Payroll Service for Employees in Italy

We manage Italian payroll for international companies, even without their own branch or permanent establishment in Italy.

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Hire employees in Italy without a permanent establishment and manage Italian payroll?

Would you like to hire an employee in Italy without your own permanent establishment and need Italian payroll? IPS supports international companies in employing and paying employees in Italy in accordance with local requirements.

Payroll in Italy requires particular consideration of social security, wage tax, the applicable Italian collective bargaining agreement or CCNL, TFR and numerous reporting and documentation obligations.

Two models are particularly relevant for employing staff in Italy without your own company:

1. Employer of Record in Italy

With an Employer of Record solution, your employee is employed through a suitable local employer structure in Italy while working operationally for your company.

✓ Fast entry into the Italian market

✓ No Italian company required

✓ Italian payroll and administration outsourced

✓ Support with social security and local compliance requirements

Important: Temporary agency work, or “Somministrazione di lavoro”, is regulated in Italy and may only be implemented through appropriately authorized structures or employment agencies.

Employer of Record

2. Direct Employment in Italy

Alternatively, your foreign company can remain the employee’s employer. The required Italian employer, social security, payroll and reporting obligations must be set up and fulfilled on an ongoing basis.

✓ Employees are employed directly by your company

✓ Italian payroll through IPS

✓ Support with employer registration and administration

✓ Consideration of the relevant Italian CCNL

The specific tax and social security structure should be reviewed before employment begins, particularly if there is no permanent establishment in Italy.

1. Employer of Record in Italy

Your employee is employed through a suitable local employer structure in Italy while working operationally for your company.

✓ Fast start in Italy

✓ No Italian company required

✓ Payroll and administration outsourced

✓ Support with Italian compliance

Note: Temporary agency work is regulated in Italy and must be carried out through an appropriately authorized structure.

Employer of Record

2. Direct Employment in Italy

Your company remains the employer and fulfills the required Italian payroll, social security and reporting obligations.

✓ Direct employment within your own company

✓ Italian payroll through IPS

✓ Support with registration and administration

✓ Consideration of the relevant CCNL

IPS is your global payroll solution for successful and efficient
cross border payroll without your own local entity.

Full Time Remote Work from Italy: Information About Payroll in Italy

With IPS as your international payroll partner, we support you with the correct employment of your staff in Italy and the preparation of Italian payroll in accordance with local requirements.

The Italian employment and payroll system is significantly influenced by national sector specific collective bargaining agreements known as Contratti Collettivi Nazionali di Lavoro (CCNL). The applicable CCNL may determine remuneration, classification, working hours, overtime, probationary periods, notice periods, sick leave and additional monthly salary payments.

Standard statutory working time is generally 40 hours per week. Collective bargaining agreements may provide for shorter regular working hours. Including overtime, average weekly working time must generally not exceed 48 hours.

No General Statutory Minimum Wage in Italy

Italy currently does not have a uniform statutory minimum wage that applies to all employees. In practice, the relevant minimum remuneration is determined primarily by the CCNL applicable to the industry and role.

For international employers, correct classification under the applicable collective bargaining agreement is therefore particularly important before the first payroll run.

Payroll Costs and Social Security in Italy

Hiring an employee in Italy involves significant social security and other employer costs in addition to gross salary. However, a general statement such as “39% payroll costs” is not reliable for every employee.

The actual costs depend on factors including the industry, company size, employee classification, type of contract, applicable CCNL and possible contribution relief.

Social Security in Italy

The statutory pension insurance system for employees generally provides for an IVS contribution of 33% of contributable remuneration. This contribution is divided between employer and employee, with the employer bearing the larger share.

Additional contributions and insurance may also apply, for example for:

→ Unemployment insurance

→ Sickness and maternity

→ Income replacement and protection funds

→ Occupational accident insurance through INAIL

→ Industry specific funds and collective bargaining benefits

If you do not have a branch in Italy, IPS supports you in correctly determining and processing the required social security contributions and payroll components in accordance with Italian law.

