A Practical HR Guide For Employee Termination in Italy
Your up-to-date guide for employee termination in Italy in a fair, legal and practical manner for international HR leaders and business owners.
Employers must be aware not just of the civil code provisions, but also specific reforms, including post-Jobs Act rules, protections for economic dismissals, and requirements under national collective bargaining agreements. Any misstep in notice, reasoning, or severance calculation can lead to reinstatement orders, significant compensation, or reputational risk.
This guide for employee termination in Italy provides a detailed overview for both employers operating in Italy and international businesses with Italian operations: from the grounds for dismissal to calculating TFR, dealing with just cause vs objective termination, and managing the procedural risks.
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Grounds for Termination in Italy
Employment termination in Italy is heavily regulated, and employers must demonstrate a legitimate reason before ending any employment relationship. Italian law recognises three primary legal grounds for dismissal: just cause, justified subjective reason, and justified objective reason. Each category has different requirements, levels of proof, and consequences for severance and reinstatement.
Just Cause (Giusta Causa)
Just cause applies to the most serious forms of misconduct. These are situations where the employment relationship cannot reasonably continue, not even during the notice period.
Examples include theft, fraud, violence at work, severe insubordination, or conduct that irreparably damages trust.
A dismissal for just cause allows the employer to terminate without notice. However, the misconduct must be clearly proven and proportionate. If challenged, courts closely examine whether the behaviour truly made continued employment impossible.
Justified Subjective Reason (Giustificato Motivo Soggettivo)
This ground covers misconduct or performance issues that are serious, but not serious enough for immediate termination. It includes lesser breaches of company policy, repeated low performance despite warnings, or behaviour inconsistent with contractual obligations.
Unlike just cause, this form of dismissal requires notice, and the employer must show that the employee’s actions made the continuation of the employment relationship difficult or untenable.
Documentation, performance reviews, and prior warnings are essential to defend this type of dismissal.
Justified Objective Reason (Giustificato Motivo Oggettivo)
This relates to business-driven reasons rather than employee behaviour. Companies may rely on objective grounds when:
- The role becomes redundant due to restructuring,
- Technological changes eliminate the need for the job,
- Cost-saving measures require workforce reductions, or
- The company experiences persistent economic difficulty
Objective dismissals require proper justification and a fair process, including verifying whether redeployment to another suitable role is possible. Italian courts and labour inspectors closely scrutinise whether the redundancy is genuine and not used as a disguised disciplinary dismissal.
Employment Contract Types and Their Impact on Termination
Italy recognises several types of employment contracts, and the rules for ending employment differ depending on the nature of the contract. Understanding how each contract works is crucial because termination rights, notice periods, and severance obligations vary accordingly.
Open-Ended Contracts (Contratto a Tempo Indeterminato)
This is the standard and most common form of employment in Italy. Termination of an open-ended contract must always be supported by just cause, justified subjective reason, or justified objective reason.
Employers must follow all statutory procedures, apply the correct notice period, and provide the employee with their accrued TFR (severance). Unlawful termination can result in reinstatement or substantial compensation based on the rules introduced by the Jobs Act and later amendments.
Fixed-Term Contracts (Contratto a Tempo Determinato)
Fixed-term contracts automatically end on the agreed date and do not require a formal dismissal, provided the employer allows the contract to expire normally.
However:
Early termination is only allowed for just cause.
If the employer ends the contract early without a valid reason, they must compensate the employee for the wages they would have earned until the scheduled end date.
Fixed-term contracts are subject to strict limits on duration and renewals. Exceeding these limits can convert the contract into an open-ended one, giving the employee enhanced protections.
Probationary Period (Periodo di Prova)
During an agreed probation period, which varies depending on job category and the applicable collective bargaining agreement (CBA/CCNL), either party may end the employment without providing justification.
Although no formal reason is required, employers must still avoid discriminatory motives and issue a termination letter if requested.
Part-Time Contracts
Part-time employees enjoy the same termination protections as full-time staff. Employers cannot end these contracts based solely on reduced hours, and dismissals must follow normal legal grounds.
