Employee Benefits in Italy: What Global Employers Need to Know in 2025

Expanding your business into Italy can be an exciting experience, but managing the country’s benefit requirements can also be a challenge. 

Italian workers value a strong work-life balance and robust social safety nets, much like countries known for generous benefits like France and Germany. 

In this guide, we'll cover the essentials of managing employee benefits in Italy, explaining who qualifies for mandatory benefits, and outlining standout perks that can elevate your company's appeal.

We’ll also explore how partnering with an Employer of Record (EOR) in Italy can help you stay compliant and competitive, so you can focus on growing your team.

Who Qualifies for Statutory Benefits in Italy?

In Italy, statutory employee benefits are generally available to workers with standard employment contracts, including full-time, part-time, and fixed-term roles. These employees are integrated into Italy's social security system, granting them access to benefits such as health insurance, pensions, and unemployment insurance. 

Eligibility for these benefits typically begins from the start of employment, provided the employment is duly registered and social security contributions are made.

Who Is Excluded?

Certain categories of workers are generally excluded from statutory benefits in Italy:

• Freelancers and Contractors: Self-employed individuals, including freelancers and independent contractors, are required to register with the National Institute for Social Security (INPS) and make their own social security contributions. While they can access certain benefits, the structure and extent differ from those available to standard employees.
• Interns and Agency Temps: Interns (contratto di tirocinio) and temporary agency workers have varying eligibility for benefits, often depending on the specific terms of their contracts. While temporary agency workers are entitled to the same basic employment rights as full-time and permanent workers, interns typically have fewer entitlements.

For more detailed information on statutory benefit eligibility in Italy, you can visit the National Institute for Social Security (INPS) or the Ministry of Labor and Social Policies.

The Role of Collective Bargaining Agreements in Italy

Before we jump into the nuts and bolts of benefit requirements in Italy, it’s important that you have a grasp of how collective bargaining agreements (CBAs) work in Italy, since they play a big role. 

What is a Collective Bargaining Agreement in Italy?

A collective bargaining agreement (CBA) is a general term for any contract negotiated between employers (or employer associations) and employee unions. These agreements regulate employment conditions such as:

• Minimum wages
• Working hours
• Leave entitlements
• Bonuses
• Classification of roles
• Notice periods
• Termination procedures

There are three main levels of CBAs in Italy:

CBA Level	Definition	Scope
National Collective Bargaining Agreement (CCNL)	Most common and widely used level of bargaining. Negotiated at the national sector level between major trade unions and employer associations.	Applies to all companies and employees in that specific industry sector (e.g., manufacturing, hospitality, commerce).
Collective Bargaining Agreement (CBA)	Supplements or refines provisions of the national agreement — but cannot undercut them. Often used to provide additional benefits or regulate bonuses, work hours, and remote work conditions.	Negotiated within an individual company (or group of companies) with internal unions or worker representatives. Applies to all employees at the company.
Territorial or Regional CBA (Territorial Collective Contract or Contratto Collettivo Territoriale)	Less common, but exist in certain sectors (e.g., agriculture or construction).	Apply within a specific geographical area (e.g., the province of Milan, or the province of Tuscany).

Understanding which type of CCNL or CBA applies to your business sector or geographical location is a key component of maintaining compliance when it comes to employee benefits and other working conditions.

Statutory Employee Benefits in Italy

As in every country, complying with statutory benefit requirements in Italy is crucial for employers as non-compliance can lead to legal penalties, damage to a company's reputation, and challenges in talent retention. 

If you’re new to managing Italian employees, it’s important to have a thorough understanding of the different types of employee benefits that are legally required under Italian labor laws. 

Health Insurance (Assicurazione Sanitaria)

Italy provides universal healthcare through the Servizio Sanitario Nazionale (also known as the National Health Service, or SSN), ensuring employees have access to medical services. 

Employers contribute to the system via social security payments. Many employers also offer supplemental private health insurance to provide faster access to services and additional coverage.

Pension Insurance (Previdenza Sociale)

Administered by the National Institute for Social Security (INPS), the pension system secures income for employees after retirement. It is funded by contributions from both employers and employees, with the employer making a larger contribution.

