Mandatory employee benefits in Italy: what businesses need to provide

Hiring talent in Italy allows global companies a highly skilled and well-educated workforce. However, for international employers, especially those without a local presence, understanding employee benefits in Italy can be a significant challenge.

Italy’s labour laws are among the most employee-centric in Europe. Employers must provide a comprehensive package of mandatory benefits, many of which are rooted in long-standing social security systems and detailed collective bargaining agreements (CBAs).

Whether you’re hiring remotely or building an on-the-ground team, ignoring or misunderstanding these entitlements can lead to compliance risks, employee dissatisfaction, and even legal penalties.

In this guide, we’ll break down the mandatory benefits in Italy, including healthcare, pensions, paid leave, and more. We’ll also explore how working with an Employer of Record in Italy can simplify benefit administration and ensure compliance without setting up a local entity.

Why understanding employee benefit obligations in Italy is critical

When you expand your business to Italy, you need to employ people and be responsible for more than just salary payments. You’re also legally obligated to provide access to public healthcare, contribute to the national pension system, offer paid leave, and often pay additional bonuses such as the 13th-month salary.

Foreign companies unfamiliar with Italy’s system often make mistakes – either by underestimating the cost of employment or by providing benefits that fall short of local standards. This can lead to fines, disputes, or difficulties retaining talent.

Understanding what is required by law (statutory benefits) and what is negotiated through CBAs (often mandatory in practice) is key to building a sustainable, compliant workforce in Italy.

Overview of mandatory employee benefits in Italy

Italy divides employee benefits into two main categories:

• Statutory benefits: Legally mandated by national labour law and apply to all employees.
• Supplementary benefits: Often required by sector-specific CBAs, which govern many aspects of employment and can vary by industry, region, or job type.

Employers must ensure their benefit packages align with both.

Healthcare benefits in Italy

Italy’s public healthcare system, known as the Servizio Sanitario Nazionale (SSN), provides universal healthcare coverage to all residents. Employees gain access to this system through mandatory registration.

When hiring in Italy, employers must register the employee with the SSN and ensure that contributions to the healthcare system are made through INPS (the National Social Security Institute). These contributions are part of the overall social security package deducted from payroll.

While SSN covers most essential services, some CBAs require employers to offer complementary private health insurance. Private healthcare is also seen as a desirable perk in competitive industries, especially for managerial or executive roles.

Remote workers legally residing in Italy are also entitled to public healthcare coverage once registered. Employers must ensure correct registration and contributions, regardless of whether the employee works from home or in an office.

Pension contributions and retirement schemes

All employees must be enrolled in the INPS, which manages Italy’s public pension and social insurance schemes. Employers and employees both contribute monthly, with the employer’s share significantly higher.

Mandatory contributions:

• Depending on the sector, employers typically contribute around 23% to 30% of an employee’s gross salary.
• Employees contribute around 9% from their salary.

These rates may vary slightly based on CBAs, job classification, and region.

Employers are responsible for calculating, withholding, and paying these monthly contributions. Errors or delays can result in penalties.

Some CBAs may also require or recommend contributions to complementary pension schemes (fondi pensione integrativi). These are additional retirement savings plans aimed at enhancing future pensions.

Paid leave entitlements

Italian law guarantees a minimum of four weeks of paid annual leave per year. However, CBAs often grant additional days – many employees in Italy receive between 26 and 30 days annually.

Italy has 12 national public holidays, with regional holidays varying by location. If a holiday falls on a weekend, it’s not typically compensated unless stated in the employment contract or CBA.

Employees are entitled to paid sick leave, with compensation shared between the employer and INPS. The length and percentage of paid leave vary depending on the employee’s tenure and the relevant CBA.

Maternity, paternity, and parental leave

• Maternity leave: 5 months, fully paid (usually 80% from INPS, sometimes topped up by the employer).
• Paternity leave: 10 days of mandatory paid leave, plus optional days.
• Parental leave: Both parents can take additional unpaid or partially paid leave based on the child’s age and care needs.

CBAs may enhance these provisions with longer durations or better pay during leave.

Other statutory employee benefits

One of Italy’s most well-known employee benefits is the 13th-month salary (Tredicesima), paid in December. This is a mandatory additional monthly salary and applies to nearly all employees.

Depending on the industry and applicable CBA, employers may be expected to provide:

• Meal vouchers (buoni pasto)
• Transport allowances
• Housing stipends (in limited cases)

Italian law mandates Trattamento di Fine Rapporto (TFR), a severance fund accrued throughout employment. It’s equal to roughly one month’s salary per year, and is paid out upon termination, regardless of the reason for leaving.

How an Italian Employer of Record helps manage employee benefits

An Employer of Record (EOR) is a third-party company that hires employees on your behalf in Italy. While your business oversees daily work and performance, the EOR becomes the legal employer and handles registration, contracts, compliance, and payroll.

How EORs help with benefit compliance:

• Registering employees with SSN and INPS
• Calculating and paying pension and healthcare contributions
• Managing sick leave, parental leave, and public holiday entitlements
• Ensuring contracts align with local law and CBA obligations
• Providing access to statutory and supplementary benefits

For businesses without a legal entity, an EOR offers a cost-effective, low-risk way to hire. You avoid the administrative burden of learning Italy’s complex benefits system while remaining fully compliant.

For example, a UK-based SaaS company wanted to hire a remote customer success manager in Rome but had no Italian entity and was unsure about benefit obligations. They partnered with an Italian EOR, which handled all legal employment responsibilities.

The EOR ensured the new hire was:

• Registered for healthcare and INPS
• Paid the correct pension and severance contributions
• Given access to statutory and CBA-aligned benefits, including the 13th-month salary and leave entitlements

The result? A happy, legally protected employee—and a stress-free hiring experience for the company.

Mandatory employee benefits

Italy’s mandatory employee benefits can initially seem overwhelming, especially for international businesses unfamiliar with local requirements. Compliance isn’t optional, from healthcare and pensions to paid leave and severance. It’s part of what makes the Italian employment system robust and worker-focused.

Working with an Employer of Record in Italy offers a bright and efficient path forward for companies without a local presence. You’ll meet all legal obligations, offer attractive benefits to your team, and avoid the complications of entity setup or compliance missteps.

Contact us today to learn how our Italian EOR services can help you confidently manage employee benefits, so you can focus on growing your team, not navigating bureaucracy.