If changes in business structure require modifying hours, employers must comply with CBA rules and consult the employee.
Apprenticeship Contracts (Contratto di Apprendistato)
Apprenticeship contracts combine work and training. They may be terminated at the end of the training period, but during the apprenticeship the employer can only terminate for just cause or justified reason.
If the employer does not give notice of non-renewal at the end of the apprenticeship, the contract automatically converts into an open-ended one.
Agency and Temporary Workers
Agency workers are employed by a staffing agency but assigned to user companies. If the company no longer requires the worker, the agency must reassign or manage the termination in compliance with Italian labour regulations and applicable CBAs.
Procedural Requirements for Lawful Termination
Italy imposes strict procedural rules on employers when ending an employment relationship. Even when a valid reason exists, a dismissal can still be deemed unlawful if the employer fails to follow the correct steps. The required process varies slightly depending on whether the dismissal is for misconduct or for objective business-related reasons.
Disciplinary Dismissals (Just Cause or Justified Subjective Reason)
- The employer must display the company’s disciplinary code in the company’s premises;
- The employer must notify the employee in writing of the allegations relating to the alleged breach of contractual duties; the allegations must specify in detail the breaches made by the employee of his employment duties;
- Within 5 days of receiving the employer’s notice, the employee is entitled to a hearing with the employer and to submit his case against termination;
- The employee may decide to be represented by a trade union representative;
- The notice of termination must be in writing and include the grounds. for termination;
- The employer may not terminate the employment within 5 days of the employee’s receipt of the notice.
Skipping any of these steps, even if the misconduct is evident, may render the dismissal invalid.
Economic or Organisational Dismissals (Justified Objective Reason)
For terminations based on business needs, the employer must demonstrate that:
The role is genuinely redundant,
The decision is supported by economic or organisational evidence, and
Redeployment to another suitable role was assessed.
In most cases, the employer must also follow the mandatory pre-dismissal conciliation procedure introduced by the Jobs Act (for employees hired after March 2015). This procedure takes place before the local labour office and provides an opportunity for settlement.
Written Notice Requirement
All dismissals must be formalised in writing, and the letter must specify the exact grounds.
If the employee requests further justification, the employer must provide a detailed explanation within seven days.
A dismissal communicated orally is automatically invalid.
Role of Collective Bargaining Agreements (CBAs/CCNLs)
CBAs play a crucial role in termination procedures. They often specify:
- Extended notice periods,
- Additional disciplinary steps,
- Documentation needed for objective dismissals,
- Protection of certain job categories.
Employers must always check the applicable CBA, as non-compliance can lead to reinstatement or financial penalties.
Employee Right to Challenge the Dismissal
An employee who believes the dismissal is unfair can file a claim before the labour court. Before doing so, they must send a written challenge to the employer within 60 days, followed by a court filing within 180 days.
Failure to follow the procedural rules is a common reason why dismissals are overturned, even when the employer had valid grounds.
Notice Periods in Italy
Payment in lieu of notice is permitted, however garden leave is not. Therefore, employees either continue to work as normal, or their employment is terminated immediately with a payment in lieu of notice.
How Notice Periods Are Determined
Most CBAs divide employees into categories such as:
- Executives (Dirigenti)
- Managers or Middle Managers (Quadri)
- White-collar workers (Impiegati)
- Blue-collar workers (Operai)
Each category has its own notice tables, often increasing with length of service. Notice periods typically range from 15 days to several months, with executives commonly entitled to much longer durations.
For example, under the “CCNL” for Manager/Executive of the Commercial sector,
In case of dismissal, the employer must give a notice as below:
Length of service less than 4 years, 6 months;
Length of service 4 to 8 years, 8 months;
Length of service 8 to 12 years, 10 months;
Length of service more than 12 years, 12 month.
In case of dismissal of an executive who has met retirement conditions, the notice period is equal to 30 days the number of months necessary to actually start to receive the pension.
