We deal with all the paperwork arising from hiring new workers and becoming an employer in Italy.
Do not hesitate to contact us for a non-binding and free first conversation.
Tel.: +39 0474 572900
In compliance with certain legal preconditions it is possible to hire an employee in Italy without the corresponding duty to create a permanent establishment with all the related regulations, concerning, in particular, bookkeeping, financial statements, added value tax and income tax obligations.
Regardless of the presence of a permanent establishment, every company that operates in Italy as an employer has to comply with all legal provisions governing social insurance and collective labor agreements, including the duty to pay social security contributions and wage taxes. This procedure isn’t comparable with the secondment of workers, due to the fact that Italian labor law applies, and, moreover, the company must be registered in Italy as an employer (employer status).
If an employee living in Italy is hired, the employment contract and payroll accounting are governed by Italian labor law.
The registration of the company in Italy as an employer without the duty to create a permanent establishment is only possible when the tasks of the hired employee are limited to service duties or business procurement activities. Under no circumstances can the employee can be entrusted with sales activities or the completion of business transactions (contract closures). Preparatory activities regarding contract negotiations are, however, allowed, as long as the signing of the contract takes place at the company's headquarters.
Italian employment contracts must comply with current legal- and collective bargaining regulations. In Italy, every business category has to be regulated by a collective labor agreement (wage agreement). In order to the determine the applicable wage agreement, it is necessary to identify the parent company’s core business (as defined in the commercial register excerpt).
The most important elements of an Italian employment contract are:
- type of contract (temporary or permanent)
- job classification
- tasks and area of activity
- job location, working hours and probation period
- gross annual salary
- additional agreements (overtime arrangements, company vehicle, reimbursement of expenses)
Wages / Salary The wage
and the related labor costs play a central role in the economic world. Labor costs consist of gross salary
and additional costs
(health insurance, accident insurance and other specific expenses).
Experience has shown that contract negotiations have to be based on the gross salary, due to the fact that wage agreements (13 monthly salaries in craft industries/manufacturing, 14 monthly salaries in trade/services sector) and the personal factors affecting the worker (such as tax exemption status and progressive taxation burden) are likely to have a considerable influence on net salary.
Generally, the final costs for the company can be determined by raising the gross salary by 40 percent. If desired, we can provide a more detailed breakdown of gross- and net salary.
One particularity of the Italian labor law system is the payment of so-called ”severance pay“, at the moment of termination of the employment contract.. This payment, however, is not comparable with an “end-of-contract gratuity”. The amount of the severance pay equals one month’s salary for each year of service and is due to the employee in all cases, regardless of the actual reason for the termination of the contract (severance pay is also due in the event of dismissal).
Health and Safety Regulations
Furthermore, employing a worker in Italy also entails complying with health and safety regulations. One of our cooperation partners provides advice on complying with health and safety regulations.
The employment of an Italian worker without setting up a permanent establishment is a cheap and simple method for breaking into the Italian market. Moreover, it enables the company, during a kind of a test phase, to evaluate the profitability of a potential Italian affiliate.
Please do not hesitate to contact us for any further information or for a non-binding and free first conversation.
Dr. Hermann A. Graber
T.: +39 0474 572900