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.

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). For the calculation of labor costs, gross salary, and the corresponding net salary, you can use our gross-net-cost calculator for Italy .

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.

Employment in Italy ✍ contracts & labor cost calculations in Italy

Name: Graber & Partner GmbH
Address: Rienzfeldstraße 30, Bruneck, South Tyrol, 39031, IT
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Working for a German company in Italy, things to know

Persons resident in Italy are often contacted directly by German companies for the purpose of penetration and expansion in the Italian market. If they wish to work in Italy for a German (or Austrian) company and, hence, for a foreign company, they will have to check if the company is duly registered in Italy. After doing so (e.g. by registration as an employer or by incorporation of a limited liability company under Italian law), an employment agreement in accordance with Italian law and payroll processing in compliance with Italian law needs to be established.

For the calculation of labor costs, gross salary, and the corresponding net salary, you can use our gross-net-cost calculator for Italy.

Working from home, service personnel, field staff, sales consultants? Things to consider

Besides the above-mentioned registration, remote office workers will not have to consider many other things. In fact, the place of residence will be registered as workplace (also for insurance purposes) and the remote worker, like any other employee, will have to abide by the rules laid down by the employer. The only difference is that the remote worker performs all or part of his work from home. In general, the work equipment and working materials (e.g. computer, printer, mobile phone, stationery) are provided by the employer, unless otherwise agreed. However, expressly regulated working hours apply. Moreover, a trusting relationship between both parties is obviously advantageous, as it is impossible or difficult to control the actual working time of the employee. However, the remote worker does not have to be available at any time.

In the case of service personnel/field staff (e.g. help desk personnel, programmers, maintenance staff), the employee's place of residence is normally considered for the purpose of registration of the place of work, as the German employer often does not have or need a secondary office in Italy. Since service personnel/field staff sometimes need to travel to customers/suppliers, the company often provides a company car or the employees use their own private car, charging the costs to the employer on a pro rata basis. In Italy, vehicle regulations and laws are very complex and subject to constant change. Hence, they need to be checked carefully together with the tax consultant/payroll consultant.

One case in point is that of sales representative/sales force. In fact, their work mainly consists of sales promotion and expansion in Italy and they often get better contractual conditions. Under the OECD Model, employees who play a key role in sales, even if they do not participate in the conclusion of final contracts, constitute a personal permanent establishment. In this case, the company shall register in Italy (usually under the business name "XY Italy Srl"). Hence, the employees will carry out their work for the Italian company.

Our services for your project in Italy

Please feel free to contact us for a first meeting that does not place you under any obligation and is free of charge, or send us an email with your request and contact details. We will reply to your e-mail in the shortest possible time. Tel. +39 0474 572900 or info@graber-partner.com.

Source: https://www.graber-partner.com/en/lexicon/170-working-for-a-german-company-in-italy-things-to-know.html

FAQ: Transfer of an employee to Italy

Especially since the Covid-19 pandemic, working from home has become an established and proven work mode. Hence, there is no longer need for a physical workplace. Consequently, more and more employees of German companies move their residence abroad (e.g. to Italy) and continue to work remotely for their employer.

Question: In case of transfer of an employee's residence to Italy, is it possible to file a posting communication?

Answer: No, if employees transfer their residence to Italy and continue to work for the German company, no posting communication in the classic sense of that term may be filed. On the one hand, the requirement of having an employer in Italy (company incorporated under Italian law) is not met. On the other hand, employees are not considered to be posted, if they are resident in the country they work in.

Instead, the company and the employee shall be registered in Italy for payroll processing purposes in accordance with Italian law and for the purposes of paying social security contributions and taxes in Italy.

Question: Which requirements shall be met for the registration of a foreign company in Italy?

Answer: As is the case in Germany, in Italy companies also act as tax withholding agent paying, in this capacity, taxes and contributions, including those payable by the employee, by means of the F24 form to public authorities or bodies.

Hence, companies need to register with the various authorities/bodies using, among others, an Italian fiscal code.

