Recruiting in Italy: 8 differences with France

Before considering any project of company creation in Italymanagers are wondering about the practical arrangements, particularly at the HR level. How to recruit in Italy? What labor law applies? How to build a harmonized HR policy across its subsidiaries? We will explain to you below the main differences between recruitment practices in France and Italy.

Key Points: 8 Differences in Recruiting

• the essential role of the Collective Agreement
• the case of Livello (= employee status)
• careful drafting of the employment contract
• a specific category, that of the manager
• regulated payroll management
• a lower level of social contributions
• a particular retirement system
• a termination of the online employment contract

The essential role of collective agreements in Italy

In France, each branch has its own collective agreement which provides a set of minimum rules for all employees concerned.

In Italy, the collective agreement (National Collective Labor Agreements – CCNL) organizes the almost all of the rules applicable to employees. It provides, for example, among its 200 articles, which compulsory mutual organization to subscribe to.

The applicable collective agreements, with a national vocation, are mainly 2:

• the collective agreement for the tertiary sector (commerce and services);
• the industry collective agreement.

Each includes specific rules for leaders.

Any exemption from the provisions of a collective agreement is made only in the interest of the employee. The overall improvement is likely to take place within the framework of a second level agreement, which is complex to establish because it requires the signature of all the unions concerned. However, as soon as a rule does not suit them, they demand guarantees and compensation.

Recruiting in Italy: understanding the concept of “livelli”

Another specificity of recruitment in Italy: defining the level suitable for his new colleague.

Collective agreements provide for different rules depending on the livelli (employee statuses). The industrial collective agreement provides for six hierarchical levels (from the lowest to the highest), while that of the tertiary sector has seven, established according to an inverse logic.

This may be the length of the trial period, the notice period, the minimum gross salary, etc. For example, the gross annual salary of an executive is greater than €41,000. It is therefore impossible to hire a junior country manager for €35,000!

The level of the employee is among the obligatory information in the Italian employment contract.

The employment contract, key to Italian recruitment

The drafting of the employment contract in Italy is careful for several reasons:

• the absence of a labor code,
• the need to obey collective agreements,
• the obligatory nature of certain information.

Result: in Italy, it is common for an employment contract to consist of 10 pages.

The contract must in particular specify:

• the level of the employee.
• its precise missions, an essential condition for ending the professional relationship during the trial period.
• the length of the trial period which differs depending on the level (from 60 days in the middle of the level to 6 months for a manager).
• the length of notice.
• the non-competition clause, rarely used in practice. At the end of the contract, it requires the agreement of the employee and the employer not to be applied. The employer must pay compensation equivalent to 20 or 30% for 12 months. This compensation involves the establishment of a pay slip to take into account social security contributions and taxes. In practice, payment is made quarterly.

Managers, a specific category of workers

By leader, we mean executive officer rather than legal representative of the Italian company. In Italy, managers have specific rules within collective agreements.

For example, employer contributions are specific to them:

• €8,500 per year within the framework of the industry collective agreement,
• €18,000 per year within the framework of the tertiary sector collective agreement.

Another example, senior executives benefit from 35 days of leave per year, without RTT.

Finally, the company can dismiss a manager without having to prove real and serious cause. In return, severance pay is higher (around 1 year’s salary).

Regulated payroll management

A “Labour law consultant” is mandatory for the payroll management and thepreparation of the pay slip. He also takes care of registration with social organizations as well as monthly declarations of social contributions.

The pay slip is stamped with the consultant’s stamp. This one is worn guarantor of payment of social security contributions. Please note, in the event of an error, the employer is responsible for payment to social organizations. He can then turn against the consultant who has failed in his mission.

Therefore, even if you have payroll software with international modules, you will need to rely on these consultants.

Our recommendation: as with your accountant in Italy, opt for a payroll consultant with international clientele to facilitate exchanges and the sharing of compatible tools.

Know the level of social contributions before recruiting in Italy

The amount of social contributions is generally lowest in Italy than in France. Thus, employee contributions represent 9.1% of gross salary, regardless of status or amounts. Employer contributions represent a cost of around 30% for the employer.

TFR: an Italian specificity regarding retirement

The TFR (Severance pay) is an amount equal to annual gross salary divided by 13.5. The company must provision this sum each year in the company’s accounts. If the employee prefers, she can pay it into a supplementary pension fund (which avoids losing everything in the event of the company’s bankruptcy).

This sum is due to any employee who leaves the company, whatever the reason: resignation, dismissal, retirement.

A major change took place at the end of 1995 in the calculation of retirement. Also, the recruited employee must indicate whether he started his career before or after January 1, 1996. If so, his contributions are calculated on his entire remuneration without ceiling. Otherwise, limitations are put in place.

If an employee notices a error in calculating social security contributionshe can contest this with his employer. The employer will have to reimburse it and will recover the overpayment from social organizations or by deduction from future contributions.

Every HR manager must know how to recruit in Italy but also know how to part ways with an employee.

First of all, the resignation in Italy is carried out exclusively online, on the website of theINPS. The employee specifies in particular the date of the last day of effective work. It is the ministry which notifies the employer and the labor inspectorate, by a certified email! The employee has a reflection period of 7 days to reconsider their decision.

Other particularity: the conventional termination exists but remains extremely rare. In fact, the employee must resign and specify that he is doing so with the agreement of the employer, hence a high risk of dispute. An Italian labor law lawyer will never recommend negotiating a contractual termination! Especially since the employee risks losing his rights with the NASpI (New Social Insurance for Employment), unemployment insurance paid for 12 months.

Finally, it is possible to dismiss an employee in Italy. To find out the details of the rules and procedures, you will need to consult the collective agreement, which supersedes the employment contract. An objective reason such as the elimination of the position is required. Lack of results is not considered cause for dismissal.

In practice, employees systematically contest dismissal to obtain greater compensation. Negotiations continue between lawyers who sign an agreement before the union chamber (a system close to our industrial tribunals).

Pramex International supports French companies in the creation of their Italian subsidiary. Our teams then ensure HR and accounting management and in particular take into account the differences in recruitment methods in Italy. Delegating administrative management is the best solution to free your mind and concentrate on operational matters.

Notes: This article concerns general information, which does not constitute advice. We invite you to contact us for further details.