: During employment termination, a written notice must be given to the employee in cases of all types of termination, except in cases of dismissal due to serious disciplinary reasons.
Notice periods are set in collective agreements or individual employment contracts, and are based on the employee’s length of service, position, and level.
- Work Hours and Breaks: The normal working week in Italy is 40 hours, however, this may vary according to the industry and sector. Any work done in excess during the work week is considered overtime, according to Italian law. However, it must be with a maximum of 48 hours.
The lowest statutory rates for overtime are 10%, but this can be raised by collective bargaining.
- Sick Leave and Payments: Employees are entitled to paid sick leave in case of sickness of injury, for a specific period, which varies according to the relevant collective bargaining agreement or individual contract.
Sick leave is partly paid from the employer, and partly paid from the National Social Security Body – however, this depends on the employee’s qualification and length of service, as well as the business sector.
- Holiday and Vacation Leave: Employees in Italy are entitled to a minimum of 28 days, or 4 weeks of paid annual leave. Collective bargaining agreements and individual contracts may provide a longer period of holiday entitlement.
Two of those weeks can be taken consecutively, at the employee’s request. Two of the four weeks can be taken in the year they were given, whilst the other half can be carried over to the next one for an additional 18 months.
- Unemployment: Dismissed employees are entitled to, under certain conditions, an unemployment benefit – known as Nuova Assicurazione sociale per l’impiego (NASPI).
The benefit is approximately equal to EUR 1,300 per month, which is paid for several weeks. It is equal to half of the contribution weeks of the previous four years. Employers contribute to the benefit’s funding.
Social Security in Italy
Both employers and employees in Italy must contribute to social security contributions, which are settled through the employee’s salary. These contributions are withheld from the employee’s salary, which are then sent to the tax office monthly.
Employers are obliged to make their own contributions to the social security funds monthly, based on the employee’s salary.
Both employer and employee social security contributions are like so:
Employer’s Social Security Contributions
- Social Security 29-32%
- Injuries at Work Insurance (INAIL) 0.4%
Employee’s Social Security Contributions
- Social Security 10%
Like income tax, social security contributions are affected by categories of employment, as well as seniority. The figures listed above are the general rates.
The contributions listed above go towards the following funds:
- The National Pension Fund (INPS)
- Temporary unemployment compensation
- Social mobility
- Other minor funds
Statutory Employer Costs in Italy
Statutory Costs in Italy include meeting the standard employee wages, and income, social and corporate taxes.
Employers must meet the minimum wage for their sectors and industries, and ensure that the necessary payments from their wages to the local authorities are made on time, which include:
- Income Tax – income tax is to be withheld from the employee every month and paid by the employer monthly to the local tax authorities.
- Social security – social security payments are to be made by both the employer and the employee monthly, which contributes to pension schemes and health insurance.
- Corporate Tax – corporate taxation on income and profits are mandatory for all businesses in Italy.