LDP Payroll Italian team delivers scalable payroll solutions through innovative technology for any size’s Employers.
LDP help to simplify the payroll process, offering insights and significant payroll expertise to improve your business decision-making, ensuring always compliance and accuracy and building our solutions that meet your needs.
LDP provides end to end payroll Payroll services, from data collection to payslips preparation including the travel expenses, stock option and RS including monthly and yearly compliance
LDP provides an end to end Payroll services related not only the day to day advice, as hereafter better described.
LDP provides a full service including the employer registration, this activity starts soon after the Company obtained the registration at the Chamber of Commerce.
LDP Employer registration services:
- includes the obtaining of Social Security and INAIL (public insurance for work accident) unique code;
- setting up the payroll software based on customized parameters.
- Obtaining the mandate form the Employer to deliver to the Authorities the monthly, yearly and on event communications.
PAYROLL AND POST PAYROLL
Payroll service should be delivered on time, clear, the approach of the payroll specialists has to be proactive and the communication in Englis when requested.
LDP Payroll Services:
- set up of clock in clock out system;
- report and budget customized;
- data collection via a WEB Portal;
- WEB Portal payslips distribution;
- Seconded management;
- file for ERP and salary and Social security payments;
- WEB portal for talent and carrier management.
The Payroll migration, especially if happen during the year it is a quite crucial process;
despite happen in other countries the process should be managed very carefully.
LDP Payroll Migration Services:
- preliminary assessment and a mapping of all payroll peculiarity and customization should be done before the migration process starts so ie: data collection, reports, budget, file for banks payments and ERP accounting recording
- analysis of the correspondence of the payroll data with the clause stated into the employment contracts
- test on the consistency of the data imported
- go live
SOCIAL SECURITY REPRESENTATIVE
Social Security Representative will be appointed in all the cases where the foreign company is obliged to pay social security for its Italian employees. This is necessary in case of temporary activity in Italy and not imply a permanent establishment as per OCSE definition.
LDP should act as Social Security Italy Representative.
LDP Social Security Services
- Employer and Social Security set up;
- acting as your Social Security Representative and related liabilities;
- secondment consulting;
- Tax and Social Security preliminary analysis;
- assistance in dealing with the Italian Social Security Authorities;
- assistance and advice on the completion and submission of the relevant social security forms;
- drafting of employment contracts;
- payroll services
LEGAL LABOUR ADVICE
LDP Lawyers complete the payroll service line and are involved when one of the following activity is requested:
LDP Legal Labour Advice:
- Drafting of employment contracts;
- Drafting Stock Option and RSU plan;
- the management of Trade Unions relation;
- employment dispute;
- disciplinary proceedings;
- collective redundancies drawing up;
- detachment agreement;
- Labour Due Diligence;
- Second Opinion.
The employee handbook allowed the employer to communicate to the employee the company culture, value and mission statement, legal information as well as rights and obligations related to the employment. The handbook should also provide realistic expectations, both what the employer expects from the employees and the other way around.
LDP Employee Handbook services:
- Work Place Polices
- Code of Conduct
- Compensation and Benefit
- Travel and expenses
- Expat Policy
Arianna, Head of Payroll Department, is a labour consultant. She deals with Unions and Social Securities, coordinate the payroll implementation migration and software integration with expertise in stock options.
Employment: kinds of contracts
Open-term employment (lavoro a tempo indeterminato)
It is the standard contract. It is a subordinate employment relationship, regulated by a contract that does not foresee a final expiration date. The relationship therefore concludes when the worker passes away, when both parties give their consensus, when the worker resigns or when the employer lays off the worker.
Fixed-term employment (lavoro a tempo determinato or a termine)
It is a subordinate employment relationship, regulated by a contract that has a specific expiration date. This category can include an employment relationship for a specific job or activity, whose content is well-defined, that has a natural duration, expiring in the moment whin the activity itself is complete. The addition of an expiration date is devoid of effect if it does not directly or indirectly appear in a written document signed by the employee.
