Employer of Record Italy: Hire in Italy Without a Local Entity

Expanding your business into Italy opens the door to a rich talent pool and new markets, but it also introduces complex local labor laws and administrative hurdles. Italian employment law is known for being highly regulated and employee-friendly, with numerous rules stemming from collective bargaining agreements, the Civil Code, and even the Italian Constitution. For a foreign company, setting up a local subsidiary means navigating bureaucracy—registering with the Chamber of Commerce, obtaining a tax ID, enrolling in social security (INPS), and more. This process can be time-consuming (often taking months) and costly, and any mistakes could lead to legal penalties or onboarding delays . That’s why many companies use an Employer of Record (EOR) in Italy to streamline hiring. An EOR serves as a local employer on your behalf, so you can hire Italian employees quickly and compliantly without establishing your own entity. In this guide, we’ll explain what an EOR is, why companies rely on EOR services in Italy, what an Italy EOR actually does, key legal considerations for hiring in Italy, and how an EOR compares to setting up a local entity. We’ll also highlight how Rivermate’s EOR platform helps HR professionals like you onboard and manage employees in Italy smoothly.

What is an Employer of Record (EOR)?

An Employer of Record (EOR) is a third-party organization that becomes the legal employer for your employee, taking on all local employment responsibilities while you retain control over the person’s day-to-day work. In other words, the EOR hires the employee in the target country on paper, but the employee still works for your company in practice. The EOR assumes full legal responsibility for employment duties such as payroll, tax withholding, social contributions, benefits administration, and compliance with local labor laws. Meanwhile, your company directs the employee’s projects and performance as usual.

In the context of Italy, an EOR is extremely useful for companies that do not have an Italian business entity. The EOR already has a legal presence (or partners with one) in Italy, so it can hire Italian staff on your behalf immediately. You don’t have to set up an Italian entity or become an expert in Italian labor regulations overnight. The EOR handles all the HR, tax, and legal formalities of employment in Italy, allowing you to focus on managing your team and growing your business. Essentially, the EOR model lets you tap into Italian talent without the usual overhead of establishing a new branch or subsidiary.

Why Use an Employer of Record in Italy?

Using an EOR service for hiring in Italy offers several important benefits and is a popular solution for HR teams at international companies. Here are some of the key reasons to use an Employer of Record in Italy:

• Avoid Setting Up a Local Entity: Perhaps the biggest advantage is that you don’t need to register a company in Italy to start hiring. Without an EOR, you would have to incorporate locally and register with authorities like the Chamber of Commerce and National Social Security Institute (INPS) before hiring any staff. This can take significant time and money. An EOR already has the infrastructure in place, so you can start hiring in a matter of days rather than months.
• Fast Market Entry: With an EOR, you can onboard Italian employees quickly, expediting your expansion into the Italian market. There’s no waiting for licenses or bank accounts – the EOR can hire and pay your employee almost immediately once you’ve signed up. This agility lets your company seize business opportunities in Italy without delay.
• Local Compliance Expertise: Italy’s labor laws and employment norms are complex, and they change over time. EOR providers are experts in Italian HR compliance, ensuring every contract term, payroll deduction, and benefit meets local requirements. This local knowledge mitigates your risk of inadvertent labor law violations. You won’t need to master the intricacies of Italian labor codes or collective bargaining agreements – the EOR has that covered.
• Administrative Relief for HR: All the heavy lifting of HR administration in Italy is handled for you. The EOR manages payroll calculations, tax filings, social security contributions, insurance, and even routine HR tasks like payslips and expense reimbursement. Your HR team doesn’t need to deal with foreign paperwork or hire local specialists, freeing them to focus on core activities.
• 100% Compliance and Risk Mitigation: By using a reputable EOR, you ensure that your hiring in Italy is fully compliant from day one. The EOR stays up to date with Italian employment regulations (from work hour limits to maternity leave entitlements) and assumes liability for correctly following those laws. This greatly reduces the risk of fines, penalties, or legal disputes for your company. In short, the EOR acts as a safety net for compliance – which is invaluable in a country with strict worker protections.
• Cost-Effective for Small Teams or Tests: Expanding into Italy via an EOR is generally more cost-effective for small-scale hiring or market testing. You pay a predictable service fee (often per employee) to the EOR, instead of investing large sums in establishing and maintaining a whole entity. If you only need to hire a few people in Italy or want to test the market, an EOR lets you do so without heavy upfront investment.
• Flexibility to Scale Up or Down: An EOR arrangement is highly flexible – you can scale your team in Italy up or down as needed without worrying about what to do with a local entity. If business needs change, you can easily add more employees through the EOR or terminate the service if you decide to pause Italian operations. You’re not locked into the long-term commitment that comes with opening a physical office or subsidiary.

