---
title: "Italy Termination & Severance 2026 | TFR, Notice, Procedure"
description: "Italy 2026: TFR accrues from day one on all exits, unfair dismissal protection applies from day one, collective rules engage at 15 employees."
canonical: https://www.teamed.global/country-hiring-guides/italy/termination-and-severance
---

Italy · Termination child

Served by Teamed vetted partner-entity network in Italy

# How do you *terminate an employee in Italy* in 2026?

Every Italian employment contract carries a TFR liability that accrues from the first day of work and must be paid out on termination regardless of the reason. There is no qualifying period before unfair dismissal protection applies, and collective redundancy procedures under [Law 223/1991](https://www.alassistenzalegale.it/en/collective-dismissals-everything-you-need-to-know/) engage as soon as your Italian headcount reaches 15 employees.

Last reviewed 12 June 2026 · Italy guide

![A wide piazza in an Italian city at dusk, ochre buildings lit by warm street lamps.](/images/country-guides/italy-termination-severance.webp)

Illustration · Milan, Italy

Answer.cite this

In Italy, every dismissal needs a valid reason from the first day of employment. There is no qualifying period before protection applies. Notice periods are not set by a single law. They come from the sector-specific CCNL (the national collective bargaining agreement) and vary by role category and seniority.

Every employee in Italy builds up a TFR (trattamento di fine rapporto) entitlement from day one. Each year, the employer sets aside annual gross salary divided by 13.5. TFR is paid out on every exit: resignation, dismissal, or contract expiry. There is no cap on the total amount ([Civil Code art. 2120](https://leglobal.law/countries/italy/employment-law/employment-law-overview-italy/07-termination-of-employment-contracts/)).

Companies with 15 or more employees must follow collective redundancy rules when 15 or more dismissals are planned within a 120 days window. The consultation can last up to 75 days in total. Skipping it can lead to reinstatement orders.

![A formal envelope sealed with a wax stamp on a wooden desk in an Italian office.](/images/country-guides/italy-termination-polaroid-1.webp)

Lettera di licenziamento

## What valid grounds exist for termination in Italy?

In Italy, every dismissal needs a valid reason from the first day of employment. There is no qualifying period. Unfair dismissal protection applies immediately ([Law 604/1966](https://leglobal.law/countries/italy/employment-law/employment-law-overview-italy/07-termination-of-employment-contracts/), Workers Statute Law 300/1970).

Valid grounds fall into two categories. Disciplinary grounds cover giusta causa and giustificato motivo soggettivo. Objective grounds cover giustificato motivo oggettivo.

### Disciplinary dismissal (for cause)

Giusta causa (just cause, immediate dismissal without notice) requires conduct so serious that the employment relationship cannot continue even temporarily. Gross misconduct, theft, severe insubordination, and fraud are typical examples. Giustificato motivo soggettivo (subjective justified motive) covers sustained poor conduct or disciplinary breaches that justify dismissal with notice after a formal disciplinary process.

### Economic and organisational dismissal

Giustificato motivo oggettivo (objective justified motive) covers economic, technical, organisational, or production-related reasons: a genuine role redundancy, business restructuring, or loss of a specific function. The employer must show the reason is real, not a pretext, and must consider redeployment alternatives before dismissing.

### Categories protected from dismissal

Certain dismissals are void regardless of stated reason. Dismissal is prohibited or restricted for pregnant employees and those on maternity leave, employees exercising trade union rights, whistleblowers, employees on approved sick leave within CCNL limits, and employees on parental leave. A dismissal in these circumstances is automatically void and reinstatement is the remedy.

### The Jobs Act framework (Legislative Decree 23/2015)

Employees hired after 7 March 2015 under permanent contracts fall under the Jobs Act increasing-protections regime. Unlawful dismissal in this cohort attracts an indemnity calculated by reference to seniority, capped at 36 months of pay for large employers (those with 15 or more employees). A Constitutional Court ruling in July 2025 extended more protective remedies to small employers as well; the exact remedy range for small-employer cases is now subject to judicial discretion as courts apply the new guidance.

## What procedure must you follow to dismiss an Italian employee?

Every dismissal in Italy needs a written notice stating the specific reason. For disciplinary dismissals, you must issue a written charge first and give the employee a chance to respond. Skipping any step can make the dismissal unlawful, even if the reason itself was valid.

The steps differ by dismissal type. For disciplinary cases, the written charge and response are not optional.

### Disciplinary procedure

1. Issue a written disciplinary charge (contestazione disciplinare) describing the alleged conduct precisely.
2. Allow the employee at least five days to respond in writing or request a hearing.
3. Hold the hearing if requested and consider the employee's defence genuinely.
4. Issue the written dismissal letter, signed by an authorised representative, stating the reason clearly.
5. Calculate and serve the contractual notice period, or pay in lieu where permitted by the CCNL.

### Objective dismissal procedure (small to medium employers)

For employers with fewer than 15 employees, objective dismissal follows the same written-reason requirement. Employers with more than 15 employees must notify the Labour Inspectorate (Ispettorato Nazionale del Lavoro) before dismissal for objective reasons and attempt a conciliation hearing.

