Italy Employment Legislation Changes 2024
Businesses in Italy will need to be ready to implement these new regulations for their employees in 2024
In this article, we will walk through all the Italy Employment Legislation changes 2024. Let’s understand the key updates and amendments in labour laws that are expected to impact employers across various sectors. We provide insights to help employers understand and prepare for the changes ahead. Join us as we explore what employers need to know to stay compliant and adapt to the evolving regulatory environment in Italy.
The Italian 2024 Budget Law
On December 30, 2023, Italy enacted Law No. 213/2023, the “2024 Budget Law,” which outlines several important changes in employment law for the 2024-2026 period. Here are the key points:
Fringe Benefits
For 2024, employees can receive up to EUR 1,000 in goods, services, or reimbursements (e.g., utility bills, rent, mortgage interest) without it counting as income. This limit rises to EUR 2,000 for employees with dependent children.
Parental Leave
Employees with children under six who take parental leave after December 31, 2023, will receive 80% of their salary for up to two months in 2024, increased from the standard 60% for one extra month.
Contribution Exemptions for Mothers
Mothers with three or more children in permanent jobs can benefit from a social security contribution exemption from January 1, 2024, to December 31, 2026, until their youngest child turns 18. For 2024, the exemption is extended to mothers with two children, though only until the youngest child turns 10. The maximum exemption is EUR 3,000 annually.
Hiring Incentives for Women Victims of Violence
Private employers who hire women who are victims of violence and recipients of “freedom income” will receive social security contribution relief for up to 24 months for permanent contracts or 12 months for fixed-term contracts. If a fixed-term contract is converted to a permanent one, the relief extends to 18 months.
Productivity Bonuses
The 5% reduced tax rate on productivity bonuses remains in place for 2024, benefiting private sector employees earning up to EUR 80,000. The tax-exempt bonus limit is now EUR 4,000 for employees actively involved in improving workplace productivity.
Pensions:
Statutory Minimum Wage Discussions
While Italy has yet to introduce a statutory minimum wage, ongoing discussions are expected to end in new wage standards by November 2024. The EU Directive on Adequate Minimum Wages could significantly influence wage structures, particularly in sectors not covered by collective bargaining agreements.
New Hiring Incentives for Women
A law effective from July 7, 2024, introduces social security contribution exemptions for employers hiring female workers. This exemption is available for up to 24 months, capped at EUR 650 per month, and applies to women hired between September 1, 2024, and December 31, 2025. Eligible women include those who have been:
This initiative aims to promote the hiring of women in areas and industries facing significant employment disparities.
Changes in Employee Disability Related Legislation
A Legislative Decree that came into effect on June 30, 2024, introduced significant updates to Italy’s disability laws. These changes stem from the 2021 delegation law, aiming to align Italian legislation with international guidance from the United Nations and the European Union on disability rights.
The decrees implemented so far include:
National Disability Guarantor
From January 1, 2025, a National Guarantor Authority will be in place to protect the rights of persons with disabilities. Key responsibilities will include:
Updated Definition of Disability
The new decree redefines disability, moving away from a purely medical model to a broader view that considers the interaction between individuals and their environment. Disability is now defined as a “long-term physical, mental, intellectual, neurodevelopmental, or sensory impairment that, in interaction with various barriers, hinders full participation in life on an equal footing with others.”
The terminology has also been updated, replacing terms like “handicap” with “condition of disability” and “person with disabilities.”
Reasonable Accommodation
Although the concept of reasonable accommodation has been present in Italian law, these new decrees clarify its scope. Employers—both public and private—are required to provide accommodations that enable persons with disabilities to perform their jobs on equal terms with others, as long as these accommodations do not place an undue financial burden on the employer. Factors like cost, company resources, and available public subsidies are considered when determining whether a requested accommodation is reasonable.
Disability Manager Role
Public employers must appoint a disability manager to facilitate the inclusion of employees with disabilities. In the private sector, guidelines encourage the hiring of disability managers to support integration efforts. This role can be outsourced to professional associations or external providers with expertise in disability management.
Protection Period for Disabled Employees
In a recent ruling (No. 11731/2024), the Supreme Court determined that dismissing a disabled employee for exceeding the protection period could be deemed discriminatory. Employers are required to consider “reasonable accommodation” before proceeding with such dismissals. Applying standard protection periods without considering the employee’s disability could constitute indirect discrimination, as disabled employees often face greater health risks. Employers bear the burden of proof if an employee provides reasonable evidence of discrimination and must carefully assess absences due to illness, the employee’s disability, and the needs of both the individual and the organization.
