Work in Italy: Compensation Components
In our previous post, we discussed salaries in Italy and how to determine if an offer is competitive. In this post, we will provide more details on how a compensation package is formed in Italy.
COLLECTIVE LABOR AGREEMENTS
Italian employment contracts are mostly governed by national/regional union agreements, similar to Brazil. These agreements determine working hours, the minimum wage for the category, vacation days, and days off. The employment contract between the worker and the company will indicate the applicable agreement.
SALARY COMPONENTS
The Italian salary consists of various components that, when added together, should reach the agreed annual remuneration amount offered by the company. Additionally, this annual amount can be paid in 12, 13, or 14 installments, depending on the collective and individual contracts.
Contractual minimum: This value refers to the category's minimum wage as per the union agreement for the position the professional is being hired for. Annual adjustments, similar to wage increases in Brazil, will be applied to this value.
Superminimum: This value refers to the additional payment the company will make based on the type of work the professional performs and varies depending on qualifications, experience, etc. Whether an annual adjustment is applied to this value or not depends on the employment contract and union agreement.
Bonuses: These are extra amounts to be paid based on the results achieved by the professional, as specified in the employment contract. Such amounts can be paid monthly along with the regular salary or on specific dates.
Let's consider an example: A professional receives a job offer of €40,000 annually. This value typically represents the total compensation the company intends to pay within a year and can be divided as follows:
Annual salary | 40.000,00 |
Number of payments | 13 meses |
Gross monthly salary | 3.076,92 |
Breakdown of Gross Salary according to the components mentioned above
Contractual minimum | 1.800,00 |
Superminimum | 950,00 |
Performance bonus (12 months) | 18,49 |
Annual company bonus | 105,00 |
In the example above, depending on the union agreement, the annual adjustment (wage increase) may apply only to the contractual minimum component (a value indicated in the collective agreement).
Adjustments to the additional values (superminimum and bonuses) will depend on individual agreements with the hiring company. However, there are union agreements that also include adjustments applicable to the superminimum.
Note: The data provided above are mere examples to understand the formation of gross salary and do not represent actual numbers.
PAID VACATION AND LEAVE
Collective agreements also define vacation entitlements in Italy and may vary depending on the job category. For example, the collective agreement for commerce indicates 26 working days of vacation per year, while in the metal-mechanical sector, it may be expressed as four weeks (counted as working days).
In addition to vacation days, paid leave, as specified in each sector's collective agreement, is also applicable. These leaves can be used for personal situations such as marriage and bereavement, but they can also be used for non-official public holidays. In other words, you can enjoy these leaves, in addition to vacation days, as additional rest days.
DEDUCTIONS FROM SALARY
Similar to Brazil, there are various contributions and taxes applicable to the salary, which impact net amounts. Stay tuned as we will discuss taxes and contributions in our upcoming posts.