We will be glad to take care of all communications and registrations. For more details with respect to the procedures to be followed for the registration of the company in Italy as an employer please visit https://www.graber-partner.com/en/international-companies/employees-employers-in-italy.html.

Question: In the event of a transfer of residence to Italy, is it necessary to enter into an employment agreement under Italian law?

Answer: Yes, in view of payroll processing under Italian law, both the company and the employee are subject to the applicable Italian collective bargaining agreement (so-called CCNL). The CCNL regulates, inter alia, the remuneration, the number of month's pay, the holidays, the remuneration in the event of illness and accident, the probation period and the notice period.

Hence, it is in any case necessary to enter into an employment agreement under Italian law, referring to the applicable CCNL.

In Italy, both the drafting of the employment agreement and the payroll processing is carried out by accountants/labour law consultants. Hence, there is no need to refer to a law firm for the drafting of the employment agreement, since we offer an one-stop service. For further information please refer to our opinion at https://www.graber-partner.com/en/international-companies/employees-employers-in-italy.html.

Question: Is there any permanent establishment risk of the foreign company in case of an employee working from home in Italy?

Answer: Yes, the remote work does not automatically exclude the permanent establishment risk in Italy. Hence, it is necessary to verify if also other requirements are met. In this regard, please refer to our opinion on permanent establishments in Italy.

Question: Which requirements need to be met by an employee in the event of transfer of residence to Italy?

Answer: Before starting to work form home in Italy, the employee shall request an Italian fiscal code and register with the registration office. Subsequently, it will be possible to file the communications with the competent authorities and bodies.

For advice and assistance to employees with regard to the application for the fiscal code, the real estate purchase/rent, the registration with the registration office, the application of low-tax schemes for employees transferring their residence to Italy etc., the employees shall refer to the competent authority and/or a trade union organisation.

Please do not hesitate to contact us via mail at info@graber-partner.com for a non-binding and free first meeting. According to our experience, it is preferable that the responsible contact person is part of our client company.

Source: https://www.graber-partner.com/en/lexicon/171-faq-transfer-of-an-employee-to-italy.html

Employment contract (ital: contratto di lavoro)

The employment contract (Italian: contratto di lavoro) forms the basis of the employment relationship between employer and employee. It regulates the mutual rights and obligations of the contractual parties: the employee undertakes to perform his or her work according to the employer’s instructions and organisational requirements. In return, the employer is obliged to pay the agreed remuneration and comply with statutory provisions as well as collective bargaining agreement provisions.

In Italy, the employment contract is closely connected with statutory regulations and the respective national collective labour agreements (NCLA, ital. CCNL – Contratto Collettivo Nazionale di Lavoro). These regulate numerous practical aspects of the employment relationship and supplement the individual agreements between employer and employee.

Is a written employment contract mandatory in Italy?

An employment contract could in principle also be concluded verbally. Therefore, in Italy, an employment relationship does not necessarily arise only through a written and signed contract.

In practice, however, the written form is of great importance. Certain agreements are only valid if they are made in writing. This applies in particular to:

a probationary period (periodo di prova),
a fixed-term contract (contratto a tempo determinato),
special working time arrangements,
non-compete clauses,
certain additional agreements or special clauses.

These agreements must generally be recorded in writing before the start of the employment relationship and accepted by the employee.

In addition, extensive information obligations apply to employers in Italy. Due to the implementation of the European Transparency Directive, the employer must provide the employee with information on the essential conditions of the employment relationship. This includes in particular the activity performed, the workplace, working hours, remuneration, the applicable collective bargaining agreement and other essential contractual conditions.

Which information should an employment contract contain?

An Italian employment contract generally contains the following essential information:

personal data of the employer and employee,
start date of the employment relationship,
type of employment relationship (open-ended or fixed-term),
workplace,
description of the activity and duties,
applicable collective bargaining agreement (CCNL),
employee’s classification and qualification,
any probationary period,
working hours and distribution of working time,
amount and components of remuneration,
provisions regarding holidays and absences,
notice periods,
where applicable, provisions regarding additional benefits or company benefits.

