In Italy employment law is defined as the “law of the employees”, meaning that the majority of labour laws aim to provide rights and protection for employees in order to create a balance between the higher (financial) power of the employer and that of the worker.


Precedence is given to statutory law, which is followed by the Collective Bargaining Agreement (“CBA”) and then the individual employment contract. The latter can derogate from the law or the CBA only by providing more favourable benefits for the employee. Company polices rank lowest and therefore must comply with the regulations, the CBA and the contract.

Did you know?

  • A court can order the reinstatement of a dismissed employee to their old position plus the payment of all outstanding salaries and social security contributions.
  • A special mandatory severance payment (called T.F.R.) can be granted, which is a deferred salary accrued during the employment relationship, to be recorded in the balance-sheet and paid out for any reason of termination (incl. resignation, retirement, etc.).
  • Italy grants high levels of protection to working mothers, who must be absent from work for five months due to pregnancy and are entitled to their full salary.
  • Mothers cannot be dismissed for any reason until their child is one year old.

Restructuring programmes: key issues

  • There is an obligation to carry out a collective redundancy procedure if the company intends to dismiss at least five employees within a 120 day period.
  • The duration of union consultations is three months (but may be longer in the event of a strike).
  • The employer cannot “cherry-pick” employees for dismissal but must select them by applying objective criteria (e.g. last-in-first out; family dependants; technical reasons).
  • An agreement with the unions / work councils (providing enhanced severance payment) is key to being successful but it is not binding: every employee can choose to accept the enhanced severance or to sue the employer.
  • Enhanced severance is on top of mandatory severance and notice periods.

General employment

  • Social security contributions (approx. 30% on gross salary) must be paid even if the company employing workers in Italy is foreign and has no offices in Italy.
  • Employees working in Italy must have an Italian employment contract (even if the employer is foreign) because the greatest majority of employees’ entitlements and protections set forth by Italian law are mandatory

This is part of the Bird & Bird: A European view on Employment Law series.

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