A guide to hiring in Italy for US companies · Last updated: 2 November 2026 · Written by the Peoitaly team, employment and payroll specialists in Italy.
If you have hired in the United States, many of your instincts will not work in Italy. Below you will find the seven differences US companies run into most often when hiring in Italy, with a side-by-side comparison and what each one means for your budget and your contracts.
Key takeaways
- No at-will employment. In Italy you can only dismiss an employee for a reason the law recognises, in writing, and usually with notice.
- Sector agreements set pay. Every employee falls under a national collective agreement (CCNL) that fixes minimum pay, job levels, notice periods and much more.
- Salaries come in 13 or 14 instalments, and candidates think in gross annual figures (RAL), not in paychecks.
- Employer costs are much higher than FICA: around 30% social security on top of gross pay, versus 7.65% in the US. As a result, total cost is usually 35–40% above gross salary.
- Severance always applies. Every employee accrues TFR, about 7.4% of annual pay, and receives it whenever employment ends, for any reason.
- Paid time off is a legal right: at least four weeks of annual leave, public holidays and paid maternity, paternity and sick leave.
Hiring in Italy in numbers
Italy is one of the largest destinations for US investment in Europe. In fact, according to ISTAT, US-controlled companies employ almost 369,000 people in Italy, more than companies from any other country. Source: ISTAT, Multinational enterprises – year 2023 (November 2025)
However, hiring in Italy for the first time often surprises US companies. Offer letters, termination, paid leave and payroll all follow a different logic. None of it is unmanageable. Still, you need to plan the costs and obligations before you make an offer, not after.
Hiring in Italy vs the US: the rules at a glance
| Topic | United States (federal baseline) | Italy |
|---|---|---|
| Ending employment | At-will in almost every state | Only with a valid reason, in writing, usually with notice |
| Minimum pay | Federal and state minimum wage | No statutory minimum wage: sector agreements (CCNL) set the minimums |
| Salary payments | 12, 24 or 26 paychecks | 13 or 14 monthly instalments |
| Employer social security | 7.65% (FICA) | About 30% (INPS), plus INAIL insurance |
| Severance | Federal law does not require it | TFR always accrues, about 7.4% of annual pay |
| Paid vacation | Federal law does not require it | At least 4 weeks a year |
| Public holidays | Paid only if the employer chooses | 12 national holidays, plus the local patron saint’s day in most agreements |
| Maternity leave | Up to 12 weeks unpaid (FMLA, if eligible) | 5 months compulsory, with at least 80% of pay |
| Health insurance | Usually employer-sponsored | Public national health service; some CCNLs add a supplementary health fund |
1. Hiring in Italy means no at-will employment
First of all, this is the difference that surprises US managers most. In Italy, you can only dismiss a permanent employee for a reason the law recognises:
- just cause (giusta causa): misconduct so serious that the relationship cannot continue, even for a day. In this case you owe no notice;
- justified subjective reason: a significant breach of the employee’s duties, but less serious than just cause. You owe notice;
- justified objective reason: business reasons, for example a reorganisation or the closure of a position. Again, you owe notice.
You must also put the dismissal in writing and state the reason, and disciplinary dismissals need a formal procedure first. If a court finds the dismissal unlawful, the employer pays compensation that the law sets; for larger employers it can reach 36 months’ pay. In some cases, the court can also order reinstatement.
So what does this mean for you? First, document performance issues over time. Second, base any restructuring on a real business reason. Finally, use the probation period well: during probation, which the collective agreement sets and which never lasts longer than six months, either side can end the relationship without notice. For more detail, read our guide on managing terminations in Italy.
2. A collective agreement sets the rules, not just the contract
In the US, the offer letter and company policies define most of the relationship. In Italy, by contrast, almost every private-sector job falls under a national collective bargaining agreement (contratto collettivo nazionale di lavoro, CCNL). Unions and employer associations negotiate one for each sector, such as commerce, metalworking, IT and logistics.
Specifically, the CCNL sets minimum pay for each job level, working hours, overtime rates, notice periods, the number of salary instalments, extra paid hours off and more. Your employment contract can improve on it, but it can never go below it. In addition, Italy has no statutory minimum wage, so the CCNL minimums play that role.
For this reason, choosing the right CCNL is one of the first decisions when hiring in Italy. It is not purely optional either, because it should match your actual business activity. See our deep dive on Italian collective agreements and how to read an Italian employment contract.
3. Salaries come in 13 or 14 payments, and candidates think per year
Italian candidates think in RAL (retribuzione annua lorda), the gross annual salary. Payroll splits it into 13 monthly payments, or 14 under some agreements such as commerce. The extra 13th month arrives in December and the 14th, where it applies, in the summer.
This has two practical consequences. First, if you budget in monthly figures, divide the annual salary by 13 or 14, not by 12, or you will overpay. Second, payroll cash flow is uneven, with a much larger payment in December. For more, see our guide to how Italian pay is structured.
Also remember that the RAL is a gross figure. The employee takes home much less after social security and income tax, while the cost to you is much higher. Our salary calculator for Italy shows all three figures.
4. The cost of hiring in Italy: much more than FICA
In the US, the employer’s share of FICA is 7.65% of wages. In Italy, however, the employer pays about 30% of gross pay in INPS social security contributions, typically between 28% and 32% depending on sector, company size and job level. On top of that come INAIL workplace accident insurance and the TFR accrual.