Overall, an Employer of Record in Italy simplifies global expansion. It gives your organization a foothold in the Italian market quickly and safely, bypassing red tape. Rather than asking your HR professionals to become experts in Italian labor law, you can *outsource those requirements to an EOR and gain peace of mind that you’re compliant. For many companies, this makes the difference between delaying expansion and being able to hire top talent in Italy right now.

What Does an EOR in Italy Do?

An EOR in Italy handles all the on-the-ground employer obligations on your behalf. Practically speaking, this means the EOR acts as your “HR department” in Italy for the employees it hires for you. Key responsibilities that an Italian EOR takes care of include:

• Hiring and Onboarding: The EOR will formally hire your selected candidate under its local Italian entity. It prepares a locally compliant employment contract (in Italian if required) covering all mandatory terms like job role, salary in euros, working hours, probation period, notice period, and so on. The EOR collects all necessary employee information (e.g. Italian tax code (codice fiscale), bank account details, address) and registers the new hire with the Italian authorities as needed. This ensures your employee is legally enrolled and ready to work.
• Payroll Processing: The EOR runs payroll for the employee each pay period (typically monthly in Italy). This includes calculating gross-to-net salary, withholding the correct income taxes, and deducting both employer and employee social security contributions. Italy’s social contributions are substantial – roughly 30% of the employee’s salary is paid by the employer to social security funds, and around 9% is withheld from the employee – and the EOR handles all these computations and payments to the authorities. They also issue payslips in compliance with Italian requirements and deposit the employee’s net pay into their bank account on time.
• Tax Filings and Social Contributions: An EOR takes care of all required tax reporting and payments related to your employee. This means monthly and annual filings to Italian tax authorities for income tax withholding, paying employer contributions to INPS (social security) and, if applicable, INAIL (workers’ compensation insurance for workplace accidents in certain industries). The EOR ensures all these payments are made accurately and on schedule, so your company stays in good standing with Italian fiscal and social security institutions.
• Benefits Administration: The EOR manages all mandatory benefits and entitlements for your Italian employee. Italy has generous worker protections, so this includes ensuring the employee receives at least the minimum required paid vacation (usually 4 weeks per year), paid public holidays, sick leave, and parental leave. If the employee is a parent, the EOR will handle the paperwork for maternity or paternity leave as per Italian law. The EOR also enrolls the employee in any compulsory private or national insurance programs and can facilitate supplementary benefits (like health insurance or meal vouchers) if part of the compensation package. All of this is done in line with local laws and any applicable collective bargaining agreements.
• HR Support and Guidance: A good EOR doesn’t just crunch numbers – they provide ongoing HR support for both you and the employee. In Italy, the EOR can advise on local employment practices and cultural expectations, help address any workplace issues or questions the employee has, and ensure that the employment relationship runs smoothly. They may also conduct background checks or obtain medical certificates if required before employment (common for some roles in Italy). Essentially, the EOR is there to handle day-to-day HR administration and let you manage the employee’s work without distraction.
• Compliance Monitoring: Employment regulations can change, and an EOR keeps you ahead of the curve. The EOR continuously monitors Italian labor law updates – whether it’s a change in social contribution rates, a new public holiday, or updates to termination rules – and adapts processes accordingly. This proactive compliance management means your operations in Italy remain lawful and up-to-date without you having to track legislative changes yourself.
• Termination and Offboarding: If the employment needs to end, the EOR will manage the termination process in compliance with Italian law. Italy has strict rules around dismissals, so the EOR ensures that there is a legally valid reason (especially for permanent employees) and that the proper notice period is given. They will prepare all required documentation, calculate any final payouts such as unused vacation and the TFR severance (Trattamento di Fine Rapporto, a mandatory severance accrual paid at the end of employment), and provide the employee with their termination letter and paperwork. By handling offboarding properly, the EOR helps you avoid wrongful termination claims and remains compliant with all obligations to the departing employee.