New Reform for Recruiting International (non-EU) Talent
In a major step toward simplifying the hiring process for international professionals, Italy has introduced a new reform effective from May 2024. Under this reform, non-EU nationals who have worked for Italian companies or their overseas subsidiaries for at least 12 consecutive months within the past four years can now obtain work permits through an online process. This initiative, first introduced last year, removes the previous quota restrictions, facilitating the entry of skilled foreign workers into Italy.
The Intra-Corporate Transfer Pathway
This reform, outlined in Article 27 of the Consolidated Law on Immigration (Legislative Decree 286/1998), represents a critical step in Italy’s strategy to attract global talent. By eliminating the constraints imposed by quota systems, the Italian government aims to create a more welcoming environment for economic development and innovation.
To further enhance efficiency, the Ministry of the Interior has rolled out an online portal where work permit applications can be submitted. Starting April 16, 2024, eligible applicants can use this streamlined digital platform, replacing the previous paper-based processes.
Eligibility Requirements
To be eligible for this work permit, candidates must have been employed continuously for at least 12 months with the same Italian company or its international subsidiaries within the last 48 months. This criterion underscores Italy’s focus on fostering long-term professional engagements and ensuring continuity in institutional expertise.
Documentation Requirements
Although the process has been simplified, applicants must still meet strict documentation criteria. Employers are required to submit detailed financial records and certificates confirming the employee’s work history. These safeguards ensure transparency and maintain the integrity of the program.
New Rules for Digital Nomads: Residence Permits in Italy
Italy has introduced new regulations for residence permits aimed at non-EU nationals who work remotely in highly skilled roles. These permits are available outside the usual immigration quotas set by the government each year. Under the updated rules, non-EU self-employed or employed individuals can apply for a one-year renewable residence permit, provided they meet the following criteria:
Family members of digital nomads are also eligible to apply for residence permits on the grounds of family reunification.
New Remote Work Agreement for Italian-Swiss Cross-Border Employees
Italy and Switzerland have signed a new agreement to govern remote work for cross-border employees. Effective retroactively from January 1, 2024, and lasting until December 31, 2025, this agreement allows Italian-Swiss cross-border workers to work remotely for up to 25% of their total working hours. This arrangement will not affect their cross-border employee status or the applicable tax regime.
Compensation for Unlawful Fixed-Term Contracts
Following the implementation of new legislation, starting from September 17, 2024, if a labor court deems a fixed-term contract invalid and converts it into an open-ended contract, the employee may be awarded compensation exceeding 12 months’ salary, provided they can demonstrate greater harm. Prior to this date, compensation for such cases was limited to a maximum of 12 months’ salary.
Contributions & Payroll Related Updates
Changes to Income Tax Brackets
Starting January 2024, Italy has revised its income tax structure (IRPEF), reducing the tax brackets from four to three:
This adjustment removes the former 25% bracket for incomes between EUR 15,000 and EUR 28,000. Additionally, for 2024, the tax-free allowance has been temporarily increased to EUR 1,955 for employees earning less than EUR 15,000, up from EUR 1,880. These changes aim to enhance disposable income and stimulate spending. Employers will need to update payroll systems to reflect these new tax rates to avoid compliance issues and potential penalties.
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Increase in Social Security Contributions
Social security contribution rates have been adjusted in 2024 to support the pension system, potentially raising payroll costs:
Employer Contributions: Now approximately 30%. Employee Contributions: Historically ranging between 9.49% and 10.49%, this will continue to vary slightly.
Employers must ensure payroll systems are correctly updated to reflect these changes.
Digital Payroll Registry Implementation
In 2024, Italy introduced a mandatory Digital Payroll Registry, requiring employers to submit payroll data electronically to a centralized system.
New Wage Transparency Laws
New wage transparency rules have been introduced in 2024 to promote fairness in the workplace. Companies must now disclose salary ranges for job roles and justify any pay disparities.
Disclosure: Salary ranges must be included in job advertisements, and internal wage reports must be maintained.
Compliance: HR and payroll teams will need to coordinate to ensure accurate and compliant wage reporting.
Green Payroll Initiative
As part of its environmental efforts, Italy launched the Green Payroll initiative in 2024, encouraging companies to adopt sustainable payroll practices.
Incentives: Companies that digitize payslips and use energy-efficient payroll systems may qualify for tax credits and other financial benefits.