In general, employees receive 33% of their gross salary as INPS contributions per year, with approximately 9 to 10% contributed by employees and 23 to 24% contributed by employers.

Unemployment Insurance (Assicurazione contro la Disoccupazione)

Managed by INPS, this benefit provides financial support to employees who lose their jobs. Employers are required to make mandatory contributions to fund this benefit.

Minimum Wage (Salario Minimo)

Italy does not have a statutory national minimum wage. Instead, minimum wages are determined through sector-specific collective bargaining agreements (CBAs), which set industry-specific minimum wages.

As a member of the EU, Italian workers are paid in Euros. In general, workers earn between €5.50 to €9.50 per hour, which works out to €900 to €1,600 per month. 

Christmas Bonus (Tredicesima Mensilità) / 13th Month Salary

The tredicesima mensilità is a traditional and legally required extra month's salary, which the employer pays in December, enhancing financial security for employees during the holiday season. The specific terms of the 13-month salary are determined by a collective bargaining agreement (CBA).

Essentially, the 13th-month salary is a mandatory benefit for most full-time employees and is calculated based on the employee's earnings throughout the year. It accrues monthly throughout the year (1/12 per month worked), and is an expected part of annual compensation.

Author's Tip

In Italy, some CBAs may also require a 14th month salary payment, which is not technically required by law, but would be required if the CBA includes it. For these cases, the employer pays the 14-month salary payment in June or July. (Some employers refer to this payment as a vacation bonus, or a quattordicesima mensilità.)

Accident Insurance (Assicurazione contro gli Infortuni)

This benefit covers workplace injuries and occupational diseases, and is funded by employer contributions. This insurance is managed by the National Institute for Insurance against Accidents at Work (INAIL).

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Occupational Health and Safety Compliance (Sicurezza sul Lavoro)

Employers must comply with regulations to maintain a safe working environment, preventing workplace injuries and illnesses. INAIL also plays a role in promoting workplace safety.

Anti-Discrimination Policies (Politiche Anti-Discriminazione)

Italian law enforces policies to promote equality in the workplace, protecting employees from discrimination based on gender, age, disability, or other factors.

Trattamento di Fine Rapporto (TFR)

The TFR, often referred to as the “severance indemnity” or “end-of-service allowance,” is a lump-sum payment that an Italian employer must provide to an employee upon termination of the employment relationship, regardless of the reason (resignation, dismissal, retirement, or expiration of a fixed-term contract).

Employers are responsible for setting roughly 1/13.5 of an employee’s annual salary aside for TFR severance pay each year. If, during the year, the employment contract ends for any reason, the full accumulated amount of the TFR is paid out.

Treat TFR Accruals as an Ongoing Contribution

“We make sure contributions are accrued monthly and reflected clearly in pay slips to avoid any confusion later on. It helps to treat TFR accruals not as a lump-sum concern at the end of employment but as an ongoing liability that needs to be tracked and managed consistently across the employment lifecycle.” ~Robbin Schuchmann, Co-founder, EOR Overview

Compliance with these statutory benefits is supported by laws from the Ministry of Labor and Social Policies (Ministero del Lavoro e delle Politiche Sociali). Understanding these benefits will ensure your business remains compliant and attractive to top talent in Italy.

Leave Entitlements in Italy

Italy also provides a comprehensive range of leave entitlements, protected by national laws, to support the well-being of employees. These policies ensure that employees can balance work and personal life effectively.

Annual Paid Leave (Ferie Annuali Retribuite)

Employees are entitled to a minimum of four weeks (20 working days) of paid annual leave per year, as stipulated by Article 36 of the Italian Constitution and further detailed in Legislative Decree No. 66/2003. 

This entitlement accrues monthly based on the employee's service. Employees must take at least two consecutive weeks of their accrued vacation days within the calendar year it is earned. The remaining leave can be taken within 18 months from the end of the year in which it was accrued.

Public Holidays (Festività Pubbliche)

Italy observes 12 national public holidays each year, in addition to local patron saint days which may vary by municipality.

Employees are generally entitled to a paid day off on these dates, as stipulated by employment contracts. If an employee is required to work on a public holiday, they are typically entitled to premium pay, as defined by the relevant collective bargaining agreement (CBA).