Particular importance is attached to the correct classification of the employee. The national collective labour agreement provides different qualification levels for different activities, which affect minimum wages, working hours, holidays, notice periods and other entitlements.

Importance of the national collective labour agreement (NCLA/CCNL)

A significant difference compared with the employment law of many other countries is that in Italy national collective labour agreements play a very important role. The applicable CCNL determines numerous details of the employment relationship.

Among other things, it regulates:

minimum remuneration,
classification and professional profiles,
probationary period,
overtime and supplements,
holidays and paid leave,
notice periods,
additional monthly salaries (e.g. 13th monthly salary),
contributions to supplementary funds.

The individual employment contract may generally not amend statutory provisions or mandatory provisions of the applicable national collective labour agreement to the disadvantage of the employee. However, deviating agreements are permitted if they are more favourable to the employee or grant additional benefits.

The correct selection of the national collective labour agreement and appropriate classification are therefore essential in order to avoid future employment law disputes or claims for additional payments.

See also the Lexicon entry National Collective labour agreement in Italy.

Conclusion

A clearly structured employment contract is an essential instrument for legal certainty in Italian labour law. It should clearly set out the individual agreements between employer and employee while also complying with statutory requirements and the applicable national collective labour agreement.
For companies, careful drafting of the employment contract is particularly important, as key decisions regarding remuneration, working hours, classification and future employment-related claims are already made at the time of hiring.

Frequently asked questions(FAQ)

1. Does an employment contract in Italy have to be signed before the start of work?
An employment contract in Italy does not necessarily have to be concluded in writing before the start of work. However, for reasons of legal certainty, it is strongly recommended to always prepare the employment contract in writing and have it signed before the start of employment, in order to clearly document the agreed conditions and avoid later disputes.

2. Can an employment contract in Italy be prepared bilingually?
Yes. Particularly in international employment relationships, it is common to prepare employment contracts bilingually (e.g. German-Italian or English-Italian). However, compliance with Italian employment law requirements remains essential.

3. Which national collective labour agreement must be applied?
The employer must select the appropriate national collective labour agreement based on the sector and the actual activity performed by the employees. The review and correct application are usually carried out by the employer’s labour law consultant.

4. Can an employer freely determine the salary in the employment contract?
Remuneration can generally be agreed individually. However, it may not fall below the minimum standards provided for by the applicable collective bargaining agreement.

5. What happens if important provisions are not included in the employment contract?
Missing information does not automatically result in the invalidity of the employment contract. In such cases, statutory provisions and the rules of the applicable national collective labour agreement apply. However, unclear agreements may lead to later disputes.

Source: https://www.graber-partner.com/en/lexicon/36-employment-contract-ital-contratto-di-lavoro.html

Business trip (ital.: trasferta)

Definition

In Italy, “trasferta” refers to an employee’s temporary assignment at a location other than their usual place of work or the one specified in their employment contract. Field work may take place either within the country or abroad. Typical examples include business trips, client visits, or service or installation assignments.

During off-site work, the employee remains employed by their employer, insured, and properly registered.

Difference Between Business Travel, Posting, and Local Staff

The difference from a secondment is that, in the case of a business trip, the employee continues to perform their work under the direction and on behalf of their own company. In the case of a secondment, however, the employee is integrated into the host company’s organization and must follow its instructions.

In the case of a business trip abroad, the term “secondment” is often (and, in fact, incorrectly) used in practice. Consequently, the guidelines on secondment apply, for example, regarding the A1 certificate, any declarations required in the country where the work is performed, or the 183-day rule. Here you will find more details on posting to Italy.

If, on the other hand, an employee already resides in the country where they will be working, this is generally not considered a secondment but rather a so-called “local employee.” In this case, the person must be registered and insured through a local employer or an Italian company. Further details on this topic are available under “Registration as an Employer” in Italy and setting up a subsidiary in in Italy.