### Notice periods

Italy has no single statutory notice schedule. Notice periods are set by the applicable CCNL and vary by sector, employee category (blue-collar operai, white-collar impiegati, middle management quadri, or executive dirigenti), and years of service. Indicative ranges in common sectors run from a few weeks for blue-collar roles to several months for quadri and up to twelve months for senior dirigenti. The CCNL governs; the contract may provide longer notice but never shorter.

During the probation period (up to 6 months under [Civil Code art. 2096](https://cms.law/en/int/expert-guides/cms-expert-guide-to-dismissals/italy)), either party may terminate with no notice at all.

1. Identify the valid reason Anchor the dismissal to a legally recognised ground: giusta causa (immediate, no notice), giustificato motivo soggettivo (disciplinary with notice), or giustificato motivo oggettivo (economic or organisational). A dismissal without a valid stated reason is void from the outset.
2. Issue the written disciplinary charge For any disciplinary dismissal, send a written charge describing the conduct precisely. The employee has at least five days to respond and can request a hearing before any decision is made.
3. Complete the response and hearing Consider the employee's defence genuinely and record the outcome. For large employers making an objective dismissal, notify the Labour Inspectorate and complete the conciliation attempt before serving notice.
4. Serve the written dismissal letter The lettera di licenziamento must be in writing, signed by an authorised representative, and state the specific reason clearly. It triggers the CCNL notice period or, where permitted, payment in lieu.
5. Calculate and pay the TFR Compute the full TFR balance accrued from the employee's first day, add any accrued holiday and pro-rated annual payments, and process the final payroll. Settlement typically follows the CCNL timeline, commonly within a few weeks to a couple of months.

## How is the TFR (trattamento di fine rapporto) calculated?

TFR is Italy's mandatory deferred-pay entitlement. It builds up throughout every year of work and is paid out on exit, regardless of the reason. There is no minimum service period. It accrues from day one ([Civil Code art. 2120](https://leglobal.law/countries/italy/employment-law/employment-law-overview-italy/07-termination-of-employment-contracts/)).

The accrual rate is annual gross salary divided by 13.5. That comes to approximately 0.888 months of gross pay for each year of service.

Each year the employer sets aside a TFR quota equal to the employee's annual gross salary (including all regular allowances) divided by 13.5. The accumulated fund earns a fixed revaluation: 1.5% per year plus 75% of the annual ISTAT consumer price index increase. This revaluation means TFR is not simply a static pot; it grows annually.

### Where TFR sits

For employers with fewer than 15 employees, TFR sits on the employer's balance sheet as a liability until paid out. For larger employers, Italian law requires employees to choose whether to transfer ongoing TFR accruals to a supplementary pension fund (fondo pensione) or to INPS's TFR treasury fund (Fondo di Tesoreria). Existing accruals held by the employer before the choice was made remain with the employer.

### TFR at termination

On any exit, the full accumulated TFR balance is due to the employee. It is taxed separately from ordinary income using a favourable five-year averaging method. There is no statutory cap on the total TFR amount; it simply reflects every year of service at the formula rate.

Eurofound · Italy: Severance pay/redundancy compensation

TFR accrues at annual gross salary divided by 13.5, with no minimum service requirement and no ceiling on the total cumulative amount. It is payable on every exit: resignation, dismissal, expiry of a fixed-term contract, or retirement.

Source: [Eurofound, Italy: Severance pay/redundancy compensation](https://apps.eurofound.europa.eu/legislationdb/severance-payredundancy-compensation/italy)

### Additional indemnity on unlawful dismissal

TFR is always owed. On top of TFR, an unlawfully dismissed employee covered by the Jobs Act increasing-protections regime (hired after 7 March 2015, large employer) can receive an indemnity of up to 36 months of salary. For earlier hires and for cases covered by the Workers Statute art. 18 (large employers, pre-Jobs Act cohorts), reinstatement remains a possible remedy.

## When do collective redundancy rules apply in Italy?

Collective redundancy rules apply when a company with 15 or more employees plans 15 or more dismissals within a 120 days window ([Law 223/1991](https://www.alassistenzalegale.it/en/collective-dismissals-everything-you-need-to-know/)).

The procedure is required by law. You cannot skip it. Failing to follow it can lead to reinstatement orders and all individual dismissals being declared not valid.

### The consultation process

The employer must notify the relevant trade unions and the regional labour office (ANPAL) in writing, setting out the reasons for the proposed redundancies, the number and categories of affected employees, the proposed selection criteria, and any social mitigation measures. Trade unions have the right to examine the proposal and call for joint examination talks.

The joint examination phase runs for up to 45 days at union level and may be extended to a maximum of 75 days in total if no agreement is reached at union level and the matter is escalated to the regional government authority.

### Selection criteria

Italian law requires objective and verifiable selection criteria for identifying which employees are made redundant. Common criteria include technical and professional requirements of the remaining organisation, seniority, and family situation. Criteria must be agreed with unions or set out transparently in the notice; subjective or discriminatory selection makes the individual dismissals unlawful.