Other types of contracts:
The main types of special contracts of employment are as follows:
- contracts for executives (“dirigenti”);
- work with temporary agencies.
Hiring an employee
Sources of Statutory Law
Italian employment law originates mainly from the Italian Constitution, the Italian Civil Code and several additional statutes, among which the so called “Workers Charter” “Statuto dei Lavoratori” (Law nr. 300/70) and by other statutory regulations.
Terms and conditions of employment are also periodically established by the so called Collectively Bargained Labour Agreements (CCNL) that have been entered for the different professional categories.
In case of conflict between the provisions of an employment contract and the provisions of law, those of law always prevail.
Hiring an employee
First of all, the employer must be registered by INAIL (National Institute for Insurance against Industrial accidents) and by Inps (National Institute for social security payment).
Then the employer must communicate the new employment to the Government Office the day before it starts.
When the employer hires the worker, the employer must deliver a signed declaration to the employee, which should contain the following information:
- the place of work;
- the trial period (if agreed);
- the date of beginning of the employment relationship;
- the placement, level and qualifications attributed to the worker;
- vacation days;
- working hours.
Collective Bargaining agreements
The current bargaining system in Italy divides collective bargaining between a national level (intended to recoup inflation) and a decentralized level (to distribute earnings from productivity or profitability).
The role of the CBA is to implement the labour law according to several matters, i.e.:
- minimum wage;
- minimum period of vacation and paid permissions;
- pay entitlements in case of leave;
- trial and notice period;
- job duties and rights / disciplinary matters.
Current salary and accruals
A salary or “retribuzione” is the payment that the worker has a right to for activities carried out in the service of the employer. A salary has to be proportionate to the quantity and quality of the work carried out and nonetheless must always be sufficient to guarantee that the employee and his/her family can live in a free and dignified way.
The minimum wage for a subordinate employment activity is determined based on the C.B.A. “Contratto Collettivo Nazionale di Lavoro - CCNL” that must always be respected.
To this end, the employer guarantees that these levels will be respected in the moment when the entry and stay documents are requested. The majority of the rights regarding employment relationships are outlined precisely in these collective employment contracts that apply to the employer who hires the worker.
Each employee has:
- the right to a salary, usually based on 13 or 14 instalments per year;
- the right to a severance pay (for lay-offs, resignations and completion of work contract).
The 13th instalment is paid in December and the 14th instalment is paid in June. The supplementary salary corresponds to a monthly salary paid during the year.
employees in Italy are entitled to an additional month's remuneration - the so-called 13th month's salary (tredicesima mensilità), usually paid in December before Christmas. In addition, salaried employees in the commerce industry, managers, executives, and those who have worked for many years in the same company usually receive a 14th month's salary (quattordicesima mensilità) during the summer, generally in June.
Severance payments (TFR)
For any termination of the contract of employment, on whatever ground, even for dismissal for just cause or resignation, the employee is entitled to receive from the employer a severance payment, that is usually referred to as TFR “Trattamento di Fine Rapporto”.
TFR is deemed to be a part of salary, must be set aside every year and kept by the employer, based on the formula of 7,5% of every year’s gross salary, plus revaluation according to a composed index of 75% of price index increase +1,5% (Law nr. 297/82).
The TFR may be partially paid off in advance, upon occurrence of some conditions.
Employees hired on or after January 1st, 2007, must decide within six months how to apply the severance indemnity fund.
Employees can choose to maintain the severance indemnity fund by leaving it with the company, and in this case, they will receive the deferred retribution accumulated in the years of work. Another option is to apply the severance indemnity fund to a pension fund. Please take note that this latter choice cannot be changed in the future.
Place of work
The worker must carry out his/her work activities in the place established by the parties to the work contract or, if this place is not defined in the contract, in the place where the activities must be performed.
