To do business in Italy, it is vital to have a good understanding of its business or work culture. Making the right impression with the right people is the key to success in Italy, and it is important to back this up with the right research on the market and potential business associates.
As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about the Italian work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in Italy to start your expansion well-informed.
Work Culture in Italy
Italian business culture is hierarchical, flexible, and sociable, and their working practices are both focused and person-oriented. Employees in Italy work long hours and are very productive. Communication between peers is both personal and professional.
Nevertheless, there is a growing appreciation of striking a work/life balance through flexitime and taking opportunities for remote working, but in the office itself etiquette still plays a key role. Here are a few tips and working practices you should be familiar with before starting on your expansion:
- Hierarchy: Italian business culture respects the hierarchical structure – job titles and responsibilities are important, and your position in the company may determine how one can speak with or address superiors and subordinates.
Decisions are made from up high, and whilst subordinates may express their opinions, they must be cautious about giving out explicit advice or constructive criticism.
- Work Relationships/Friendships: In Italy, locals generally like to establish relaxed personal relationships. They tend to be curious, asking questions about you, your family, and personal interests. This is important to the establishment of trust in a business relationship.
- Introductions: Introductions in Italy tend to be formal. Shake hands with everyone in the room, and address people by their title and last name. Before meetings begin, business cards are exchanged, and they should have an Italian translation on the reverse.
- Dress Code: A person’s presentation plays an important role in the Italian culture, and a fashionable style is considered as a sign of a person’s social status.
In Italy, a conservative style is mostly accepted, but more informal clothing is common outside of large companies and financial circles. The dress code for men is dark suits, and the dress code for women is dark, elegant pant suits or skirt suits, accessorized with simple jewelry and makeup.
- Punctuality: Punctuality is not a main concern in Italy. Work plans are not taken too strictly, so often some flexibility is built into a deadline. For meetings, guests are expected to be on time for meetings, but be prepared for some delay, due to waiting for their Italian business associate.
- Negotiations: Business communication is generally carried out in English, although the use of a professional translator is common amongst businessmen in Italy. Negotiations tend to be lengthy and are conducted slowly due to the hierarchical decision-making process. Italians also tend to carefully evaluate advantages and risks.
- Agreements: The decision-making process is quite lengthy in Italy, due to the hierarchical structure of many of its businesses. Verbal agreements and handshakes bond an agreement. However, most agreements are in writing. It is also expected of business associates to act on their part of the deal, as unreliability is looked down upon.
- Communication: In Italy, discussions can be very lively. Italians often say what is on their mind, and it is common for them to express any disagreement and constructive criticism during meetings and negotiations.
- Meals: Hospitality plays an important part in Italy’s business culture. Business meals are used to cement relationships, as well as discuss business. Refusing an invitation will most often be seen as an insult.
Italy Minimum Wage
Italy does not have a government-regulated minimum wage and is one of the few European countries that do not have one. There is no minimum wage at national or regional level either.
The minimum wage rate is then determined by collective bargaining agreements on a sector-by-sector basis, or individual contract negotiation – but this is not always applied. However, employees must receive a salary that is equal with the quality and quantity of their work and is also sufficient enough to guarantee a decent lifestyle for themselves and their family.
Wages are not capped, but caps are considered for the purpose of social security contributions.
Probation in Italy
In Italy, probation periods may vary according to the individual or collective agreement, but they are limited to a maximum duration of six months. The probationary period must be included in the employment contract.
Working Hours in Italy
The normal working week in Italy is 40 hours, however, this may vary according to the industry and sector.
In the private sector, Italians tend to work long hours – they are typically 9am to 1pm, and 2:30pm to 6:00pm, Monday to Friday. However, you will find employees still at work after 6pm, which is seen especially with higher management.
In the public sector, typical working hours are from 8am to 2pm, from Monday to Saturday. Many public offices tend to compensate for not working on Sunday with working some afternoons.
Workers are also entitled to a rest period of at least 24 hours every seven days, typically not working on Sundays.
Lunch breaks are kept to a minimum - however, on the occasion of business lunches with Italian business partners, they tend to last long. Business lunches are used to build or reinforce a personal relationship.
Overtime in Italy
Any work done in excess during the work week is considered overtime, according to Italian law. However, it must be with a maximum of 48 hours. The lowest statutory rates for overtime are 10%, but this can be raised by collective bargaining.
If not specified in the employment agreement, overtime cannot exceed 48 hours weekly or 250 hours yearly.
Notice period in Italy
During employment termination, a written notice must be given to the employee in cases of all types of termination, except in cases of dismissal due to serious disciplinary reasons.
Redundancy, Termination / Severance in Italy
A contract of employment in Italy can be terminated in the following ways:
- Dismissal by the employer
- Expiry of a fixed term
- Mutual agreement
Notice periods are set in the collective agreement, and payment is given for unused holiday leave.
Severance pay is also given in all cases of termination. The amount payable is equal to the sum of each annual salary, divided by 13.5.
In cases of collective redundancies, these occur when a company of more than 15 people intends to make at least five dismissals within 120 for business reorganization purposes.
The employer intended to carry out the collective redundancies must inform the employees’ representatives (either the company’s works council or related trade unions) in writing and provide the following information:
- The reason(s) why the redundancies are being done
- The reasons (technical, organizational, or economic) as to why the redundancies cannot be avoided, wholly or in part
- The numbers and job descriptions of the of the redundant employees
- The timetable for the redundancies
- Any measures that were taken regarding the redundant employees
- The proposed method of calculating the redundancy payments (other than those that are written by law or included in collective bargaining agreements)
The redundancy procedure is divided into two phases, which include consultation and negotiations between the employer, the employees’ representatives, and the Regional and Provincial Employment Offices.