Author's Tip

In Italy, premium pay and overtime pay are different. Premium pay applies on public holidays, night shifts, or weekends, with rates varying between 30% to 100% for working on a public holiday. In contrast, overtime pay kicks in when an employee works more than 40 hours per week. Overtime rates are determined by CBAs, and are often paid at a 25% to 50% higher rate.

Sick Leave (Congedo per Malattia)

Employees in Italy are entitled to paid sick leave when they are unable to work due to illness or injury. The duration and compensation rates can vary based on the applicable CBA.

The process requires the employee to notify the employer promptly and obtain a medical certificate from a doctor. The doctor electronically submits the certificate to the National Social Security Institute (INPS), which then makes it available to the employer. 

Pay during sick leave is usually a combination of contributions from the employer and INPS. The percentage of salary paid varies depending on the length of the sick leave period and the specific CBA. 

Often, the employer covers the first few days (a waiting period), after which INPS pays a percentage (e.g., 50% or 66.66%), and the employer may supplement this amount to reach a higher percentage (e.g., 75% or 100%) for a certain period.

Maternity and Paternity Leave (Congedo di Maternità e Paternità)

Italy provides paid leave for new parents, with benefits administered by INPS to support family life.

Maternity leave consists of five months of paid leave, typically two months before and three months after childbirth, with 80% of wages covered by INPS. 

Paternity leave includes ten days of paid leave, which are compulsory and must be taken within five months of the child's birth.

Parental Leave (Congedo Parentale)

Parents can take up to six months of leave per parent until the child is 12 years old, with reduced pay, administered through INPS to foster family life. 

In 2025, the parental leave allowance will rise to 80% of the employee’s salary for each parent, for up to three months. To access the increased benefit, parental leave must be taken within the child’s first six years of life.

While Italy offers a generous amount of paid maternity leave compared to other countries, its paternity and parental leave allocations are more moderate, creating an opportunity for employers to stand out.

By matching and exceeding these minimum statutory leave entitlements, employers can foster a positive company reputation, making it easier to hire employees.

Common and Additional Employee Benefits in Italy

While not mandatory, many employers in Italy commonly offer additional benefits to enhance employee satisfaction and retention. These benefits can significantly contribute to a positive work environment and help attract top talent.

Private Pension Plans

Complementary to the public pension system, private pension plans provide additional retirement savings options for employees. Known as "previdenza complementare," they are often established through collective bargaining agreements and can be either open or closed pension funds. 

Contributions are typically made by both employers and employees, offering tax advantages and enhancing retirement security.

Supplemental Health Insurance

Supplemental health insurance refers to extended health coverage beyond the public system, reducing out-of-pocket expenses for employees. 

These plans may cover services such as dental care, vision, and private hospital accommodations. Employers often provide this benefit to improve healthcare access and employee well-being.

Company Cars

In Italy, company cars are sometimes provided to employees in managerial positions, making transportation for business easier. 

However, the provision of a company car constitutes a taxable fringe benefit, with the taxable amount calculated based on the vehicle's characteristics and usage. Employers can deduct a percentage of the costs associated with company cars, depending on their use and the employee's role.

Performance Bonus

Some Italian employers offer performance-based bonuses to encourage productivity and motivation by rewarding employees for meeting or exceeding targets. 

In Italy, performance bonuses must be clearly defined in employment contracts or collective agreements and are subject to specific tax treatments. Employers may benefit from favorable tax regimes when offering these bonuses under certain conditions.

Computer Allowances

Computer allowances support remote work by providing employees with necessary technology and equipment. Employers may supply laptops, monitors, and other tools, or offer allowances to cover related expenses. 

Again, the specifics are typically outlined in remote work agreements and may be influenced by collective bargaining agreements.

Vacation Bonus (Quattordicesima Mensilità) / 14th Month Salary

Some employers and CBAs offer an extra salary installment paid in the summer, helping employees manage vacation expenses. This 14th-month salary is common in certain sectors and is usually disbursed in June or July, as stipulated by collective bargaining agreements.