In case of mission outside of the place of work the worker is entitled to receive a reimburse of the expenses and/or a daily allowance.
The worker cannot be transferred from one productive unit to another, unless proof of technical, organizational and productive necessity is provided.
Employment agreements can be subject to a trial period.
The maximum duration of which is established by Collective Bargaining Agreements and normally depends on the employee’s professional level but in no case, it exceeds six months.
Hours of work
D.Lgs 66/2003 provides that the hours worked by employees ought not to exceed 48 hours a week. These limitations are applicable for effective working time, and for overtimes.
CCNL sets forth the normal weekly working time, that is no more than 40 hours.
Work performed in excess of 40 hours a week is considered payable overtime.
Overtime has to be occasional or due to exceptional reasons which cannot be met by the hiring of new workers and cannot exceed 4 months.
The employee has the right to 11 consecutive hours of rest every 24 hours and to at least 24 consecutive hours, as a rule on Sundays, every seven days.
The 24 hours as weekly rest period can be shifted only for special activities. Workers are entitled to a compensatory rest.
According to Law 623/23, overtime must be paid at a rate not lower than specific amount.
Working time is usually established by the employer, within the limitations cited above, and can be changed.
For part-time work, distribution of the working hours is established by an individually written contract which cannot be unilaterally amended by the employer. Law nr. 63/2000 gives the employer the right to change the part-time scheduled hours, under two conditions: prior consent by the worker, and increasing in hourly wage.
There are four national holidays and other holidays. During these festive days, workers receive regular pay. If for technical reasons they have to work, they receive double pay and a further increase (about 50% of daily pay).
Holidays are the following:
Jan. 1st; Jan 6th; Easter Monday; Apr. 25th; May 1st; Jun 2nd; Ago 15th; Nov 1st; Nov first Sunday; Dec 8th; Dec 25th; Dec 26th; plus the day of the patron saint referring to the city where the company works.
All workers are entitled to rest one day a week (Constitution, Article 36) normally on Sunday (Civil Code, Article 2109).
Minimum leave of workers is determined by collective agreements, which generally provide for an annual leave of not less than four weeks per year.
Some agreements provide for additional vacation based on the ground of seniority.
The employee has also the right to use hours of permission paid by the employer, according to the Collective Bargaining Agreement applicable to his individual contract.
The employee is generally entitled to choose the period of time for his/her holiday. However, the employer may schedule different dates for his/her vacation, if the business needs of the enterprise require so.
Within a year, the employees are entitled to 15-days, fully-paid leave for getting married.
According to Civil Code, Article 2110 and Law nr. 1204/71, female workers have special protection in case of pregnancy and maternity.
From the beginning of pregnancy to one year after the child’s birth, the employee cannot be dismissed (except for just cause) and during this period, a woman who resigns has the right to the same indemnities due for dismissals (provided she gives due notice).
Maternity leave is compulsory for female workers, from two months before until three months after childbirth. Pre-childbirth leave can start at an earlier date than two months, if the worker’s work is dangerous for her health or that of the unborn child. On the other hand, it is possible to postpone pre-childbirth leave in order to increase the leave granted after childbirth.
During compulsory maternity leave, the mother is entitled to 80% of her regular pay from Social Security and the period is counted as actual work time. Collective agreements usually oblige the employer to make up the difference to the regular wage.
In case of death or serious illness of their wife, fathers may get paternity leave upon the same conditions of the maternity leaves.
According to Law nr. 53/2000, both parents have the right to leave for no more than a total of 10 months during the first eight years of a child’s life. A longer period is possible (up to three years) in case of children with handicaps.
During that leave, the employee is entitled to have 30% of regular pay for six months, if the child is less than 6 years. For additional time, there are different indemnities depending on the family income.
The working mother, during the first year, has the additional right to two hours of daily rest, initially intended for breast- feeding. Supplementary time is also foreseen in case of twins or multiple births.