Impact: This initiative promotes environmentally friendly practices while potentially reducing operational costs.
Renewal of the NCBA for Credit & Banking Sectors
On 23 November 2023, the renewal of the National Collective Bargaining Agreement (NCBA) for the Credit Sector was officially signed by trade union associations. This agreement, which had expired on 31 December 2022, now extends until 31 March 2026 and introduces several important changes that will affect many companies within the sector.
Here is a breakdown of the key modifications:
Salary Increase
One of the most significant updates is a monthly salary increase averaging EUR 435 gross, which will be implemented in four phases:
More than 80% of the increase took effect during the first nine months of the agreement’s implementation. Employers will need to assess, on a case-by-case basis, the potential to absorb these increases through “superminimo” pay. Legal guidelines are anticipated to provide clarity on this issue.
Working Time Reduction
A notable update in line with modern working standards is the reduction in working hours. From 1 July 2024, the standard work week has been reduced from 37.5 hours to 37 hours, with no decrease in salary.
Additionally, the number of hours allocated for paid employee training increased from 8 to 13 hours. This change is intended to foster skill development and career advancement. Provisions have been made to enable banks to seek funding for training from bilateral bodies and the European Union.
Maternity and Gender-Based Violence Protections
The renewed NCBA also introduced enhanced protections for female employees during pregnancy, particularly for those deemed at risk. Full economic compensation, which was previously limited to five months, will now be provided throughout the pregnancy.
The agreement also includes an explicit commitment to addressing workplace harassment and gender-based violence. The “Declaration on Harassment and Gender-Based Violence in the Workplace” has been incorporated into the contract to help prevent and combat any forms of intimidation or harm.
Outside Employment
Another key development is the removal of the requirement for employees to seek prior approval from their employer before engaging in additional work outside their regular job. This change aligns with Italy’s Transparency Decree (Legislative Decree No. 104 of 27 June 2022), which restricts employers from prohibiting employees from taking on secondary employment outside regular work hours unless certain conditions are met, such as concerns about health and safety, the integrity of public services, or conflicts of interest.
Sickness and Disability Provisions
For employees with severe disabilities, as defined under Law 104/92, Section 3, Paragraph 3, the number of sick leave days has been increased by 50%, providing enhanced support compared to previous agreements.
The Cohesion Decree: Employment Opportunities for Disadvantaged Groups
On April 30, 2024, the Council of Ministers approved Legislative Decree No. 60, commonly referred to as the Cohesion Decree. This decree introduces several urgent measures aimed at enhancing employment opportunities for disadvantaged groups through contribution relief and other incentives.
Stay in Southern Italy 2.0 ("Resto al SUD 2.0")
This initiative seeks to encourage the establishment of new businesses and self-employment ventures in Southern Italy by providing financial support. The program targets individuals under 35 who face conditions such as marginalization, social vulnerability, unemployment, or discrimination. It also includes those who are inactive or beneficiaries of the “Programma GOL,” aimed at improving employability. Implementation details will be outlined in future decrees.
Self-Employment Incentives
Article 21 of DL No. 60/2024 introduces incentives for self-employed individuals working in sectors such as new technologies, digital innovation, and ecological transition. Unemployed individuals under 35 who establish a business in these areas between July 1, 2024, and December 31, 2025, can benefit from a full exemption from social security contributions (excluding INAIL contributions) for up to three years. This exemption extends to both the business owner and any employees hired on permanent contracts, provided the employees are also under 35 at the time of hiring, with a maximum relief of EUR 800 per month.
Youth Employment Grants ("Bonus Giovani")
This provision offers private employers a full exemption from social security contributions (excluding INAIL contributions) for up to 24 months for hiring non-executive staff under permanent contracts, or for converting fixed-term contracts to permanent ones, between September 1, 2024, and December 31, 2025. This exemption applies to employees under 35 who have never had permanent employment before and is capped at EUR 500 per month per employee. In the southern regions of Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia, and Sicily, the cap increases to EUR 650 per month. However, if the employee is dismissed for objective reasons within six months of hiring, the exemption will be revoked, and the employer must repay the benefit.
Women Employment Grants ("Bonus Donne")
This measure grants private employers a 100% exemption from social security contributions (excluding INAIL contributions) for hiring disadvantaged women under permanent contracts between September 1, 2024, and December 31, 2025. The exemption lasts for up to 24 months and is capped at EUR 650 per month per worker. Eligible women include those without regular paid employment for at least six months in the Special Economic Zone (Southern Italy) or for 24 months regardless of residence. Hires must result in a net increase in employment and comply with EU requirements.
