Mandatory Employee Benefits in Italy

Categories of Workers

In Italy, and as far as contracts are concerned, there are four categories of workers and each category is able to claim its own set of rights and benefits, some of which overlap with the others and some that do not. Generally, the higher the position within a company, the more benefits are afforded. The categories are:

• “Dirigente” (executive): usually, national collective agreements set the general principles that regulate their relationship with the employer, but general and specific conditions can also be negotiated through individual agreements;
• “Quadro” (middle manager): these employees who, though they are not top executives, carry out tasks that are important for the growth and success of the company they work for. Employers are required to insure “quadri” against claims for civil liability brought by third parties;
• “Impiegato” (white collar employee): these tend to be formal employees and civil servants;
• “Operaio” (blue collar employee).

Employees that have full-time contracts generally receive better benefits than those who are covered purely by INPS (see below). Those with guaranteed contracts often receive:

• Sickness compensation: this is available after three days of absence from work. Between the 4th and 20th day of illness, statutory sick pay amount is equal to 50% of average daily pay, moving to 66.66% between the 21st and 180th day. This benefit ends when the illness does. You are entitled to a maximum of 180 days per calendar year.
• Maternity and paternity pay: maternity allowance is equal to 80% of pay and is payable for 5 months (2 prior to and 3 after the date of birth or 1 month prior to and 4 after). Paternity leave is equal to 100% of pay for seven days.
• Incapacity and disability benefits: Workers registered with obligatory forms of insurance for Disability, Old Age and Survivors, or special packages for independent workers, who are no longer able, completely or in part, to return to working activity, are protected by economic benefits (incapacity benefits, disability pension) to help ease the state of need and adverse economic position in which they find themselves.
• Old age & survivors’ pensions: the legal retirement age in Italy is 67 for both men and women. A survivors’ pension is payable to family members, subject to certain conditions, if the deceased was already a pension holder;

In addition to the above, those employees with permanent contracts acquire a high degree of tolerance, in the sense that it becomes very difficult to fire them, another reason that many Italian companies prefer to hire workers who use the Partita IVA.

If, however, you belong to any of the types of workers indicated below—most likely without a full-time or permanent contract, then you are instead insured solely by the National Institute for Social Security (INPS, in Italian). The above benefits do not apply if you are:

• An employee of the private sector signed up to the Employed Workers Pension Fund;
• An employee in the public sector;
• An independent worker;
• Self-employed (working with a Partita IVA, also known as a VAT number).

That said, workers here maintain some rights regarding their client’s right to unilaterally amend a contract, certain rights concerning notice periods, payment terms, IP rights, maternity, sickness and unemployment benefits.

Healthcare Services and Benefits

The largest benefit—for every resident and worker—that Italy, and wider Europe, offers is access to free healthcare services. Italy’s National Health Service is funded by all residents through taxes, along with co-payment of the cost of medicines and health services, and is managed by the individual regions through the Local Health Authorities. Some other benefits under the Italian welfare system include:

• Civil incapacity and long-term care benefits: this supports workers suffering from chronic physical and/or mental incapacity preventing them from being self-sufficient and, therefore, makes it impossible for them to provide for themselves.
• Family benefits: this includes a household allowance, which guarantees support for families of employed workers whose household is made up of multiple people and who have an income lower than that established annually by law.

Accidents, Unemployment and Social Inclusion

Social security contributions are calculated on a percentage basis relative to gross income. Generally, an employer is responsible for paying these costs. However, in the case of self-employed workers, it is the employee who is responsible for paying (upwards of a 40% tax). This is one of the reasons that employers prefer to offer, and often only offer, contracts through a Partita IVA. There are three different schemes for unemployment benefits and each one is a cash benefit that must be requested. To be requested, you must fill out the appropriate paperwork:

• INASPI: is granted in the event of involuntary redundancy (meaning that you lose your job) or expiry of a fixed-term employment contract, to employed workers, including apprentices, cooperative members, artistic staff and fixed-term workers in public administration;
• DIS-COLL: is given in the event of involuntary redundancy to workers with atypical employment contracts.
• ISCRO: is given to self-employed Professionals with a VAT registration number (Partita IVA) to cover a risk of partial loss of income.
• Social inclusion and income support measures: this form of social assistance based on social solidarity and is guaranteed in the form of economic benefits and services funded by the taxpayer, at both national and local levels, using the Regions’ and the Local Authorities’ resources, to promote social inclusion and income support.

The National Institute for Insurance against Accidents at Work (INAIL) manages the insurance system, funded through contributions paid by employers, which protects workers in case of:

• Accidents at work: accident social security protects all workers employed in professional or commercial activities which, depending on their nature, may expose them to the risks in the workplace.
• Occupational disease or death at the workplace: as for occupational disease, this protection is accessed through a “mixed” system. This means that occupational diseases are not only those listed in the various EU reference tables but also any other illness that the employee can prove is directly connected to his/her professional activity.

The services provided in the event of an accident at work or occupational disease can be of two kinds:

• Treatment and recovery: health services, such as support, prosthetics, assistance and rehabilitation with the goal of ensuring the maximum possible recovery of independence and mental and physical resources, and thus his/her reintegration into daily life;
• cash: compensation, either a one-time payment or through annuities.

An Update to Contractual Transparency

On 13 August 2022 Decree no. 104 of 27 June 2022, which was to implement EU Directive 2019/1152 on transparent and predictable working conditions, went into effect. This is the so-called “Transparency Directive.” It updated many of the outdated aspects of what should be included in a written contract presented to employees. In addition to all of the information that is typically included in employment contracts (i.e., identities of the parties, remuneration, and working hours, category of work for which the worker is employed, start date, duration and conditions of probationary period, place of employment and place of work, etc.), employers and contracting companies are now required to provide all workers the following:

• training rights, if there are any;
• The duration of holiday leave, as well as any other type of paid leave, including leave to guarantee a healthy work-life balance;
• procedure and notice terms for termination of work by either party;
• details about worker salary, including the timeline and payment method;
• work schedule, including overtime and any related payments;
• variability in working schedule and the relevant specific conditions, such as the existence of a guaranteed minimum number of hours and relevant remuneration;
• collective bargaining agreements applied to the employment relationship;
• social security/insurance contributions.

Any employer or company who fails to comply with these new obligations may be fined by the labor authorities if employees file complaints, the sanctions ranging from EUR 250 to EUR 1,500 for each worker involved in the violation. A note on the abovementioned collective bargaining agreements: Unlike EU States, Italy does not have a minimum wage determined by the law and valid for all the workers belonging to a given trade. Collective negotiations are binding only for employers registered with the relative trade unions. Constitutionally, however, all employers, even those not involved with trade unions, must guarantee that their employees receive wages proportionate and adequate to the quality and quantity of the activities performed.

Are you interested with this topic? Then you might want to read our articles about Italian Digital Nomads VISA, Social security contributions and occasional self-employment, Calculating Italian Salaries: how to get to your real compensation and AVERAGE SALARY IN ITALY: GENDER, REGION AND CITIES’ DIFFERENCES.