8 MIN READ
UPDATED JUL 6, 2026💡 Everything you need to know to hire and manage employees in Italy through Toku. Toku handles payroll processing, tax withholding, social contributions, and statutory compliance. This guide covers what you need to plan costs and manage your team.
At a Glance
| Item | Detail |
|---|---|
| Currency | Euro (EUR) |
| Payroll cycle | Monthly. Toku runs one payroll per month in Italy. |
| Estimated employer costs on top of salary | Approximately 36-40% of gross salary (including TFR end-of-service accrual) |
| Onboarding lead time | 2-3 business days |
| Standard working week | 40 hours (many collective agreements set 36-38) |
| Probation period | 6 months per Toku's employment agreement |
| Annual leave | Minimum 4 weeks (20 working days); often 26-32 days under the applicable collective agreement |
| 13th month salary | Required (tredicesima, paid in December); many collective agreements also require a 14th month |
| Minimum notice on termination | Set by the applicable collective agreement, typically 1-4 months |
Onboarding a New Hire
Plan for 2-3 business days between submitting a new hire and their start date. Toku completes the employee's social security registration no later than the day before they start, so the main thing you need to do is submit the hire with enough lead time.
Submit your new hire through the Toku platform and we take it from there: local employment agreement, statutory registrations, and payroll setup. See Onboard Contributors as a Client Admin in Toku for the step-by-step process, and the Country Readiness Live Tracker for lead times across all countries.
Employer Costs
On top of gross salary, you pay the following employer contributions in Italy (typical rates for private-sector, non-executive employees; exact rates vary by sector and collective agreement):
| Cost | Rate | Notes |
|---|---|---|
| INPS pension | ~23-24% | Contribution ceiling of €122,295 (2026) for employees first enrolled after 1996 |
| Unemployment insurance (NASpI) | ~1.6% | No ceiling |
| Sickness and maternity (INPS) | ~2.4-3.5% | No ceiling |
| Family allowance (CUAF) | ~0.7% | No ceiling |
| INAIL workplace injury insurance | ~0.4-4% | Risk-rated by sector |
| Other minor funds | ~0.5-1% | Varies by collective agreement |
| TFR end-of-service accrual | ~7.4% | Deferred compensation accrued each year and paid out whenever employment ends, for any reason |
As a rule of thumb, total cost of employment is roughly 136-140% of gross salary. On top of that, the mandatory 13th month salary (and the 14th month where the collective agreement requires one) means annual salary cost is 13-14 monthly installments rather than 12.
Employees pay their own INPS pension contribution (9.19%, rising to 10.19% on income above €56,224) and income tax (IRPEF at 23-43%, plus regional surcharges of 1.23-3.33% and municipal surcharges of up to 0.9%). These are withheld from gross salary, not charged on top. Toku calculates and remits all of the above.
Compensation & Payroll
Payroll in Italy is monthly. Toku runs one payroll per month, and employees receive a detailed payslip (busta paga) each cycle. Salaries are paid in euros by bank transfer.
Italy has no statutory national minimum wage: minimum pay is set sector by sector through the applicable collective agreement (CCNL), with lowest-level minimums typically around €1,000-1,400 gross per month for full-time work. The 13th month salary (tredicesima) is paid in December, and where the CCNL mandates a 14th month (quattordicesima), it is usually paid in June or July.
Employment Contracts & Probation
- Toku issues a compliant local employment agreement for every hire, specifying the applicable CCNL, classification level, pay, duties, and hours.
- Indefinite-term employment is the default. Fixed-term contracts are allowed for up to 12 months without justification and up to 24 months (including a maximum of four renewals) with a valid business justification.
- Probation is 6 months per Toku's employment agreement. Either party may withdraw during probation without notice.
Working Hours
The statutory standard week is 40 hours, though many collective agreements set 36-38 hours. Average weekly hours including overtime may not exceed 48 over a four-month reference period, and overtime is capped at 250 hours per year. Overtime premiums are set by the collective agreement, typically 15-30% surcharges for weekday overtime and 30-50% for Sundays and public holidays. Remote work (smart working) requires a written individual agreement covering rest periods, equipment, and the employee's right to disconnect; Toku puts this in place where needed.