Special Economic Zone Exemption ("Bonus ZES")
Private employers operating in Southern Italy, with up to 10 employees, can take advantage of this incentive, which provides a full exemption from social security contributions (excluding INAIL contributions) for hiring non-executive staff under permanent contracts between September 1, 2024, and December 31, 2025. The exemption applies for up to 24 months, with a maximum benefit of EUR 650 per month per employee. Eligible workers must be at least 35 years old and have been unemployed for at least 24 months.
Labor Incidence Check for Construction Projects
Article 28 of DL No. 60/2024 introduces new rules regarding the assessment of labour costs in construction projects. Project supervisors (or clients in private contracts) and project managers (in public contracts) must verify the labor incidence before final settlement. In private contracts worth EUR 70,000 or more, failure to conduct this verification before paying the final balance may result in an administrative fine ranging from EUR 1,000 to EUR 5,000 for the responsible project supervisor or client.
New Tender Regulations: Key Changes Implemented
A recently enacted law introduces substantial changes affecting tenders for companies and self-employed workers. The key updates are as follows:
Employee Compensation: There is now a mandatory requirement to ensure that personnel involved in tendered or subcontracted works and services receive wages equal to or higher than those outlined in the national collective agreement relevant to the specific industry in which the work is performed.
License Points System for Construction Sites: Beginning on October 1, 2024, companies operating on temporary or mobile construction sites must obtain a license based on a points system. Points will be deducted for violations of employment laws or other legal infractions. If a company holds fewer than 15 points or lacks the required license, it will face administrative penalties and will be barred from participating in public tenders for a six-month period.
This regulatory update aims to promote fair labor practices and enhance compliance within the tendering process.
Incentives for Business Repatriation to Italy
Legislative Decree No. 209 introduces a preferential tax regime for businesses relocating to Italy from non-EU or non-EEA countries, offering a 50% tax exemption on transferred income. However, specific conditions must be met, and the exemption may be revoked if the business moves outside of Italy within certain timeframes.
Article 6 of Legislative Decree No. 209, enacted on December 29, 2023, outlines the details of this new tax regime aimed at encouraging the repatriation of businesses to Italy.
Eligibility and Conditions
The repatriation must involve business activities conducted in a structured form, as individual entrepreneurs are excluded from benefiting under this regime. Furthermore, the relocated economic activities must originate from a country outside the European Union or European Economic Area, meaning businesses previously operating within the EU/EEA are not eligible for this relief.
The Explanatory Report to Legislative Decree No. 209/2023 clarifies that the incentive applies to economic activities transferred to Italy, even if conducted by companies within the same corporate group. However, the transfer must involve the business assets (or a business branch) and not merely the legal entity’s residency. Starting a new activity in Italy that is unrelated to the one previously conducted abroad would not qualify for the relief, as it would not constitute a genuine business transfer.
Additionally, the relief excludes activities already conducted within Italy in the 24 months preceding the transfer.
Tax Exemptions
Income derived from business or self-employment activities that meet the repatriation conditions does not count towards taxable income for personal or corporate income tax purposes or towards the taxable value for IRAP (Regional Tax on Productive Activities) purposes, with a 50% exemption applied to the relevant income.
This favorable regime applies for the tax year during which the relocation occurs and for the five subsequent tax periods, effectively providing the tax benefit for six years.
Forfeiture of Relief
The relief can be forfeited if the repatriated business is relocated (“offshored”) outside of Italy. Specifically, the tax benefit is revoked if the business is moved out of the country within five years after the relief period ends, or within ten years in the case of large enterprises.
In the event of forfeiture, the tax authorities will reclaim (recapture) the unpaid taxes for the period of the relief, with interest. However, no penalties are imposed in such cases.
How Beyond Borders HR Can Help You
These 2024 employment legislation changes for Italy can be challenging for employers to process independently. Beyond Borders HR, a global HR consulting firm, stands ready to assist businesses in understanding and implementing these changes effectively. With our extensive expertise in global HR practices, we ensure that your organization stays compliant with the evolving regulatory landscape. Reach out to Beyond Borders HR for tailored solutions, expert guidance, and seamless integration of these legislative updates into your HR policies and practices. Our team is dedicated to empowering your business with the knowledge and support needed to thrive in this dynamic regulatory environment.