In case of resignation, the employee must give a notice as below:
Length of service less than 2 years, 2 months;
Length of service 2 to 5 years, 3 months;
Length of service more than 5 years, 4 months.
Notice period begins from the 1st day of the month following the date of dismissal or resignation.
Notice may be worked or paid in lieu (payment equal to the remuneration provided during the notice period).
No notice is required in case of dismissal for just cause. In case of resignation for just cause, the company must pay 133% of the payment in lieu of notice.
Under the “CCNL” for Quadri employees of the commercial sector, the employer must give a notice as below:
- Up to 5 years’ service, 60 calendar days.
- Over 5 years service and up to 10 years, 90 calendar days.
- Over 10 years service, 120 calendar days.
Key Principles
1. Notice must always be given in writing
The employer must communicate the dismissal in writing, and the notice period starts from the day the employee receives the letter.
2. Notice can be worked or paid in lieu
Employers who prefer immediate termination may provide indemnity in lieu of notice, equal to the salary and benefits the employee would have earned during the notice period.
3. Notice does not apply in cases of just cause
If the employer invokes giusta causa (serious misconduct), no notice or payment in lieu is required.
4. Notice rules also apply to resignations
Employees must comply with the same notice rules when resigning, unless leaving for just cause.
Special Cases
- Fixed-term contracts: notice is not required when the contract expires naturally; however, early termination for just cause still follows the same principles.
- Apprenticeships: if the employer decides not to continue employment at the end of the training period, they must give proper notice based on the CBA.
- Executives: some CBAs and individual contracts grant very long notice periods, often 4–12 months.
Collective Redundancies in Italy
When Collective Redundancy Rules Apply
A collective redundancy occurs when an employer intends to dismiss, within the same production unit or across the entire company:
At least 5 employees
Within 120 days,
For reasons not related to misconduct (i.e., economic, organisational, or technological reasons).
These rules apply even if the dismissals are spread out, as long as the threshold is met.
Mandatory Steps in the Collective Redundancy Procedure
Once the threshold is met, the employer must follow a formal process involving unions and labour authorities.
1. Written notice to trade unions
The employer must notify:
Workplace union representatives (if any),
Local branches of the most representative trade unions.
The notice must explain:
The reasons for the planned redundancies,
Number and job categories of employees affected,
Total workforce numbers,
Selection criteria (e.g., length of service, family responsibilities, technical needs),
Timing of the dismissals, and
Any measures being considered to reduce the impact (redeployment, retraining, part-time options).
2. Union consultation period
A consultation period of up to 45 days follows, where unions and the employer discuss alternatives to dismissal. The aim is to explore solutions such as:
Job-sharing or reduced hours,
Reassigning workers to different sites,
Retraining or reskilling,
Voluntary exit programmes.
Even though the parties must negotiate in good faith, there is no obligation to reach an agreement.
3. Notification to labour authorities
Apart from notifying he works council, the employer must notify the local Employment Offices and send the redundancy plan to:
- The Regional Labour Office (Regione), and
- The authorities may participate in meetings and propose alternatives or support measures.
4. Final communication and selection of employees
After the consultation period ends, whether an agreement is reached or not, the employer may proceed with the dismissals. The selection of employees must follow objective and fair criteria, typically:
Length of service,
Family responsibilities,
Technical and organisational needs.
Failure to justify the selection criteria is a common reason courts overturn dismissals.
Employee Rights and Remedies in Collective Redundancy
Employees affected by collective redundancies are entitled to:
- Notice or payment in lieu,
- TFR (end-of-service severance),
- Any additional amounts required by the applicable CBA,
- Access to NASpI unemployment benefits (discussed in detail below), and
- Support measures under active labour market policies.
If the employer fails to follow the procedure, courts may order:
Reinstatement (in certain cases), or
Compensation ranging from several months’ salary to the statutory caps under the Jobs Act rules.