Expense Reimbursement and Compensation for Field Work

Various forms of expense reimbursement are provided for the duration of field service. For the duration of the business trip, the employee receives a so-called travel allowance. The travel allowance is exempt from taxes and social security contributions within the established limits if it covers expenses incurred outside the municipal area.

Provisions in the Employment Contract

Especially when business travel is scheduled on a regular basis, it is advisable to address this in the employment contract or in a separate written agreement. In this regard, it is recommended to specify in which cases field work may be required, what the employee’s usual place of work is, which expenses are reimbursable, and what method of expense reimbursement applies. Clear contractual provisions ensure legal certainty, prevent future disputes, and facilitate proper handling for payroll tax and social security purposes.

Frequently Asked Questions(FAQ)

1. Is a business trip the same as a secondment?
Not always. In common parlance, the two concepts are often confused. In the case of a business trip, the employee continues to work for their employer. In the case of a business trip abroad (which is commonly referred to as a “secondment”), registration requirements, the A1 certificate, and the minimum conditions stipulated by labor law in the country where the work is performed may also become relevant.

2. When is a business trip allowance tax-exempt?
In the case of a business trip outside the municipality where the employee’s usual place of work is located, a lump-sum amount of up to 46.48 euros per day in Italy or 77.47 euros abroad may remain tax-exempt. If expenses for lodging or meals are also reimbursed, these limits are reduced.

3. Do expenses always have to be documented with receipts?
If you submit a detailed expense report, yes. Expenses related to hotels, restaurants, trains, flights, taxis, or similar services must be supported by invoices, receipts, and proof of payment. Without adequate documentation, the reimbursement may become taxable.

4. What should companies regulate internally?
Companies should establish who authorizes business travel, which expenses are reimbursed, what supporting documents are required, which payment methods are permitted, and by when expense reports must be submitted.

Source: https://www.graber-partner.com/en/lexicon/91-business-trip-ital-trasferta.html

Annual gross salary RAL (ital.: retribuzione lorda annua)

The annual gross salary, generally referred to in Italy as RAL (Retribuzione Annua Lorda), is a key element in employment law and personnel planning. It represents an employee’s annual gross remuneration before the deduction of social security contributions and taxes.

The RAL is frequently used in employment contracts, salary negotiations and job advertisements. It allows different remuneration models to be compared, but it does not indicate the amount actually received by the employee.

What does the annual gross salary include?

The RAL generally includes the employee’s agreed annual gross remuneration.

It mainly includes:

the basic monthly salary provided for by the CCNL (Contratto Collettivo Nazionale di Lavoro);
additional monthly payments such as the 13th month salary (tredicesima) and, where applicable, the 14th month salary (quattordicesima);
fixed allowances and contractual supplements;
regularly paid variable remuneration, where this forms part of the employee’s salary.

The following are generally not automatically included:

expense reimbursements;
certain tax-free fringe benefits;
one-time discretionary bonuses.

The exact composition depends on the individual employment contract, the applicable collective agreement and specific arrangements.

Difference between gross salary and net salary

The RAL does not correspond to the amount that the employee actually receives in their bank account.

The following are generally deducted from gross salary:

employee social security contributions (INPS contributions);
personal income tax (IRPEF);
regional and municipal surcharges.

The remaining amount is paid as net salary (net pay on the payslip).

The difference between gross and net salary depends, among other factors, on:

the level of income;
personal tax deductions and allowances;
family circumstances;
available tax benefits.

An indicative calculation of the expected net salary based on the gross salary can be made using our gross-to-net salary calculator for Italy.

Relationship between RAL and employer costs

For employers, the RAL is not the only relevant figure. The actual personnel cost is generally significantly higher.

In addition to gross salary, the employer bears, among other costs:

employer social security contributions;
contributions to supplementary pension and welfare funds;
insurance contributions (e.g. INAIL);
costs related to holidays, public holidays and absences;
any additional contractual benefits.