Overall, an employee in Italy usually costs 35–40% more than the gross salary. For example, a RAL of €40,000 costs the employer roughly €55,100 a year. The upside is that those contributions fund the employee’s pension, health care and unemployment benefits. As a result, you do not need to add a separate health plan or a 401(k)-style retirement plan to stay competitive when hiring in Italy. You can find the full breakdown in employer costs in Italy.
5. Severance pay always applies: the TFR
In the US, severance is a choice or a negotiation. In Italy, instead, every employee accrues the TFR (trattamento di fine rapporto), roughly one month’s pay for each year of service, or about 7.4% of annual pay. The employee receives it when employment ends for any reason: resignation, dismissal, the end of a fixed-term contract or retirement.
In other words, the TFR is not a penalty. It is deferred pay that you accrue every month, so the key is to budget for it from day one as a liability on the books. See our guide to TFR in Italy.
6. The law sets paid time off
US federal law does not require paid vacation. In Italy, on the other hand, every employee has the right to at least four weeks of paid annual leave a year. Employees must take at least two of those weeks in the year they accrue them, and the employer cannot pay out the remaining leave while employment continues. Source: Legislative Decree 66/2003, art. 10
On top of annual leave come the national public holidays. From 2026 there are 12 that can fall on a working day, because Italy restored 4 October (Saint Francis of Assisi) as a national holiday. In 2026, however, it falls on a Sunday, so the first extra day off will come in 2027. Most collective agreements also give the local patron saint’s day off, and many add extra paid hours off (ROL). Source: Law 151/2025, summary by Fiscal Focus
Also, plan for August. Many Italian businesses and clients slow down or close for part of the month, and employees often take two or three weeks of leave in a row.
7. Maternity, paternity and sick leave are paid
Under the US Family and Medical Leave Act, eligible employees get up to 12 weeks of unpaid leave. In Italy, by contrast, leave is paid, and INPS funds most of it through the contributions you already pay:
- Maternity leave: five months compulsory, usually two before and three after birth. INPS pays at least 80% of salary, and many collective agreements require the employer to top it up to 100%.
- Paternity leave: ten working days compulsory, at 100% of pay. Read more in our guide to paternity leave in Italy.
- Parental leave: additional optional months for both parents, and INPS pays part of them.
- Sick leave: under most collective agreements, the employer pays the first three days, INPS pays an allowance from the fourth day, and the employer often tops it up. The employee also keeps the job for a period that the agreement sets. See sick leave in Italy.
What does this mean for you? Plan cover for long absences, and never treat them as a performance issue. Italian law also voids any dismissal because of pregnancy or during protected leave.
Options for hiring in Italy as a US company
In practice, there are two common routes. The right one depends on how many people you plan to hire and how long you intend to stay.
- Set up an Italian company, usually an S.r.l. It gives you full control. However, it takes time, brings local directors’ duties, accounting and tax filings, and only pays off once the team grows large enough.
- Use an Employer of Record (EOR), which employs your staff on your behalf while they work for you. In Italy, only an employment agency that the Ministry of Labour has authorised can lawfully do this. Since many global platforms subcontract to a local partner, check who actually holds the licence. See is EOR legal in Italy?
Whichever route you choose, also assess the permanent establishment risk. Depending on what your employees do in Italy, their activity can create a taxable presence for your US company.
Peoitaly’s view on hiring in Italy
The US companies we work with rarely struggle with the rules themselves. Instead, they struggle with timing. An offer in US terms, with a monthly salary divided by 12, no mention of the collective agreement and no budget for TFR, needs a rewrite, and the candidate notices. So agree the RAL, the CCNL and the job level before the offer goes out, and most of the surprises above disappear.
Hiring your first employees in Italy? Peoitaly is an Italian, Ministry-authorised employment agency: we can employ them for you or run your Italian payroll.
Talk to usFAQ: hiring in Italy as a US company
Dismissal, costs and minimum pay
Is employment at-will in Italy?
No. You can only dismiss a permanent employee for just cause or for a justified subjective or objective reason, in writing, and usually with the notice that the collective agreement sets. During the probation period, however, either side can end the relationship without notice.
How much does an employee cost in Italy compared with the US?
The employer pays about 30% of gross pay in social security, versus 7.65% FICA in the US, plus INAIL insurance and the TFR accrual. In total, an employee usually costs 35–40% more than the gross annual salary.
Is there a minimum wage in Italy?
There is no statutory minimum wage. Instead, the national collective agreement (CCNL) that applies to the employee sets the minimum pay for each job level.
Severance, leave and entities
Do I have to pay severance in Italy?
Yes. Every employee accrues TFR, about 7.4% of annual pay, and receives it when employment ends for any reason, including resignation.
How much paid vacation do Italian employees get?
At least four weeks a year by law. In addition, they get the national public holidays and, under most collective agreements, the local patron saint’s day and extra paid hours off.
Can a US company hire in Italy without an Italian entity?
Yes, through an Employer of Record. In Italy, however, only an employment agency that the Ministry of Labour has authorised can act as the legal employer while the employee works for you.
Sources and notes
- US rules: federal baseline only (FICA, Fair Labor Standards Act, Family and Medical Leave Act). Individual states may require more, such as paid sick leave or paid family leave.
- Italian rules: Civil Code; Legislative Decree 66/2003 (working time and annual leave); Legislative Decree 151/2001 (maternity and paternity); Law 151/2025 (4 October public holiday); national collective agreements in the CNEL archive.
- Employer costs: INPS contribution rates for 2026, as our employer costs guide details.
- US investment in Italy: ISTAT, Multinational enterprises – year 2023.
This article gives general information on the rules in force in 2026 and is not legal advice. The details for each employee depend on the collective agreement and on individual circumstances.