Severance Pay (TFR) and Final Payments
Every employee in Italy, regardless of contract type, seniority, or reason for termination, is entitled to TFR (Trattamento di Fine Rapporto). This is a mandatory severance payment accrued throughout the employment relationship. TFR is not a penalty or compensation for dismissal; rather, it is deferred salary that must be paid when the employment ends.
What Is TFR and How It Works
TFR is calculated annually and set aside either:
- Directly by the employer, or
- Paid into a pension fund if the employee has chosen to participate in a private scheme.
Each year, the TFR accrual is equal to:
The employee’s annual salary divided by 13.5,
Plus revaluation based on 1.5% + 75% of inflation (ISTAT) – (revaluation mechanism applied each 31 December)
TFR is therefore inflation-protected, and amounts vary significantly depending on length of service.
When TFR Is Paid
TFR must be paid:
At the end of employment, regardless of whether the employee resigned, was dismissed, or a fixed-term contract expired;
Within the timeframe established by the relevant CBA (usually within 30–60 days).
Delays can trigger penalties and legal claims.
Additional Payments on Termination
Depending on the circumstances, employees may also be entitled to:
Payment in lieu of notice (if the employer does not require them to work their notice period),
Unused holiday pay,
Pro-rated 13th or 14th month salary, where applicable,
CBA-mandated allowances or indemnities, especially for executives (dirigenti).
Executives often receive additional severance protections under their sectoral agreements, including “supplementary indemnities” that can equal several months of salary.
No Statutory Severance for Redundancy
Italy does not impose extra redundancy severance by default, except where required by:
Specific collective redundancy agreements,
Company-level agreements, or
Executive-level CBAs
In many restructuring cases, employers offer voluntary severance packages to encourage mutually agreed exits and reduce litigation risk.
Tax Treatment
TFR is subject to a separate and often lower tax rate, calculated through a special substitute tax system designed to reduce the burden on employees. This tax regime is complex and applied automatically by payroll, but employers must ensure calculations are correct.
Employee Protections, Unfair Dismissal, and Remedies
Italian labour law strongly protects employees against unlawful dismissal. Even when an employer believes they have a valid reason, courts may overturn the termination if the justification is weak or if the employer failed to follow the required procedure. Remedies vary depending on the employee’s hiring date, company size, and the severity of the employer’s breach.
Different Legal Regimes: Pre–Jobs Act vs Post–Jobs Act Employees
Italy’s dismissal consequences differ based on when the employee was hired:
Hired before 7 March 2015 → Protected by Article 18 of the Workers’ Statute, which offers broader reinstatement rights.
Hired on or after 7 March 2015 → Covered by the Jobs Act reforms, which favour monetary compensation except in the most serious cases.
As a result, two employees in the same organisation may be entitled to different remedies if dismissed unfairly.
When a Dismissal Is Considered Unlawful
A dismissal can be declared unlawful if:
The grounds for dismissal are not supported by evidence,
The employer fails to follow procedural steps (e.g., disciplinary procedure),
Selection criteria in collective redundancies are improper,
The dismissal is discriminatory or violates fundamental rights,
The dismissal lacks a clear written justification.
Remedies for Unfair or Unlawful Dismissal
1. Reinstatement (Reintegrazione)
Reinstatement is still possible, but only in specific scenarios:
Discriminatory dismissal
Dismissal without any valid reason
Dismissal based on a non-existent fact (e.g., fabricated misconduct)
Certain procedural violations for employees protected under Article 18
In reinstatement cases, the employer must also:
Pay wages from the dismissal date until reinstatement (subject to caps), and
Restore the employee’s seniority rights.
Reinstatement is more common for employees hired before 7 March 2015, but still possible in rare cases for post-Jobs Act workers.
2. Monetary Compensation
Where reinstatement is not applicable, courts may award financial compensation based on statutory scales:
A) For Post–Jobs Act Employees (hired after 7 March 2015)
Compensation ranges from:
- A minimum of 6 months’ salary, up to
- A maximum of 36 months’ salary,
depending on seniority and company size.