Leave Entitlements
| Leave | Entitlement | Who pays |
|---|---|---|
| Annual leave | Minimum 4 weeks (20 working days); often 26-32 days per CCNL | Employer |
| Sick leave | Up to 180 days per calendar year | Employer pays days 1-3 at 100%; INPS pays from day 4 (50% for days 4-20, 66.67% for days 21-180), with CCNL top-ups common |
| Maternity leave | 5 months (typically 2 before and 3 after birth), mandatory | INPS at 80%; employer top-up to 100% is common per CCNL |
| Paternity leave | 10 days (20 for multiple births), within 5 months of birth | INPS at 100% |
| Parental leave | Up to 10 months per couple (max 6 per parent), usable until the child turns 14 | INPS: 3 months at 80% within the child's first 6 years, further months at 30% |
| Bereavement leave | 3 days per year | Employer |
| Wedding leave | 15 calendar days | Employer |
At least two consecutive weeks of annual leave must be taken within the accrual year, and the remainder within 18 months after it. Leave cannot be paid out in cash during employment; unused balances are settled only at termination.
Public Holidays (2026)
Italy observes 12 national public holidays, plus each municipality's local patron saint day (for example, June 29 in Rome and December 7 in Milan). If a holiday falls on a weekend, no substitute day is given.
| Date | Holiday |
|---|---|
| January 1 | New Year's Day |
| January 6 | Epiphany |
| April 5 | Easter Sunday |
| April 6 | Easter Monday |
| April 25 | Liberation Day |
| May 1 | Labour Day |
| June 2 | Republic Day |
| August 15 | Ferragosto (Assumption of Mary) |
| November 1 | All Saints' Day |
| December 8 | Immaculate Conception |
| December 25 | Christmas Day |
| December 26 | St. Stephen's Day |
Benefits: Required vs. Common Extras
Statutory (included in employer costs above): universal public healthcare through the national health service (SSN), the INPS state pension, unemployment insurance (NASpI), INAIL workplace injury insurance, and the TFR end-of-service accrual.
Toku offers fully sponsored international health coverage through Remote Health. See Remote Health, Your Global Insurance Plan for coverage details and enrollment.
Other common extras in Italy include private supplementary health insurance, meal vouchers (typically €5-8 per working day), supplementary pension funds, and company welfare plans covering education, childcare, and health spending. Fringe benefits are tax-free up to €1,000 per year (€2,000 for employees with dependent children); above that, the full amount becomes taxable. Toku can advise on how each of these affects your total cost.
Ending Employment
Italy requires valid grounds for dismissal (serious misconduct, material breach, or genuine economic and organizational reasons), and unfair dismissals can lead to compensation of 6-36 months' salary or, in limited cases, reinstatement. Involve Toku early whenever you are considering a termination. For the process, see How to Terminate an Employee or Contractor.
Notice periods are set by the applicable collective agreement based on classification and tenure. Typical employer notice under major CCNLs:
| Service | Notice |
|---|---|
| During probation | None required |
| Junior employee, up to 5 years | 1-2 months |
| Mid-level employee, 5-10 years | 2-3 months |
| Senior employee, 10+ years | 3-4 months |
| Executive (dirigente) | 6-12 months |
Payment in lieu of notice and paid garden leave are both permitted, and garden leave is included in Toku's standard Italian employment agreement. Whatever the reason employment ends, the employee receives their accumulated TFR (roughly 7.41% of annual gross salary accrued per year, plus annual revaluation). Because TFR accrues monthly within the employer costs above, it is not an extra surprise cost at termination. Collective redundancies (five or more dismissals within 120 days in the same province) trigger a union consultation procedure of up to 75 days.
Hiring Someone from Overseas?
Non-EU nationals need a work visa and residence permit, and most subordinate employment permits are subject to Italy's annual quota system (decreto flussi), with processing typically taking 2-6 months; the EU Blue Card is the main route for highly qualified hires. EU, EEA, and Swiss nationals can work in Italy without a permit. Talk to Toku before extending an offer to a candidate who needs sponsorship.
Last verified July 2026. This guide is for general information and doesn't constitute legal or tax advice. Your Toku account manager can confirm specifics for your situation.