Pre-Plan your 14th Month Payments to Simplify Administration

“To handle the 14th month salary, we’ve built this into the financial modeling from day one. If a role falls under a CCNL that requires a 13th and 14th salary, we treat it as part of the total annual compensation and divide the total cost over twelve months for budgeting purposes. From the employee’s perspective, though, we ensure the 14th salary is paid at the agreed time—typically around June or July. Having this pre-planned and clearly outlined in the employment contract makes administration smoother and avoids confusion with international employers who may not be used to this setup.” ~Robbin Schuchmann, Co-founder, EOR Overview

According to numerous Employer of Record partners, these types of additional benefits are highly valued by employees in Italy and can contribute significantly to job satisfaction and loyalty. 

Benefits That Attract Top Talent in Italy

In Italy, top organizations often provide additional benefits beyond statutory requirements to attract and retain talent. While not legally required or culturally expected, these benefits can significantly enhance competitiveness in the job market.

Wellness Programs

Some companies offer programs that include gym memberships, mental health resources, and wellness reimbursements to promote employee well-being. These initiatives often encompass fitness classes, health screenings, counseling services, and stress management workshops. 

Other employers also provide financial incentives for healthy behaviors, such as discounts on health insurance premiums.

Flexible Work Arrangements

Modern Italian employers provide options for remote work, flexible hours, and hybrid models, allowing employees to balance personal and professional commitments effectively. 

Flexible arrangements can include compressed workweeks and autonomy in choosing work locations, contributing to improved work-life balance.

Professional Development Opportunities

Many organizations fund courses, certifications, and workshops to support continuous learning and career advancement. Plus, in Italy, companies can access public funding for employee training through Interprofessional Joint Funds, facilitating skill enhancement and productivity.

Childcare Support

Some companies offer on-site childcare facilities or subsidies to assist working parents with childcare expenses. Additionally, government initiatives provide financial assistance and tax benefits to families, supporting access to early childhood education and care services.

Commuter Allowances

Financial support for commuting costs, including public transportation passes or fuel reimbursements, is provided by some employers. These allowances help offset travel expenses and can be structured to offer tax advantages for both employers and employees.

Stock Options

Offering stock options is a way for companies to incentivize employees by giving them a stake in the company's success. 

In Italy, equity-based incentive plans are subject to specific legal and tax regulations, particularly for companies listed on regulated markets. Proper structuring of these plans is essential to comply with disclosure obligations and optimize tax treatment.

Meal Vouchers

Employers often provide meal vouchers as a non-taxable benefit to help cover daily food expenses. These vouchers, known as buoni pasto, can be used at restaurants, supermarkets, and for online food deliveries, offering convenience and fiscal advantages.

These benefits, increasingly practiced by leading firms, are crucial in fostering a motivated and loyal workforce. Flexible work arrangements and wellness programs, in particular, are highly valued by employees, contributing to increased satisfaction and retention.

How to Set Up and Manage Employee Benefits in Italy

Setting up and managing employee benefits in Italy requires a strategic approach to ensure compliance and employee satisfaction. Here’s a summary of the key steps involved.

Partner with Local Benefits Providers

Collaborate with local insurance companies and service providers to offer competitive and culturally relevant benefits. 

Engaging with established Italian providers ensures that benefits align with local expectations and legal requirements. For instance, partnering with providers like UniSalute can offer comprehensive health insurance plans that complement the national healthcare system

Ensure Compliance with Regulations

Adhere to the guidelines set by the Ministry of Labor and Social Policies (Ministero del Lavoro e delle Politiche Sociali) to avoid legal issues and ensure fair employee treatment. 

This involves registering employees with the National Institute for Social Security (INPS), adhering to collective bargaining agreements (CBAs), and fulfilling obligations related to pensions, unemployment insurance, and other statutory benefits.

Communicate Benefits to Employees

Develop clear communication strategies to inform employees about their benefits, ensuring they understand and appreciate the offerings. This may include communication through:

• Employee handbooks
• Onboarding presentations
• HR portals or intranet
• One-on-one consultations

Transparent communication fosters trust and helps employees make informed decisions regarding their benefits.

Monitor and Update Benefits Offerings

Regularly review and adjust your benefits packages to align with industry standards and employee needs, keeping them attractive and competitive. You’ll also need to monitor for changes in labor laws and market trends to stay confident that your benefits offerings remain relevant and compliant.