B) For Pre–Jobs Act Employees (hired before 7 March 2015)
Compensation can be:
- 15 to 27 months’ salary, or
- 12 to 24 months if the dismissal is unjustified but factual grounds existed.
3. Damages for Procedural Violations
Even if a dismissal is substantively valid, failing to follow the correct process (e.g., skipping the disciplinary hearing) can result in:
- An indemnity of 2 to 12 months’ salary,
- Without reinstatement.
This is one of the most common employer mistakes.
3. Protection Against Discrimination or Retaliation
Any dismissal based on:
- Gender, age, religion, race,
- Political opinion, union activity,
- Pregnancy or parental status,
- Whistleblowing or retaliation
is automatically null and triggers mandatory reinstatement.
Pregnant employees and employees on maternity/paternity leave receive heightened protection, and dismissals during these periods are almost always invalid.
Challenging a Dismissal: Employee Deadlines
Employees must challenge a dismissal within:
- 60 days to formally dispute the termination, and
- 180 days to file the claim in court.
If the employee misses these deadlines, the dismissal becomes final even if it was unlawful.
Resignations, Retirement, and Probationary Terminations
Not all employment relationships in Italy end through dismissal. Several situations, such as voluntary resignation, retirement, or termination during probation, follow different rules but still require employers to meet certain legal obligations.
Resignations (Dimissioni)
Italian law requires a formal procedure for resignations to ensure they are voluntary and protect employees from coercion.
Mandatory Online Procedure
Notice Periods
Employees must respect the notice period set out in the applicable Collective Bargaining Agreement (CBA).
If they leave without working the notice period:
The employer may deduct the corresponding amount from the final payslip,
Unless resignation is for just cause (e.g., unpaid wages, harassment, unilateral changes to working conditions).
Employer Obligations
Even when an employee resigns, the employer must:
Provide final pay,
Calculate and pay TFR,
Issue mandatory employment termination forms (cessazione rapporto di lavoro).
Retirement
Retirement usually occurs when the employee meets the age and contributory requirements for an Italian state pension. Termination for retirement can happen in two ways:
Employee-Initiated Retirement
Employees may choose to retire once pension eligibility is reached. Standard resignation and notice procedures apply.
Employer-Initiated Retirement
Employers may initiate retirement only:
- At the statutory retirement age (currently 67, subject to adjustments), and
- After confirming the employee qualifies for a full pension.
The dismissal must be communicated in writing and must respect the CBA notice period. Employers cannot force early retirement unless the employee explicitly agrees.
TFR and Retirement
Retirement counts as a normal termination event. The employee receives full TFR and any additional contractual entitlements.
Probationary Termination (Periodo di Prova)
Probation in Italy is regulated by law and CBAs, and its duration varies depending on job category.
Termination During Probation
Either party may terminate the contract during probation:
- Without giving reasons,
- Without notice, unless required by the CBA,
- As long as the termination is not discriminatory.
Employers must still act in good faith and avoid dismissals linked to protected characteristics such as pregnancy, union activity, or illness.
Key Considerations
If the employer allows the probation period to expire without action, the employment automatically continues as a permanent relationship.
Probation cannot be extended beyond the limits set by the CBA.
Any misconduct termination during probation still requires written communication.
Documentation, Exit Formalities, and Final Employer Obligations
When an employment relationship ends in Italy, whether through dismissal, resignation, expiration of a fixed-term contract, or retirement, employers must complete a series of mandatory administrative steps. These obligations ensure compliance with Italian labour law and prevent disputes around final pay, contributions, or employee rights.
Mandatory Termination Communication (UNILAV)
Employers must notify the Ministry of Labour of any termination through the UNILAV online system.
Key points:
The communication must be submitted within 5 days of the termination date.
It applies to all types of terminations: dismissals, resignations, retirement, mutual agreement, and fixed-term expiry.
Failure to submit or late submission can result in administrative penalties.
This is one of the most strictly enforced obligations under Italian labour rules.
