Compensation in Italy follows a logic that is both structured and highly regulated. While salaries are usually discussed as annual gross figures, the way those figures are translated into payroll — and the obligations attached to them — often surprises foreign employers encountering the Italian system for the first time.
Understanding how wages are structured, how additional salary payments apply, and how contributions are calculated is essential before making a hire.
In Italy, these elements are not negotiable details; they are legal and contractual realities that shape the true cost of employment.
Annual salary does not mean twelve equal payments
Italian salaries are expressed on an annual gross basis, but that figure is rarely divided into twelve equal installments. Instead, payroll is built around a system of multiple salary payments distributed throughout the year.
This distinction matters because it directly affects cash flow, budgeting, and compliance. Employers who assume a simple monthly salary model often underestimate their real payroll exposure, particularly during mid-year and year-end periods.
The 13th salary is a statutory obligation
The 13th salary, known as tredicesima, is not a benefit or a discretionary bonus. It is a statutory payment required under Italian law and applies to employees across sectors.
This additional salary is accrued monthly and typically paid in December. From a compliance standpoint, it forms part of the employee’s guaranteed remuneration. From a financial standpoint, it represents a predictable increase in payroll obligations at year end.
Employers must account for this cost from the outset. Treating the 13th salary as an “extra” rather than an integral part of the wage structure is one of the most common planning errors we see.
The 14th salary depends on sector and agreement
Unlike the 13th salary, the 14th salary (quattordicesima) is not universal. Whether it applies depends on the Collective Bargaining Agreement governing the role.
In sectors where it is required, the 14th salary is accrued throughout the year and paid separately, often during the summer months. Once included in the applicable CBA, it becomes a binding employment condition and cannot be excluded through individual negotiation.
This is why salary obligations in Italy cannot be assessed without first identifying the correct collective agreement.
Collective Bargaining Agreements shape compensation
Collective Bargaining Agreements are central to Italian employment law. They regulate not only minimum salary thresholds, but also how wages are structured, how many salary installments apply, and which additional payments are mandatory.
CBAs vary by sector, role, and classification. As a result, two employees performing similar work under different agreements may have materially different compensation structures.
This framework leaves little room for standardisation and makes local expertise essential.
Payroll compliance in Italy is not about applying a template; it is about aligning each employment relationship with the correct regulatory context.
Employer contributions materially increase employment cost
Beyond gross salary, employers are responsible for mandatory social security contributions. These fund pension schemes, unemployment coverage, maternity and parental leave, and workplace injury insurance.
Contribution rates vary depending on sector and employee classification, but they represent a substantial cost on top of salary. The total cost of employment in Italy is therefore always higher than the headline annual wage.
Accurate forecasting requires treating contributions as a core cost component, not an administrative afterthought.
Employee deductions and payroll responsibility
Employees also contribute to the social security system through payroll deductions. These amounts are withheld by the employer and remitted to the relevant authorities.
While these deductions affect the employee’s net pay rather than employer cost, the responsibility for correct calculation and timely payment sits squarely with the employer. Errors in this area can trigger audits, penalties, and disputes — even when mistakes are unintentional.
Why wage structure matters before hiring
Italian employment law does not reward assumptions. Employers who approach hiring with simplified models often discover discrepancies only after payroll is live.
By understanding wage structure in advance, companies can:
- Budget accurately and avoid unexpected cost increases
- Make compliant and competitive offers
- Plan cash flow around known salary obligations
- Reduce exposure to regulatory and payroll risk
This level of clarity is particularly important for companies hiring their first employee in Italy.
The role of an Employer of Record
An Employer of Record ensures that wage structure, additional payments, and contributions are handled in line with Italian law and the applicable collective agreement.
This includes accurate salary installment planning, correct contribution calculations, and ongoing compliance as regulations evolve. Rather than interpreting complex rules internally, companies can rely on local expertise to ensure their employment setup remains compliant from day one.
Italian payroll is not complex — but it is precise.
Companies that succeed in Italy are not those that simplify the system, but those that respect it. Understanding how wages and statutory benefits function is the foundation of compliant hiring and sustainable growth in the Italian market.
If you’re planning to hire in Italy and want a clear view of real employment costs and obligations, speaking with a local EOR early in the process makes that clarity possible.