In case of sickness, the employee’s protection has been remarkably improved, mainly through collective bargaining. During sickness, suspension of the contract, with job protection, lasts for periods usually determined by collective agreements, according to the employee’s seniority. The average period is about one year. During this time, the worker is fully paid (by the employer or by the Social Security). Beyond this period an employee is usually entitled, under collective agreements, to a further period of unpaid leave.
A preliminary distinction must be made between fixed-term and indefinite term contracts. As far as fixed-term contracts are concerned, termination is automatic at the end of the specified duration or on completion of the specified task (Law nr. 230/62).
Nevertheless, according to provision of Civil Code, Article 2119, the employer may terminate the contract earlier for "just cause".
The Civil Code provides that each contracting party (the employer and the employee) of a contract of indefinite duration can terminate it, provided the notice period is respected (Article 2118), or without any notice in case of just cause (Article 2119).
According to domestic Law an employee can be dismissed for the following reasons:
(1) Just cause - meaning a serious breach of the employee by his/her duties or other behaviour that prevents the working relationship to be carried forward
(2) Justified Grounds - meaning either:
- a subjective reason, that is a breach by the employee of his/her duties, which is not as substantial as to constitute Just Cause. The breach may consist, for instance, in failure to follow important instructions given by the management, material damages to machinery and equipment, low performance (the grounds for dismissal being "subjective reason");
- an objective reason whereby the employer needs to reorganize the manufacturing process or the workforce through redundancies.
Dismissals must always be in writing and detail the reasons for dismissal. Failure to do so makes the dismissal ineffective.
Should the employee believe to have been unfairly dismissed, he/she can challenge the decision in court and the employer must observe the following rules.
If the company employs up to 60 workers in total throughout Italy, or up to 15 in a single working unit, the employee is entitled to reinstatement pursuant to the Workers' Charter if it is found that no “just cause” or “Justified reason” existed for his discharge. Known as “a real guarantee of employment”, this provision ensures that a worker who gives his/her employer non-cause for dismissal will be able to keep his/her job so long as he wants it and so long as the business entity employing him remains in existence.
An employee is, as noted above, entitled (i) to reinstatement, and (ii) to receive compensation for improper dismissal equal to no less than five months' salary. The exact number of months of salary is determined by the court taking into consideration such factors as the circumstances surrounding the discharge, the size of the enterprice, the worker's seniority. In addition, the employer must also pay the employee the value of any wages or benefits lost from the date of the court's decision to the date of reinstatement.
Employees dismissed for reasons other than Just Cause are entitled to a notice period. Employers may exempt the employee from working during the notice period by paying him/her an indemnity equal to the salary payable during the notice period. Such an indemnity is liable to social security charges.
Under the provisions of the "collective dismissal procedure", whenever redundancy involves five employees at least within a 120-day period of time and an employer with fifteen or more employees, the company must preliminary consult with the trade unions.
Termination without grounds is limited to trial periods, employees who have reached retirement age and directors.
If the employer invites the employee to return to work and the employee does not take up the offer within 30 days, the contract is automatically terminated.
Where there are fewer than 15 employees in a unit or fewer than 60 employees in total, the employee unfairly dismissed has no right to reinstatement, but is entitled to compensation ranging from 2,5 to six times the monthly pay.
The contract of employment may also be terminated by the resignation of the employee, provided a notice period is respected.
Social security system
In Italy, the following contributions in favour of the employees are mandatory by law:
- contributions for pensions schemes;
- contributions for social security covering life insurance, health, maternity, disability, unemployment and family allowances.
All the above contributions must be paid by the employer to a public body whose name is “I.N.P.S.”
Employers must withhold social security and pension scheme contributions due by the employee (part of the contributions for the employee is due directly by the employer).
The amount of social security and pensions scheme contributions depends on the type and size of the business and the rank of the employee.
The percentage to be paid to INPS for welfare services is about 37% / 40% of each employee’s gross salary (9%/10% paid by the employee and 28% / 31% paid by employer).