In summary, an Employer of Record in Italy handles every aspect of employment administration from hire to retire. According to global employment experts, an EOR will effectively onboard employees, manage payroll and taxes, file necessary paperwork with authorities, administer benefits, and ensure terminations follow the law. This comprehensive service means you, as the client company, can manage your Italian team’s projects and goals without getting bogged down in HR bureaucracy. The EOR takes care of the details behind the scenes, acting as a shield between your company and the complex Italian regulatory environment.

Legal and Compliance Considerations in Italy

Italy’s legal and regulatory landscape for employment is one of the most robust in Europe. Any company hiring in Italy (directly or via an EOR) needs to be mindful of these compliance requirements. Here are some key legal and compliance considerations specific to hiring in Italy:

• Comprehensive Labor Laws: Italian labor law is comprehensive and worker-friendly, designed to protect employee rights. Employers must adhere to the Italian Civil Code and labor statutes, and often industry-specific Collective Bargaining Agreements (CCNL) which set additional standards for wages, hours, and benefits in certain sectors. An EOR will ensure any applicable collective agreement terms are reflected in the employee’s contract and working conditions.
• Employment Contracts: In Italy, every employee should have a written employment contract in a language they understand (Italian is standard). The contract must include all mandatory terms such as the job title, work location, start date, contract duration (permanent or fixed-term), working hours, salary, paid annual leave, notice period for termination, and any probationary period. Italian law allows verbal agreements, but written contracts are strongly preferred to document these details. An EOR will draft compliant contracts that check all these boxes from the outset.
• Working Hours and Overtime: By law, the standard work week in Italy is 40 hours. Overtime is permitted within limits, but there is an absolute maximum of 48 hours per week on average (usually calculated over a multi-week reference period) including overtime. Employers must also respect required rest periods (at least one day off per week, and 11 hours of rest between workdays as per EU regulations). The EOR ensures your employee’s schedule and any overtime pay meet these requirements.
• Minimum Wage and Payroll Standards: Italy does not have a single national minimum wage; instead, minimum pay is typically set by collective agreements per industry. It’s crucial to pay at least the rates stipulated by the relevant CCNL for the job role and level. Wages must be paid on time (usually monthly) and via traceable methods (bank transfer). The EOR will adhere to the correct wage scales and timely payment rules so that your employees are always paid correctly and punctually.
• Taxes and Social Contributions: Employers and employees in Italy have significant tax and social security obligations. Employers contribute roughly 30% (or more) of an employee’s gross salary to social security programs (INPS) for pensions, unemployment, and other benefits. Employees contribute around 9-10% of their salary to INPS (deducted from pay) and are subject to progressive income tax rates. There are also regional and municipal taxes on employment in some cases. Compliance means registering the employment with tax authorities, calculating all contributions correctly, and remitting payments on time. An EOR takes care of all Italian payroll tax compliance, shielding you from these complex calculations and filings.
• Mandatory Benefits and Leave: Italian law mandates a range of benefits to provide a safety net for workers. These include a minimum of four weeks’ paid vacation per year, approximately 12 public holidays, sick leave (with protection from dismissal during illness for a certain period), maternity leave (5 months at around 80% pay, paid by INPS), paternity leave (10 days paid), and various other family leaves. Employers must also pay an extra month’s salary (the “13th month”) as a holiday bonus in many cases, typically at Christmas, and some industries even have a 14th month pay. All of these entitlements must be provided either by law or by collective agreement. An EOR will ensure your Italian employees receive all statutory benefits and any additional ones required by their specific industry agreement, keeping you fully compliant.
• Employee Termination Protections: Firing or laying off employees in Italy can be challenging due to strong employee protections. For permanent employees, termination generally requires just cause or justified reasons (like serious misconduct or economic restructuring) and must follow a formal procedure. Wrongful termination can lead to heavy penalties or compulsory reinstatement of the employee. Additionally, whenever an employee leaves (whether they resign or are terminated), the employer must pay out the accumulated TFR (severance indemnity) that has been accruing for that employee. An EOR will navigate the legal grounds for termination and handle the calculations and payout of any required severance amounts, ensuring the process is legally sound.
• Requirement for Licensed Employment Agencies: It’s important to note that Italian law does not explicitly recognize “EOR” as a distinct legal concept – it treats it as a form of labor supply (staff leasing). In Italy, labor leasing is only legal if conducted by an authorized employment agency with the proper license from the Ministry of Labor. In practical terms, this means your EOR provider in Italy either needs to own a locally licensed entity or partner with one. If an unlicensed company tried to act as your EOR, it would be considered unlawful intermediation of labor, with serious consequences for all parties. Reputable EOR services like Rivermate are careful to operate through fully compliant entities in Italy, so that your employment arrangements remain completely above board.