Final Payslip and Settlement (Cedolino di Cessazione)
The final payslip must include:
Accrued but unused annual leave,
Outstanding wages, bonuses, or commissions,
TFR payment,
Any notice period indemnity (if notice was not worked),
Pro-rated 13th or 14th month salary (if applicable under CBA).
All payments must align with CBA rules, which often impose industry-specific calculations and timing.
TFR Pay-Out (Trattamento di Fine Rapporto)
TFR must be paid to the employee regardless of the reason for termination, except in rare cases such as certain apprenticeship non-confirmations. Employers must:
Calculate TFR based on annual salary accruals + inflation adjustments,
Deduct any amounts already transferred to an external pension fund (if chosen by the employee),
Pay the TFR at termination unless deferred through supplementary pension arrangements.
Some CBAs require payment within a specific number of days; otherwise, “within a reasonable timeframe” is the standard practice.
Return of Company Property
Employers should document the return of:
Laptops, phones, and equipment,
Badges and access cards,
Company vehicles,
Confidential documents or data.
It is recommended to use a handover checklist to avoid later disputes, especially in cases involving senior staff with sensitive information access.
Delivery of Mandatory Documents
Upon termination, employers must provide:
CUD certificate (tax summary for the year, typically provided the following March),
PAY history and relevant payroll documents,
Documentation required by supplementary pension or insurance funds (if applicable),
A certificate confirming employment duration and role (certificato di lavoro), if requested by the employee.
These documents may be needed by the employee for unemployment benefits, pension claims, or future employment.
Unemployment Benefits (NASpI) Support
While not a legal requirement, many employers in Italy proactively support employees by:
Issuing timely documentation needed for the employee’s NASpI unemployment application,
Confirming termination reasons in a clear manner (except for misconduct cases).
NASpI eligibility is closely tied to the cause of termination, so accuracy in the employer’s documentation is essential.
NASpI unemployment benefits are available for many involuntary job losses. Eligibility generally requires at least 13 weeks of contributions in the 4 years before termination and at least 30 days worked in the previous 12 months.
Internal Exit Procedures
Companies often include:
Deactivation of system access,
Revocation of authorisations,
Final handover of projects and responsibilities,
Exit interviews (optional but common).
For senior employees, a more formal handover protocol may be required.
How Beyond Borders HR Can Help
Managing employee termination in Italy can be complex, especially with the country’s strict protections, formal procedures, and evolving case law. Errors in documentation, timelines, or justification can expose companies to reinstatement orders, significant damages, and long litigation.
Beyond Borders HR helps businesses reduce these risks through practical, hands-on support at every stage of the offboarding process. Our team assists with:
Assessing the grounds for termination
We review the circumstances of each case, comparing them to current Italian legal standards (including distinctions between “giusta causa,” “giustificato motivo soggettivo,” and “giustificato motivo oggettivo”) to ensure the decision is legally defensible.
Ensuring compliance with notice, procedures, and documentation
From drafting disciplinary letters to preparing evidence files and ensuring timelines are followed precisely, we help employers avoid procedural errors that often lead to disputes.
Supporting economic and restructuring-related dismissals
We guide organisations through the steps required for individual and collective redundancies, including union consultation requirements, selection criteria, and communication obligations
Managing risk around protected employees and unfair dismissal claims
Our experts flag any heightened protections (e.g., maternity, union representatives, workers with disabilities) and help employers structure decisions to minimise legal exposure.
Advising on TFR (severance), final pay, and settlement agreements
We provide clarity on statutory payments, TFR calculation, and options for negotiated settlements before or during litigation.
Cross-border consistency for multinational employers
Many companies struggle to align global policies with Italian employment rules. We help HR teams design compliant processes that still fit global operational standards.
Whether your organisation is handling a single dismissal or restructuring across multiple EU markets, Beyond Borders HR ensures every step is legally compliant, clearly documented, and carried out with care and transparency.
Need help handling dismissals in Italy with confidence? Chat to Beyond Borders HR for expert guidance.
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These amounts increase if procedural steps were skipped.