Partner with an EOR Service

Another option worth considering is partnering with an EOR (Employer of Record) service in Italy, which can simplify the process of managing employee benefits and other core HR tasks substantially. This is also the best option for companies who want to hire talent in Italy but don’t have a legal entity established in the country yet. 

By partnering with an Italian EOR service, you can outsource numerous time-consuming tasks HR processes, including:

• Hiring and onboarding new employees
• Employment contracts
• Benefits administration
• Payroll and tax compliance
• Labor law and national collective agreement compliance
• Visas and work permit assistance

By outsourcing these HR functions to an EOR partner, you’ll gain peace of mind that your operations are fully compliant, while gaining time back in your week to focus on other strategic goals. That’s why EOR services are increasing in popularity among companies hiring global talent.

Treat the CCNL as a Living Framework

“When it comes to national collective bargaining agreements (CCNLs), I make it a point to treat them as a living framework, not a one-time checklist. We always start by identifying which CCNL applies, since each has its own set of rules around compensation, leave, notice periods, and benefits. From there, we maintain a compliance map that outlines those obligations in practical terms, broken down by role, industry, and region. …Keeping this map current is just as important as drafting it in the first place.” ~Robbin Schuchmann, Co-founder, EOR Overview

Why Compliance is Important

Not following employment laws in Italy can lead to serious consequences for your business. It's crucial to comply to avoid these potential pitfalls:

Following employment laws in Italy is necessary to avoid serious legal and financial consequences. For businesses who skirt the law, either intentionally or unintentionally, non-compliance can lead to the following issues:

• Employee Misclassification: Misclassifying employees as independent contractors can result in significant penalties, including:
  • Fines ranging from €100 to €500 per misclassified worker.
  • Back payments of unpaid social contributions to INPS (National Social Security Institute).
  • Reclassification of the working relationship, leading to additional liabilities such as unpaid wages, benefits, and holiday pay.
  • Potential criminal charges in severe cases of intentional misclassification.
    
• Underfunding Social Security Contributions: Failing to make the correct social security contributions can lead to:
  • Civil penalties up to 60% of the unpaid contributions.
  • Interest charges on overdue amounts.
  • Legal action initiated by INPS to recover unpaid contributions.
  • In severe cases, criminal charges against company directors, which may include fines and imprisonment.
    
• Corporate Fines/Penalties: Non-compliance with labor laws can result in substantial fines and damage your company's reputation.
  • For example, in 2021, Italian authorities fined several food delivery platforms a total of €733 million for misclassifying over 60,000 workers.
    
• Legal Disputes: Ignoring employment laws may lead to costly legal battles and settlements. Employment disputes in Italy are handled by specialized labor courts (Tribunale del Lavoro), and proceedings can be time-consuming and expensive.
  
• Loss of Business License: Severe violations of employment laws can lead to the revocation of your business license, effectively halting your operations in Italy.

Staying compliant with local employment laws is both essential to protect your business and critical to ensure smooth operations and maintain your reputation as a responsible employer.

Get Support Setting Up Benefits in Italy

Managing employee benefits in Italy involves understanding statutory requirements and aligning your offerings with employee expectations. Offering a mix of mandatory and additional benefits enhances your company's appeal and fosters a motivated workforce. 

However, staying up-to-date with Italian labor laws is a time-consuming process, made even more challenging if you don’t already have local HR staff who are familiar with the landscape. 

That’s why many global employers choose to partner with an Employer of Record service, to simplify the entire process of hiring and managing global teams.

If you think you could benefit from some extra help in this regard, don’t worry — you’re not alone! To point you in the right direction, here’s my thoroughly researched list of the most trusted EOR services in Italy who can help you take the next steps:

1. 1. Deel — Best for offering local health benefits to Italian EOR employees
2. 2. Borderless AI — Best AI-driven EOR platform
3. 3. RemoFirst — Best for budget-conscious remote team expansion
4. 4. G-P — Best EOR service for flexible payment methods
5. 5. Native Teams — Best for support for statutory benefits
6. 6. Multiplier — Best for fast hiring without a local entity
7. 7. Atlas HXM — Best Italian EOR partner for enterprise organizations
8. 8. Omnipresent — Best for Italian labor law compliance
9. 9. Horizons — Best for a flexible EOR contract with no termination fee
10. 10. Mercans — Best for an advanced EOR management platform

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