Staying on top of all these Italian legal requirements is no small task. Compliance is one of the strongest arguments for using an EOR – the EOR’s job is to ensure every rule is followed, from day one of employment through the end. When you partner with an EOR in Italy, you gain a local compliance team that shields you from liability and keeps your operations in line with Italian laws and regulations. This allows you to hire confidently, knowing that both your company and your employees are protected under the law.

Employer of Record vs Opening a Local Entity in Italy

When expanding into Italy, companies often weigh using an EOR against the alternative: setting up their own local entity (such as a subsidiary or branch) and hiring directly. Each approach has its pros and cons. Below is a clear comparison of using an EOR versus opening a legal entity in Italy:

Factor	Using an EOR in Italy	Setting Up a Local Entity in Italy
Setup Time	Very fast – you can start hiring in Italy within days using an EOR’s established entity. No need to wait for incorporation.	Slow – establishing a company in Italy can take several months, involving registration, bank accounts, and bureaucratic approvals. Onboarding employees must wait until all setup is complete.
Upfront Effort & Cost	Minimal upfront effort. The EOR has done the hard work; you simply sign a service agreement and pay a fee per employee. Lower initial cost, making it ideal for small-scale expansion.	Significant effort and cost. You must navigate incorporation, legal fees, and registration charges. It can take up to six months to fully set up and you bear all those costs. This investment only pays off if you plan a long-term, large operation.
Compliance Management	Handled by EOR. The EOR’s experts manage Italian labor compliance, payroll taxes, and HR admin. The EOR also assumes liability for employment law compliance, reducing your risk.	Your responsibility. You must ensure compliance with all Italian laws. This likely means hiring local HR/legal experts or consultants. Your company is liable for any mistakes or infractions.
HR Administration	Outsourced. The EOR manages payroll, contracts, benefits, and terminations. They serve as your Italian HR and payroll team.	In-house. You need to establish HR processes, payroll systems, and possibly local HR staff to manage employees. All admin tasks fall on your team.
Control & Customization	Standardized. EORs provide a ready-made solution, but policies and processes may be somewhat standardized across clients. There is limited ability to customize employment terms beyond what’s offered (aside from role-specific details).	Full control. With your own entity, you have the freedom to implement company-specific HR policies, tailor benefit programs, and build your company culture locally. You control all aspects of the employment experience.
Scalability & Cost Long-Term	Flexible scaling. Easy to scale up or down—add or remove employees without worrying about entity overhead. However, the per-employee fees can add up; using an EOR might become costlier as you hire dozens of employees .	Economies of scale. Once established, a local entity is more cost-effective for large teams. You don’t pay per-employee fees to a third party, so if you plan to hire many employees in Italy long-term, running your own entity could save money.
Administrative Burden	Low burden. The EOR handles most ongoing admin, so your team has minimal extra workload.	High burden. All ongoing administrative tasks (payroll, filings, audits, renewals of licenses, etc.) are additional workstreams for your organization.
Exit Flexibility	High. If you decide to exit the Italian market, you can simply terminate the EOR service and dissolve the local employment contracts. There’s no entity to wind down (beyond the employees’ offboarding).	Low. Closing a local entity in Italy can be as complex as opening one. You would need to go through legal procedures to close the company or branch, which can be time-consuming and costly.

In short, an EOR is usually the best choice for quick, low-commitment expansion or when you have a smaller number of employees to hire in Italy. It lets you test the market or operate in Italy with minimal fuss. On the other hand, if you are planning a very large-scale operation in Italy and have the resources, establishing a local entity could be more cost-effective in the long run and give you more control over your local workforce.

Many companies actually start with an EOR to get their Italian team up and running, and then later transition to opening a subsidiary if and when the volume of business in Italy justifies it. The good news is that using an EOR is a low-risk way to get started – you can always decide to set up a local entity down the road, but if you set one up too early, you’ll have sunk costs and administrative burdens from day one. For most HR teams looking to hire in Italy, an EOR provides the smoothest path to compliance and speed.