The total cost of an employee is generally referred to as labour cost (costo del lavoro).

Importance of RAL in employment contracts

When hiring new employees, remuneration is often stated in terms of RAL. This facilitates comparisons between different offers, especially for managers and specialised professionals.

When agreeing on a RAL, the following aspects should also be considered:

the applicable CCNL;
the number of monthly salary payments provided for;
any variable remuneration components;
company benefits or additional bonuses.

A RAL of 50,000 euros may therefore result in different monthly payments depending on the contractual structure.

Frequently asked questions (FAQ)

1. What does RAL mean in Italy?
RAL stands for Retribuzione Annua Lorda and indicates an employee’s annual gross remuneration before social security and tax deductions.

2. Is RAL the same as annual salary?
Yes, in common usage RAL corresponds to the agreed annual gross salary. However, it does not automatically include every possible additional payment or benefit.

3. How is RAL calculated?
RAL is generally calculated by adding together the gross salary payments due during the year, including any additional monthly payments provided for by the contract (such as the 13th month salary).

4. How can RAL be converted into net salary?
An accurate conversion is only possible by considering the individual tax situation. The main factors are IRPEF, social security contributions and personal tax circumstances.

5. Why are actual employer costs higher than RAL?
RAL only includes the employee’s gross remuneration. The employer must additionally bear social security contributions, insurance costs and other personnel expenses.

6. What role does the CCNL play in determining RAL?
The applicable collective agreement defines, among other things, minimum salaries, employee classifications, additional monthly payments and other employment conditions. Therefore, RAL must always be assessed in connection with the relevant CCNL.

Source: https://www.graber-partner.com/en/lexicon/40-annual-gross-salary-ral-ital-retribuzione-lorda-annua.html

Payslip (ital.: busta paga)

A payslip (also known as a wage slip or salary statement) is a monthly statement of remuneration. It shows a clear breakdown of gross wages and the deductions (e.g. social security contributions and taxes) that result in net wages. It is based on the information provided by the company on working hours and absences (e.g. hours/attendance list, holidays, sick leave, overtime). The payslip therefore contains all wage components (e.g. basic salary, allowances, overtime, fringe benefits) on the one hand and deductions payable by the employee on the other. In Italy, employers are required to provide employees with a payslip every time they are paid (a legal requirement since 1953).

There is no rigid official template for payslips – the important thing is that the mandatory information is clearly visible. The payslips prepared by our firm typically contain the following information, among other things:

Master data of employer and employee
Details of the employment relationship (e.g. start date, length of service)
Applicable collective agreement (CCNL) and classification, including job description
Working hours/attendance (days, hours, overtime) and absences (e.g. holidays, leave of absence) including balance/remaining hours
Gross remuneration – composition (basic salary and other remuneration components)
Deductions (social security contributions, taxes and any other deductions)
Payment amount (net salary)

Frequently asked questions (FAQ)

1. Are payslips mandatory in Italy?
Yes. Employers must provide a payslip with every wage payment.

2. When must the payslip be handed over?
Generally, at the same time as the remuneration is paid (e.g. for monthly payments).

3. Can the payslip be sent by email?
Yes, this is generally possible – it is important that it is delivered on time and that there is proof that the employee has received it (e.g. suitable delivery/logging).

4. Is an employee portal (login area) sufficient?
A password-protected portal may be permissible if only the respective employee has access and the provision is documented in a traceable manner.

5. What information must be included in any case?
At a minimum: employee data/qualifications, accounting period, all remuneration components and all deductions shown separately.

6. Are employer contributions (e.g. employer's share of NISF) visible on the payslip?
Usually no: the payslip mainly shows the contributions and taxes deducted from the employee's gross salary.

