The indefinite-term contract (contratto a tempo indeterminato) is the standard and legally preferred form of employment in Italy under the Civil Code and Jobs Act reform (D.Lgs. 23/2015 for post-March-2015 hires). It provides full statutory protections including notice-period rights, severance (TFR) accrual, unfair dismissal protections, and access to CCNL-based benefits (13th/14th salary, seniority pay increases, etc.). Must generally be documented in writing detailing role, pay, CCNL applied, and working hours.
Term contracts must be in writing and specify the objective reason once the 12-month threshold is crossed. Exceeding the applicable cumulative cap, exceeding renewal limits, or lacking required justification generally converts the contract into an indefinite-term relationship by operation of law. Fixed-term employees are entitled to pro-rata TFR, 13th/14th salary, and equal treatment with comparable indefinite-term employees under the applicable CCNL.
Under Legislative Decree 66/2003, employees are entitled to a minimum of 11 consecutive hours of daily rest in every 24-hour period, at least 24 consecutive hours of weekly rest (typically Sunday, which can be averaged over 14 days), and a break for shifts exceeding 6 hours. Overtime is capped at 250 hours/year by default (subject to CCNL variation) and must be compensated with a premium: roughly 10-25% for daytime overtime, 25-50% for night work, and 50-100% for work on public holidays, with specific rates and possible compensatory time off set by the applicable CCNL.
Probation (periodo di prova) must be agreed in writing before or at the start of employment (Civil Code Art. 2096); an unwritten probation clause is void and the employee is deemed hired on a permanent, non-probationary basis. During probation either party may terminate the relationship freely without notice or stated reason, subject to good-faith limits (e.g., not before allowing a reasonable trial of duties). Maximum permissible length is set by the applicable CCNL and cannot exceed 6 months under general principles.
Both payments form part of the employee's total gross annual compensation (RAL) rather than being bonuses on top of it, and both are subject to standard income tax and social security withholding. Employers must budget and accrue these obligations throughout the year; pro-rata amounts are due on termination for the portion of the year worked.
Job titles and classification levels (inquadramento) are regulated primarily by the applicable CCNL rather than by general statute. CCNLs define broad legal categories under the Civil Code — dirigenti (executives), quadri (middle managers), impiegati (white-collar/clerical staff), and operai (blue-collar workers) — and further subdivide each into numbered levels/grades that determine minimum pay, duties, and progression. Employment contracts must state the CCNL-assigned level and corresponding duties; assigning duties inconsistent with the stated level can expose employers to reclassification claims.
Total mandatory INPS employer social security contributions average approximately 29-32% of gross salary (exact rate depends on company size, sector, and applicable CCNL), covering pension (IVS - the largest component), unemployment insurance (NASpI), sickness and maternity funds, wage guarantee funds (CIG), and family allowances. In addition, employers pay INAIL work-injury insurance (employer-only, rate varies roughly 0.4%-8%+ by occupational risk classification) and must separately accrue TFR severance at 6.91% of annual gross salary, payable at the end of the employment relationship regardless of cause.
Employees contribute approximately 9.19% of gross salary (mostly to the IVS pension fund) up to the annual INPS pensionable ceiling (~EUR 55,448 for 2026), rising to about 10.19% on earnings above that threshold up to the contribution cap (~EUR 120,000). These contributions are withheld and remitted by the employer alongside income tax (IRPEF) withholding.
In addition to statutory leave, employees are entitled to the following statutory benefits:
Italy's social security system is administered primarily by INPS (pensions, unemployment, sickness, maternity, family allowances) and INAIL (work-injury insurance), with rates set nationally but varying by CCNL, sector, and company size.
Work-injury and occupational-disease insurance in Italy is mandatory and administered exclusively by INAIL (Istituto Nazionale per l'Assicurazione contro gli Infortuni sul Lavoro), funded entirely by employer premiums — employees make no contribution.
Premium rates are risk-based, determined by the employer's ATECO sector classification and the specific tariff rate ('tasso') assigned to each job/processing activity, and can range from under 1% to over 8% of payroll for high-risk occupations. INAIL coverage provides employees with medical care, temporary and permanent disability benefits, and survivor benefits in the event of a workplace accident or recognized occupational illness.
Italy mandates TFR (Trattamento di Fine Rapporto), an end-of-service severance fund that employers must accrue for every employee regardless of whether the employment ends by resignation, dismissal (with or without just cause), mutual agreement, contract expiry, or retirement.
TFR accrues at approximately 6.91% of the employee's annual gross salary for each year of service (calculated as gross annual pay divided by 13.5, net of a 0.50% mandatory INPS contribution), and the accumulated balance is revalued each December 31 at a fixed 1.5% plus 75% of the official inflation rate (ISTAT index). Employees may request a partial advance (generally up to 70%) after at least 8 years of service for specific needs such as a first home purchase or major medical expenses, subject to statutory and company-size conditions. The full TFR balance is paid out as a lump sum when employment ends.
Tredicesima (13th-month salary) is a mandatory, near-universal benefit for private-sector employees in Italy, equal to one additional month's gross salary, paid in December.
It accrues proportionally at 1/12 for each month worked during the year (including partial years), is subject to standard income tax and social security withholding, and a pro-rata amount must be paid out on termination regardless of when in the year the employment ends. Some sector CCNLs (e.g., commerce, tourism, services, logistics) additionally mandate a 14th-month payment (quattordicesima), typically paid in June or July, though this is not required across all sectors (e.g., it is generally absent in metalworking).
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Your employee's hours, time off, holidays, bonuses, and commissions are automatically calculated into payroll. RemoFirst will invoice you in either US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), Australian Dollars (AUD), or Singapore Dollars (SGD) around the 15th of each month to make sure your employees are paid on time. To make it even easier, you can summarize your entire global team's salaries to aggregate them into one payment (instead of many individual payments).
Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.
Whenever the employee or employer has a question about, or anything else related to international employment, they can speak with our customer support team to get answers from our team of experts.
