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Minimum wage in Italy

Italy's Payroll

Social security in Italy

Other employee benefits in Italy

Compliant, seamless payroll and benefits in Italy and beyond

Payroll in Italy

Employees in Italy enjoy an organised pay structure, characterised by sector-specific wage agreements, and extensive benefits.

Rather than a national minimum wage, the national collective bargaining agreements determine the wages, which vary by industry. Taxes are progressive, and social security contributions cover pensions, healthcare, and other benefits, with both employees and employers contributing.

Understanding this essential information about Italy’s payroll system will help you ensure your employees are paid fairly, protecting your business from potential legal disputes.

Outsourcing payroll services in Italy

In the most recent Global Payroll Complexity Index or GCPI report, Italy was ranked fifth in terms of payroll complexity. This covers both setting up and effectively running payroll. One of the most impactful reasons for this is the sheer number of collective bargaining agreements employers have to take into consideration when paying their workers.

Because of this, outsourcing payroll has been a preferred solution to many companies, especially for businesses that are unfamiliar with Italy’s labor laws and regulations. Working with a reliable global payroll service provider, such as CXC, can take care of these complexities and help you avoid costly payroll mistakes. This way, you can save time and resources and focus on your core business. Going this route also ensures that employees are always paid on time, and that regulations are followed.

In this guide, we will explore everything you need to know around payroll in Italy, including the minimum wage, payroll cycle, working hours, remote work policy, and more.

Minimum wage in Italy

Since there is no mandatory minimum wage in Italy, several factors are considered when determining the pay of an employee. From national collective bargaining agreements to the types of contract employees have, all of these affect the potential minimum pay they can be entitled to receive.

Italy’s minimum wage policy

Wages are determined by sector-specific national collective bargaining agreements. These agreements are negotiated between unions and employers within each industry and vary across different sectors like agriculture, retail, and manufacturing. As a result, the minimum wage can vary significantly depending on the sector in which one works.

For example, in the agriculture sector, minimum wage agreements might set a base pay between 7 EUR to 8 EUR per hour, while those in the retail sector may receive a higher rate, reflecting the complexity or demand for labor in that field.

This sector-specific system ensures that wages remain fair and competitive within the respective industries, but it also means that there is no uniform wage across the board in Italy.

Average minimum wage in Italy

While there is no formal national minimum wage, estimates suggest that the average minimum wage across Italy—based on sector-specific agreements—ranges from approximately 7 EUR to 9 EUR per hour before taxes. This can vary depending on the region, as Northern Italy generally offers higher wages compared to the South due to differences in economic activity and living standards.

In terms of monthly earnings, the average wage for low-skilled workers tends to be around 1,200 EUR to 1,500 EUR per month, depending on the hours worked and sector. After taxes, this may reduce to approximately 1,000 EUR to 1,200 EUR per month. This variation is often highlighted when comparing Italy to other EU countries, where minimum wage laws might be more straightforward.

For international comparisons, the minimum wage in Italy in U.S. dollars can range from around 7.50 USD to 10.00 USD per hour, depending on the exchange rate and region-specific wage agreements.

Minimum wage for different types of workers in Italy

Italy’s wage structure also varies depending on the type of worker. For example:

Apprentices and interns: Most of the time younger workers and those undergoing training earn a reduced minimum wage compared to full-time employees. This is because they are expected to also receive instruction and training while in these positions. Their wages can range from 500 EUR to 1,000 EUR per month, depending on the sector and length of employment.
Part-time workers: Wages for part-time employees are prorated. This means they receive the same hourly wage as full-time workers in their sector but adjustment for the fewer hours they worked.
International students: For international students working part-time, their minimum wages usually depend on their work contracts, which are often covered by collective bargaining agreements. Typically, students can expect to earn a similar hourly rate as Italian nationals, but their weekly hours are limited under visa regulations.

Italy's Payroll

Understanding how payroll works in Italy is crucial for businesses and employees alike. Italy’s payroll system is distinct due to various laws, mandatory contributions, and unique components like the 13th-month salary.

Payroll cycle in Italy

The standard payroll cycle in Italy is monthly, with salaries usually being paid on the 27th of each month.

Employers are required to provide detailed pay slips that break down earnings, taxes, and deductions. These pay slips are vital for workers to understand their total compensation, including any variable elements like overtime or bonuses.

In addition, Italian law requires that employees are paid regularly, and delayed payments can lead to penalties for employers. For workers on fixed-term contracts or those in temporary roles, payroll cycles may vary slightly, but the monthly schedule is generally the norm across sectors.

13th-month salary in Italy

One unique feature of Italian payroll is the mandatory 13 th -month salary, known as the “tredicesima”. This is an additional monthly salary paid to employees, typically in December, just before Christmas. The 13 th -month salary is a form of deferred compensation designed to help employees with the added expenses of the holiday season.

In some sectors, employees may also receive a 14 th -month salary, usually paid in June or July. This is more common in industries like manufacturing and banking, where collective bargaining agreements provide additional compensation structures. Both the 13 th – and 14 th -month salaries are prorated based on the time worked during the year for new hires.

Italy’s social security system offers a wide range of benefits to employees and self-employed individuals alike. Understanding the nuances of social security contributions in Italy is critical when hiring and engaging local talent compliantly.

Social security contributions in Italy

Social security contributions in Italy are mandatory for both employers and employees, with the majority of the funds allocated towards pensions, healthcare, unemployment benefits, and other welfare programs. Contributions are handled by the INPS or Istituto Nazionale della Previdenza Sociale, Italy’s national social security institution.