Salary, 13th and 14th Month Payments

The remuneration structure is largely determined by the applicable CCNL. A 13th month payment, known as “tredicesima”, is very common for Italian employees and is generally paid at the end of the year.

Depending on the collective bargaining agreement, an additional 14th month payment, known as “quattordicesima”, may also be provided. The agreed annual salary must therefore be correctly distributed across the monthly payments required under the applicable agreement.

Sick Leave

In the event of illness, an employee in Italy must report their incapacity for work in accordance with statutory and company requirements. The medical certificate is generally submitted electronically to INPS.

For categories of employees entitled to statutory INPS sickness benefits, INPS payments generally begin from the fourth day of illness.

For the first three days, known as the waiting period, and for any additional sickness benefit payments, the applicable CCNL and employee category are particularly important.

The period of protection against dismissal during longer periods of illness, known as the periodo di comporto, is also largely determined by the collective bargaining agreement and is often around 180 days, although this may vary.

Vacation and Public Holidays

Employees in Italy are legally entitled to at least four weeks of paid annual leave. Collective bargaining agreements may provide additional vacation entitlement or additional paid days off.

Since 2026, the following twelve nationwide statutory public holidays apply:

→ January 1: New Year’s Day

→ January 6: Epiphany

→ Easter Monday

→ April 25: Liberation Day

→ May 1: Labor Day

→ June 2: Republic Day

→ August 15: Ferragosto / Assumption Day

→ October 4: Saint Francis of Assisi

→ November 1: All Saints’ Day

→ December 8: Immaculate Conception

→ December 25: Christmas Day

→ December 26: Saint Stephen’s Day

In addition, the feast day of the relevant local patron saint is generally observed, for example Saints Peter and Paul on June 29 in Rome.

Probationary Period, Termination and TFR

Probationary periods and notice periods in Italy are also strongly influenced by the applicable CCNL. The agreed probationary period should be recorded in writing and must comply with statutory and collective bargaining requirements.

Termination by the employer must generally be made in writing and be based on a legally recognized reason, such as giusta causa or giustificato motivo.

The applicable notice period generally depends on the CCNL, employee classification and length of service. If a required notice period is not observed, a corresponding payment in lieu may be required.

Trattamento di Fine Rapporto (TFR)

A distinctive feature of Italian employment law is the Trattamento di Fine Rapporto (TFR). This is a benefit accrued during employment that generally becomes payable when the employment relationship ends, regardless of whether the employee resigns or the employer terminates the employment relationship.

For each year of employment, a TFR amount is generally calculated by dividing the relevant annual remuneration by 13.5. The accumulated amount is also revalued annually in accordance with statutory requirements.

TFR is therefore not a traditional severance payment that only arises as a result of termination by the employer, but rather an employment cost that accrues continuously throughout the employment relationship.

Currently since July 1, 2026: New rules apply to private sector employees regarding the allocation of newly accrued TFR to company or collective supplementary pension arrangements if no corresponding choice is made within the prescribed period.

International Payroll in Italy Requires the Correct CCNL Classification

For payroll in Italy, correct payroll processing is not determined by statutory law alone. The applicable national collective bargaining agreement may regulate key elements such as minimum salary, working hours, overtime, vacation, sick leave, probationary periods, notice periods and 13th and 14th month payments.

As an international payroll service provider, we support you in aligning your Italian payroll with the employee’s actual role, industry and employment situation.

Employ and Pay Employees in Italy in Compliance with Local Requirements

Employing your own staff in Italy involves numerous social security, tax and employment law requirements. With our international payroll solutions, we support you with efficient and locally compliant processing.

Your benefits:

✓ Italian payroll in accordance with local requirements

✓ Consideration of the relevant Italian CCNL

✓ Support with social security, INPS and payroll compliance

✓ Consideration of TFR as well as 13th and, where applicable, 14th month payments

✓ Employment of staff without your own Italian company using suitable structures

✓ Employer of Record through suitable or authorized employment structures

✓ Support with direct employment as a foreign employer

✓ Flexible expansion into the Italian market

Request a non binding consultation now and employ and pay employees in Italy professionally.

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