How Rivermate Helps with Hiring in Italy

Rivermate is a leading global Employer of Record provider that can simplify your expansion into Italy. With Rivermate as your EOR partner, you gain a combination of technology, expertise, and support that makes hiring and managing Italian employees easy. Here are some of the ways Rivermate helps companies hire in Italy:

• Hire in Italy (and 150+ Countries) with One Partner: Rivermate’s platform has global EOR coverage in over 150 countries, including Italy. This means you can hire in Italy without a local entity, and if you need to expand beyond Italy, Rivermate can support those countries too under the same service. You won’t need to juggle multiple providers – a single unified platform handles all your global hiring.
• 100% Compliance Assurance: Rivermate guarantees full compliance with Italian labor laws and regulations through its network of local legal experts. From ensuring contracts meet Italian standards to correctly calculating INPS contributions and taxes, Rivermate takes on the compliance burden. You can trust that every aspect of your Italian employment will be handled according to the latest laws, which keeps your company protected from fines or legal issues.
• Fast Onboarding and Payroll: Using Rivermate, you can onboard an employee in Italy in a matter of days, not weeks. The platform streamlines the collection of necessary documents and automates much of the process. Once onboarded, your Italian employees will be paid accurately and on time in euros, with payslips and taxes taken care of. Rivermate’s global payroll engine ensures a smooth payday for your team, every month.
• Unified HR Platform: Rivermate provides an all-in-one platform where you can manage employment contracts, payroll, benefits, and time off for your Italian hires (and other international team members) in one place. This unified approach means you have full visibility into your international workforce and can generate reports or manage changes easily. It integrates with the rest of your HR tech stack, so managing a remote team in Italy feels as seamless as managing local employees.
• Flexible and Customizable Solutions: Unlike a one-size-fits-all service, Rivermate offers flexibility to accommodate your needs. Need a custom clause in the employment contract for a senior hire? Need to provide a specific perk to attract an Italian candidate? Rivermate can work with you to tailor solutions, ensuring the arrangements align with your company’s policies and the employee’s expectations. This flexibility sets Rivermate apart from many providers that have rigid policies.
• Dedicated Support: With Rivermate, you won’t feel like you’re navigating Italian employment alone. Dedicated support is a cornerstone of the service – both you and your employee in Italy get a dedicated account manager. You’ll have a direct line (via phone, email, Slack, or WhatsApp) to a real person who understands Italian HR. Whether you have a question about a local practice or need urgent help with an issue, Rivermate’s team is available 24/7 to assist. This high-touch support ensures any challenges are resolved quickly and professionally.
• Smooth Employee Experience: Rivermate strives to make the experience positive for your Italian team members as well. They receive local onboarding guidance, timely answers to HR questions, and all the mandated benefits without hassle. When your employees are well taken care of by the EOR, they can be more productive and engaged in their roles. Rivermate’s approach as an extension of your HR team helps keep your talent in Italy happy and supported.

By partnering with Rivermate for your Employer of Record needs in Italy, you essentially get peace of mind. You can hire the people you need in Italy and trust that every legal, payroll, and tax detail is handled by specialists. This allows you to focus on integrating your new hires into your company culture and achieving business goals, rather than wrestling with Italian administrative procedures. Rivermate’s friendly yet professional team will guide you through every step, making international expansion truly hassle-free.

Conclusion: The Benefits of EOR for Your Italy Expansion

Hiring in Italy doesn’t have to be an overwhelming process. An Employer of Record provides a streamlined, safe, and efficient way to expand your team into Italy. By using an EOR, companies can avoid the heavy lifting of setting up a local entity and instead rely on experts to manage Italian labor compliance, payroll, and HR matters. The result is that you onboard talent quickly, pay them correctly, and comply with all local laws – all without needing in-house Italian HR expertise.

For HR professionals, an EOR like Rivermate offers the best of both worlds: you gain access to Italian talent and keep control over your employees’ work and performance, while the EOR handles the paperwork and legal complexities behind the scenes. This not only saves your team time and resources, but it also reduces risk, giving you confidence that you’re doing everything by the book in Italy.

In summary, the Employer of Record route in Italy allows your company to hire and operate efficiently from day one. You can focus on growing your business and supporting your new employees, rather than getting bogged down in bureaucracy. Whether you’re hiring one specialist or building a whole team in Italy, EOR services make the process faster and more flexible. And with a trusted partner like Rivermate providing a friendly, professional hand every step of the way, you can expand into Italy with ease. By leveraging an EOR, you unlock Italy’s opportunities without the usual headaches – setting your global expansion up for success.