Employers’ social security contributions typically range from 29% to 32% of an employee’s gross salary, depending on the sector and the applicable collective bargaining agreements.
On the other hand, employees contribute around 9% to 10% of their gross salary towards social security. These contributions are deducted directly from their pay and managed by the employer.

Social security benefits in Italy

Both employee and employer contributions are used to fund a variety of benefits, including the following:

Health services and sickness compensation
Incapacity and disability benefits
Maternity, paternity, and parental leave pay
Occupational accidents and diseases benefits
Unemployment benefits
Old age and survivor’s pensions

To ensure transparency, all contributions and their exact amounts are listed on the monthly pay slips of employees.

Self-employed social security contributions in Italy

Self-employed individuals in Italy, including freelancers and independent contractors, are also required to make social security contributions. However, the structure for the self-employed differs slightly from that of traditional employees.

Those who are self-employed typically follow a separate social security regime, which takes into account that they are essentially paying for both the employee and employer contributions. The rate for the self-employed in Italy varies but is generally around 25% to 30% of gross income. This contribution is split between mandatory pension funds and healthcare.

There are several social security schemes available for distinct categories of self-employed individuals. For instance, those in specific professions, like lawyers or doctors, may pay into private pension schemes regulated by their professional bodies. Meanwhile, other freelancers pay directly to the INPS through a dedicated system for independent workers.

Pension schemes in Italy

Pensions in Italy are structured based on an individual’s contribution history. The pension system operates on a pay-as-you-go basis, meaning today’s workforce funds the pensions of current retirees.

To qualify for a pension in Italy, individuals generally need to have contributed to the social security system for at least 20 years. The retirement age in Italy is currently 67, although this can vary depending on ones’ employment history and any early retirement provisions. Pension amounts are calculated based on the total number of years of contributions and the average income during an individuals’ working life.

Italy also provides survivor pensions for spouses and children, as well as disability pensions for individuals unable to work due to health conditions. These pensions are funded by both employer and employee contributions, making Italy’s social security system one of the more comprehensive in Europe.

Special category pensions in Italy

There are special pensions available for workers in specific industries or with unique employment statuses. For example, individuals in the public sector, military, and law enforcement often have different pension schemes than those in the private sector.

Additionally, Italy provides early retirement options for workers in physically demanding jobs. Known as “lavori usuranti” or strenuous work, individuals who qualify for this category may retire earlier, often at 61 or 62, provided they have sufficient contribution years. This category includes professions like miners, construction workers, and nurses working in intensive care units.

Farmers and agricultural workers also have access to special pension schemes under INPS, where contribution rates are typically lower but are compensated by the state to ensure a fair pension upon retirement.

Other employee benefits in Italy

In addition to salaries and pensions, many employees in Italy enjoy a variety of additional benefits that improve their quality of life. These benefits, not mandated by law, can include health insurance, meal vouchers, company perks like cars or mobile phones, and flexible working conditions.

Employee health insurance in Italy

While Italy has a public healthcare system, many companies offer private health insurance as part of their employee benefits package.

Private health insurance in Italy typically supplements the public system by providing quicker access to specialists, better hospital accommodations, and coverage for medical expenses that the public system does not fully reimburse, such as dental care and certain prescriptions.

Private health insurance is not a mandatory employee benefit in Italy, but it is increasingly popular, especially among multinational companies and larger businesses. By offering private health insurance, employers can attract top talent, especially those who value quicker access to healthcare services.

Employee meal vouchers in Italy

Meal vouchers are a common and popular benefit in Italy, known as “buoni pasto..” These vouchers are provided by employers to subsidize meals for employees during working hours. Meal vouchers are often distributed in paper or electronic form and can be used at restaurants, cafes, and supermarkets. The value of each meal voucher typically ranges from 5 EUR to 10 EUR per day, depending on the company.

Meal vouchers are a non-mandatory employee benefit in Italy, but many companies offer them as a tax-efficient way to compensate employees. For employers, offering meal vouchers is beneficial because they are partially exempt from social security contributions and income taxes, up to a certain limit. For employees, meal vouchers provide a significant savings on daily food expenses.

Company car and mobile phone benefits in Italy

For higher-level employees or those whose job involves extensive travel, company cars are a common perk. Company cars are provided by employers for both professional and personal use. The exact terms depend on the company policy, but they usually include all costs related to the car, such as insurance, maintenance, and fuel.

The mobile phone benefit is also widely offered, particularly to employees who need to stay connected for work. Many companies provide smartphones along with data plans, covering both business and personal use. This is especially common in the tech, sales, and management sectors.

These benefits offer employees the convenience of staying connected and mobile without incurring personal costs, and they are tax-deductible for the employer, which makes them an attractive perk for both parties.

Flexible work benefits in Italy

In recent years, flexible work benefits have gained traction in Italy, especially after the pandemic reshaped the workplace. Flexible work arrangements include remote work, flexible hours, and part-time arrangements. Italian labor laws provide employees the right to request flexible working hours, particularly for those with caregiving responsibilities, such as parents with young children.

While not mandatory, offering flexible work benefits in Italy can enhance employee satisfaction, improve work-life balance, and increase productivity. Many companies now offer hybrid working models, where employees can split their time between the office and working from home. These arrangements are particularly common in sectors like technology, finance, and consulting.

Compliant, seamless payroll and benefits in Italy and beyond

Getting payroll and benefits right is not just a legal issue. Every country also has its own customs, norms, and expectations about employee compensation. And if your operations aren’t in line with your workers’ expectations, they may not stick around for long.

Thankfully, we know what we’re doing. When you work with CXC to engage workers in Italy, we’ll handle everything from tax withholding to employee bonuses on your behalf.

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