Source: https://www.graber-partner.com/en/lexicon/35-payslip-ital-busta-paga.html

Frequently Asked Questions of: Probationary Period

The probationary period is a mandatory component of an employment contract. Below is an overview of the key aspects:

FAQ – Probation Period Question: What is the probationary period and what is its purpose?
Answer: The probationary period is a clause in the employment contract and serves the mutual interests of both contracting parties:

For the employer: It allows the employer to determine whether the employee’s skills and working methods are suitable for the work to be performed.
For the employee: It allows the employee to assess whether the working conditions, the work itself, and the working environment meet their expectations.

Question: When is a probationary period invalid?
Answer: For a probationary period agreement to be valid, certain formal and substantive requirements must be met:

The written form is mandatory: the probationary period must be agreed upon in writing. If there is no written agreement regarding the probationary period, the respective clause is invalid and the employer cannot invoke the probationary period.

The probationary period must relate to the activity for which the employee was hired. If the employee is assigned substantially different duties during the probationary period, this may affect the validity of the probationary period agreement.

Question: Where is the duration of the probationary period determined?
Answer: The duration of the probationary period is regulated by law and specified in the individual national collective labour agreements, whereby the duration usually depends on the employee’s classification/category.

As a general rule:

Maximum duration: Pursuant to the Transparency Decree, the probationary period may not exceed six months. National collective labour agreements may provide for a shorter duration.
Specific rules for fixed-term contracts (new from 2025): For fixed-term employment contracts, the duration of the probationary period is determined proportionally to the duration of the contract.
- It amounts to one day of actual work for every 15 calendar days from the start of the employment relationship.
- Minimum and maximum limits apply:
  - For contracts of up to six months: at least 2 days and no more than 12 days (calculation: 180 calendar days / 15 calendar days).
  - For contracts of more than six months but less than twelve months: no more than 24 days (calculation: 365 calendar days / 15 calendar days).
- National collective labour agreements may provide for more favourable provisions for employees.

Question: When is the probationary period extended?
Answer: The probationary period is extended by the corresponding duration in the event of absences due to sickness, occupational accidents, maternity/paternity leave, or suspension of work by the employer (e.g. wage supplementation schemes). This ensures that the employee is effectively given the opportunity to complete the probationary period. However, foreseeable absences such as public holidays or weekly rest days do not interrupt the probationary period.

Question: How can the employment relationship be terminated during the probationary period?
Answer: A characteristic feature of the probationary period is the simplified termination of employment. Both the employer and the employee may terminate the employment relationship at any time during or at the end of the probationary period without stating any reason and without observing a notice period. There is also no entitlement to compensation.

Source: https://www.graber-partner.com/en/lexicon/41-frequently-asked-questions-of-probationary-period.html

Minimum wage (ital.: paga base)

In Italy, there is no uniform statutory minimum wage in the form of a fixed gross hourly rate that applies to all employees. Instead, minimum wage levels are generally determined by national collective agreements.

However, Article 36 of the Italian Constitution stipulates that employees are entitled to remuneration that is commensurate with the quantity and quality of their work and, in any event, sufficient.

What is the collectively agreed wage in Italy?

The individual collective agreements set so-called collectively agreed wages or minimum wages for the respective sectors and occupations. The amount depends in particular on the employee’s pay grade.

An employee performing basic tasks may therefore have a lower minimum wage – even within the same collective agreement – than, for example, a skilled worker or a manager.

In addition to pay, collective agreements regulate numerous other aspects of the employment relationship, such as overtime, length-of-service allowances, annual leave, additional monthly salaries and various fringe benefits.

What is meant by a ‘fair wage’?

Since 2026, the importance of collective agreements has been further reinforced by law. The legislator now uses the term ‘salario giusto’ – fair pay.

The reference point is not merely the basic wage set by the collective agreement. Rather, the decisive factor is the total remuneration provided for the employee under the relevant collective agreement. In addition to the basic wage, this may also include other wage components and allowances provided for in the collective agreement.

Italy thus remains committed to its collective agreement system: no general minimum wage of, for example, 9 or 10 euros per hour has been introduced.

Which collective agreement applies?

In determining the appropriate remuneration, the following factors are particularly relevant:

the sector and the area of production,
the main activity carried out,
the nature and size of the employer, as well as
the employee’s specific duties and job classification.