Payments are due monthly on the base of employees’ gross salary. Only for employees who signed their first job contract in their life after 2005 December 31st there is a threshold. So, in that case, you have to pay NICs only till the annual ceiling (Each year this value increases in line with the inflation rate).
Industrial accidents insurance (INAIL)
INAIL is the National Institute for Insurance against Injuries at the Workplace and Occupational Disease. It manages the mandatory insurance, in defence of the worker, against accidents at the workplace and occupational diseases.
Particularly, INAIL takes care of:
- guaranteeing economic, health and supplementary (integrative) services;
- ensuring the rehabilitation and the re-insertion of workers.
Each employer has to pay to INAIL for insurance against accidents at the workplace and occupational illness a percentage related to each employee’s kind of job/risk.
This contribution is totally due by the employer and has to be paid once per year on February 16th (in that date the employer pay the balance for the previous year and the same sum in advance for the current year).
Italian income tax is called “IRPEF” and it’s based on a complex system of rates, brackets and tax deductions. Here you have tax rates and brackets.
|Brackets (per year)||Tax rates|
|Less than 15.000,00 euro||23%|
|15.000,01 – 28.000,00 euro||27%|
|28.000,01 – 55.000,00 euro||38%|
|55.000,01 – 75.000,00 euro||41%|
|More than 75.000,01 euro||43%|
This is a supplemental tax payable to the Region in which the worker has his/her fiscal domicile as of 1st January. It is a tax that is paid in a year, but refers to the previous income year. The amount is calculated based on an average percentage that varies from a minimum of 1.23% to a maximum of 3.33%, to be applied on the annual income of the worker and varies from region to region. For employment income and income like employment, the additional tax is calculated based on the tax substitutes and is withheld in a maximum number of 11 monthly instalments.
This is an additional tax payable to the municipality in which the worker has its domicile from 1 January of the fiscal year where the additional municipal tax is calculated. It is calculated using a percentage to be applied on the annual income of the worker and varies from municipality to municipality (max 0.8%). For employment income and income similar to employment, the additional tax is calculated based on the tax substitutes and is withheld in a maximum number of 11 monthly instalments.
There is the additional municipal advance payment (Acconto addiz. comunale) equals to 30% of the total municipal additional tax, calculated by applying a rate to the taxable amount of the previous year. For employment income and income similar to employment, the additional municipal advance tax payment is calculated based on the tax substitutes and is withheld in a maximum number of 9 monthly instalments, starting from the month of March.
Compulsory hiring of personnel with disabilities
Business undertakings with 15 or more employees are required to recruit personnel from "protected categories" like widows, orphans, refugees and disabled persons.
Trade Union regulations at a glance
The Italian Constitution recognises the right of citizens to associate freely (Article 19) and the right of employers and employees to join associations or unions.
The Italian Constitution recognises the right to strike, which must be exercised within the limits that the law sets forth (Article 40).
Unions have a self-regulation code of strike.
Settlement of labour disputes
Law nr. 80/98 transferred jurisdiction to hear cases brought by workers and civil servants to the Labour Courts. The Labour Courts belong to the organization of the general civil court system, although they apply special rules of procedure.
Before lodging their complaint, plaintiffs are required to carry on an attempt to settle their dispute through conciliation before a public labour office, or through union procedure of dispute resolution.
There are not procedures for settling collective disputes, save for the possibility that Law nr. 8098 sets forth, of pleading the Supreme Court for an interpretation of the CCNL entered by the union of civil servants.
Safety at the labour premises
According to provisions of Law nr. 626/94, the employers must adopt all necessary measures, considering the specific features of the job and workplace, to preserve the physical integrity and personality of the employees.
In addition, the employers must carry out dedicated risk assessments and organize prevention and protection systems. The employees and their representatives are entitled to check the effective implementation of the required health and safety standards.