Redundancy pay varies to the employee’s length of service and job position.
Pension Plans in Italy
Italy operates a two-pillar pension system, comprising of a mandatory state pension, and occupational pensions.
The first pillar is the public pension system, that consists of a pay-as-you-go insurance plan comprising of various branches – the most important being pension insurance for employees, the self-employed, and retired pensions for civil servants.
The level of the type of pension, as well as the statutory retirement age depend on a set of complicated pension rules. Pension eligibility depends on at least 40 years of contributions.
The second pillar is the occupational pension system, which only 22% of the working population use. These pension funds can either be:
- Closed or conceptual pension funds: these can be implemented in two ways;
- as company pension funds made by a single company
- or as industry-wide funds set up by the employers’ association and trade unions for a specific group of participants
- Open pension funds: these funds are offered by banks, insurance companies, investment management companies for a generic group of participants, or the self-employed.
All pension funds are operated on a defined contribution basis, and there are no minimum funding requirements.
Public Holidays in Italy
There are 11 holidays that Italy follows:
- New Year’s Day – January 1st
- Epiphany – January 6th
- Easter Monday
- Liberation Day – April 25th
- Labor Day – May 1st
- Day of the Founding of the Republic – June 2nd
- Assumption Day – August 15th
- All Saints’ Day – November 1st
- Feast of the Immaculate Conception – December 8th
- Christmas Day – December 25th
- St. Stephen’s Day – December 26th
Employees can receive an additional day’s pay if a public holiday falls on a Sunday of another day that isn’t normally a workday. However, employees working on a holiday are paid overtime.
Each locality also has an additional holiday to honor its patron saint.
For businesses, a summer break is normally taken during August, when most large industries are closed – but this may also be done in July. There is also a winter period between Christmas, New Year’s Day, and the Epiphany where there is reduced business activity.
Sick Leave in Italy
In the case of illness or injury, employees are entitled to paid sick leave for a specific period of time, which varies according to the relevant collective bargaining agreement or individual contract.
This period is generally between six and 12 months. Sick leave is partly paid from the employer, and partly paid from the National Social Security Body – however, this depends on the employee’s qualification and length of service, as well as the business sector.
Employees generally receive full or almost full sick leave compensation. The employer, however, is not entitled to receive any recovery sick pay from the state.
Vacation / Holiday in Italy
Employees in Italy are entitled to a minimum of 28 days or 4 weeks of fully paid annual leave. Collective bargaining agreements and individual contracts, however, can provide a longer period of annual leave.
Two of those weeks can be taken consecutively, at the employee’s request. Two of the four weeks can be taken in the year they were given, whilst the other half can be carried over to the next one for an additional 18 months.
Annual leave cannot be replaced by payment in lieu, except when the employment contract is terminated.
Employees are also able to transfer their leave to employees of the same company, in cases of them needing to look after their minor children due to particular health conditions. This can be done on certain conditions, which must be set out in the applicable collective bargaining agreements.
Maternity/Paternity Leave in Italy
Maternity Leave: Pregnant workers in Italy are entitled to 5 months of maternity leave, which can be taken from two months before delivery and for three months after. However, due to an amendment to the law made in 2019, a pregnant employee may also choose to start her maternity leave after childbirth.
The mother is entitled to 80% of her regular pay from the social security system during her maternity leave.
Pregnant employees may stay at work until the ninth month of pregnancy, on the condition that prior authorization is given by their gynecologist.
During pregnancy, the employee must not be given tasks that may endanger her health. Pregnant mothers may also be transferred to a different job with no pay reduction, if necessary, in order to protect the mother’s or the child’s health.
Paternity Leave: Paternity Leave in Italy consists of 5 days, which can be taken during the first five months following the child’s birth. A working father can benefit from an extra leave day, which may be taken from the mother’s maternity leave (as long as she agrees to it).
Parental Leave: Parents in Italy are also entitled to parental leave of up to six months per parent (with a limit of 10 altogether), during the child’s first 12 years. Parental Leave pay is 30 percent of their average daily pay.
During parental leave, parents may also make requests for flexible working arrangements. This, however, should be given priority to mothers during the first three years after the end of maternity leave, and both parents in case of a child affected by disability.
Bonus in Italy
It is common in Italy for employees to be rewarded through contractual bonus payments or discretionary bonus payments. In the case of contractual bonuses, they are subject to specific conditions regarding the bonus scheme.
For the banking and insurance sectors, companies in Italy must comply with the compensation policies set by the Bank of Italy, as well as the Italian Institute for the Supervision of Insurance.
Car allowance Italy
Employees in Italy are entitled to car allowances or mileage reimbursement rates. The rates will vary depending on whether the vehicle is employee-owned or company-owned, as well as they type of car being used.
For personal cars, employees can be reimbursed for 44 cents per kilometer for business trips, and tax-free up to a certain annual maximum.
For company cars, in contracts that were entered into before 2020, 30% of the annual maximum of 15,000km mileage was in a taxable benefit (to account for personal use too).
In cases of contracts entered into after 2020, the taxable amount now depends on the emission rate of the car, which ranges from 25-50%. The remainder is non-taxable as its allocated to business use.
Don't suffer from culture shock, call us!
To expand into Italy fruitfully, an understanding of the local business culture is vital for your business’ success. With Bradford Jacob’s expertise and knowledge of employment through our Professional Employment Organization (PEO), as well as our experience with Italian customs, law, compliance, and tax regulations, we can assure the recruitment of the right people to make your expansion goals a reality.