The statutory provisions are primarily based on the collective agreements of the main employers’ and employees’ organisations at national level. If a different collective agreement is applied within the company, the total remuneration provided for must, in principle, not be lower than the comparable remuneration under these collective agreements.

Can a higher wage be agreed?

Of course, a higher wage than that provided for in the collective agreement may be agreed. The collective agreement essentially sets a minimum threshold. Higher salaries or additional wage components may be agreed in the individual employment contract.

An additional personal wage component (“superminimo”) is often agreed upon. Whether this can be offset against subsequent increases in the minimum wages set by collective bargaining agreements depends on the specific terms of the agreement.

When hiring an employee in Italy, it is therefore important to check both the correct collective agreement and the correct pay grade, as well as the resulting minimum wage.

Source: https://www.graber-partner.com/en/lexicon/96-minimum-wage-ital-paga-base.html

Time banks (ital.: banca ore)

A time account (banca ore) allows for the flexible allocation of working hours. Overtime worked does not necessarily have to be paid out in full immediately, but can be accumulated in a personal time account and later offset against paid time off.

Even when using an hour bank, the applicable statutory and collective bargaining agreement provisions regarding working hours and rest periods must be observed. The specific structure of the hours bank is primarily determined by the relevant national collective agreement.

How does a time account work?

The time account records the difference between the hours of work contractually due and those actually worked:

Time credit: The employee works more hours than scheduled.
Time off in lieu: The accumulated credit is later taken as shorter working days or days off.
Time deficit: The employee works fewer hours under the agreed flexibility scheme. However, a negative balance is only permitted insofar as this is provided for by the applicable regulations.

For example, an employee with an agreed weekly working time of 40 hours works 46 hours in one week. Provided the collective agreement permits this, the six additional hours can be credited to the time bank and used later for time off in lieu.

Time account or overtime?

Work carried out beyond normal working hours is generally regarded as overtime. Overtime must be recorded separately and remunerated in accordance with the provisions of the collective agreement.

However, a collective agreement may provide that the additional hours worked are transferred, in whole or in part, to a time bank. Depending on the arrangement:

the basic pay is replaced by paid time off;
only the overtime premium is paid;
the premium is also converted into additional time off;
or part of the hours is paid out and part is accumulated.

A time account therefore does not automatically mean that no premium is payable for additional work. The provisions of the applicable collective agreement are always decisive. The Italian Working Time Act expressly permits collective agreements to provide for overtime to be offset by corresponding rest periods.

What rules does the collective agreement set out?

The provisions can vary significantly depending on the sector. In particular, the following should be checked:

which hours may be transferred to the time bank;
whether the hours are credited on a 1:1 basis or with a premium;
what the maximum time credit may be;
the time limit within which the hours must be used;
who determines when time off in lieu is taken;
what happens to unused hours or upon termination of the employment relationship.

Not all collective agreements provide for a time bank. If a company-specific arrangement is to be introduced or if there is to be a deviation from the provisions of the collective agreement, it must be regularly checked whether a works agreement with the relevant trade union representatives is required for this.

What are the working time limits?

The general statutory limits also apply when using a time account. The standard working week is generally 40 hours, although the collective agreement may provide for a shorter working week or a flexible calculation over a longer period.

The average weekly working time, including overtime, must not, as a general rule, exceed 48 hours. The calculation period is normally four months and may be extended by collective agreement under certain conditions. Similarly, the statutory daily and weekly rest periods must be observed.

What applies in the absence of a time account?

If there is no valid time bank scheme in place, any additional hours worked must, as a general rule, be recorded as overtime and paid at the rates provided for in the collective agreement.

Companies should document time credits and their use in a transparent manner and monitor them regularly. The time bank must not be used to circumvent statutory or collective agreement provisions on working hours, rest periods and overtime.

Source: https://www.graber-partner.com/en/lexicon/85-time-banks-ital-banca-ore.html

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