### Social safety net

Italy operates a wage-guarantee fund (Cassa Integrazione Guadagni, CIG) administered by INPS. Employers facing economic difficulties can activate CIG to temporarily suspend or reduce employees' working hours, with INPS paying a proportion of their wages. CIG is often used as an alternative to collective dismissal and is expected to be exhausted before a collective procedure is launched.

### Consequences of procedural failure

If the collective procedure is not followed, individual dismissals within the redundancy plan are declared void. The employer faces reinstatement orders and full back-pay liability from the date of dismissal. This is a materially different exposure from the UK protective-award model; Italian courts can order the workforce back to work.

## How does mutual termination work in Italy?

Italian law allows risoluzione consensuale (mutual termination). Both parties sign an agreement. The employee receives their TFR plus any agreed additional payment.

Mutual termination does not give the employee access to NASpI unemployment benefit under the standard rules. This matters a great deal in negotiations.

### Conciliation via the Labour Inspectorate

For employers with 15 or more employees making an objective dismissal, the law requires an attempt at conciliation before the Labour Inspectorate (Ispettorato Nazionale del Lavoro) before serving the dismissal letter. The conciliation can result in a settlement that avoids the formal dismissal altogether.

### Settlement agreements and NASpI

A standard mutual termination agreement (risoluzione consensuale) does not trigger entitlement to NASpI unemployment benefit. To preserve NASpI access, parties often structure the exit as a formal dismissal by the employer (ideally for objective reasons) followed by a negotiated severance package, or they use the incentivised resignation procedure (dimissioni incentivate) where available. The correct structure matters for the employee's post-employment financial position.

### What goes into the settlement

A well-drafted Italian settlement includes: TFR in full, any accrued holiday and pro-rated thirteenth and fourteenth month payments, the contractual notice payment or pay in lieu if agreed, the agreed severance top-up, a tax and social-contribution allocation clause, a mutual waiver of claims, and a confidentiality clause. The agreement must be signed before a trade union representative, a conciliation body, or at the Labour Inspectorate to be binding and to waive statutory claims.

### Gratuitous exit vs protected exit

Employees can resign freely at any time. If the employer encourages resignation without the protections above, there is a risk the resignation will later be challenged as a constructive dismissal. Written confirmation, union witnessing, or Labour Inspectorate involvement removes that risk.

## How Teamed runs Italy terminations

Teamed becomes your legal [employer of record](/lp/employer-of-record) in Italy for [**from $599 per employee per month**](/pricing). There is **zero FX mark-up** on EUR invoicing. Our Italian partner entity is the legal employer. Every dismissal runs through Italian employment law from day one, TFR included.

We handle the procedural steps, notice calculation under the applicable CCNL, TFR accounting, and final-pay reconciliation on **one platform**. The decision to dismiss, and on what grounds, remains yours.

**Real HR and legal experts** manage your Italian hires: offer letters, CCNL identification, monthly payroll including TFR provisioning, disciplinary letters, and exit settlements. **An actual person** handles your account, not a ticket queue. There is **no setup fee** and **no exit fee**, and every employer cost item **passes through at cost, itemised** on every invoice, including TFR and INPS contributions.

The split of responsibilities under EOR for Italy terminations:

| What Teamed handles | What the client decides |
| --- | --- |
| Identifying the applicable CCNL and the correct notice period for the role | Whether to dismiss, and the reason category (disciplinary or objective) |
| Drafting the written disciplinary charge and response period | Performance standards and what conduct justifies disciplinary action |
| TFR calculation and provisioning throughout employment | Whether to offer enhanced exit terms above TFR |
| Labour Inspectorate conciliation coordination (where required) | Settlement figure and any non-compete terms |
| Final payroll: TFR, accrued holiday, thirteenth/fourteenth month pro-rata, notice | Communication with the wider team |
| INPS notifications, social security settlement, CIG applications where relevant | Redeployment decisions and alternative role offers |
| Trade union coordination for collective procedures | Selection criteria for any collective redundancy |

Italian employment law rewards employers who get the process right from day one, not just at exit. Because TFR is accruing continuously, there are no surprise severance bills at the end of a long relationship; the liability is transparent and managed monthly.

EOR payroll, contractor onboarding, and entity setup live on **one platform**. An Italian contractor who converts to payroll keeps their record, and that same employee can **graduate** from EOR to your own Italian entity without switching systems. Run the [Crossover Calculator](https://www.teamed.global/tools/crossover-calculator) to see the month the model flips. EOR is the right model for a first Italian hire, **until it isn't**. Start from the Italy hiring overview; each guide here takes one layer of Italian employment law.

Key sources: [L&E Global, Italy termination overview](https://leglobal.law/countries/italy/employment-law/employment-law-overview-italy/07-termination-of-employment-contracts/), [Eurofound, Italy severance](https://apps.eurofound.europa.eu/legislationdb/severance-payredundancy-compensation/italy), and [CMS Expert Guide to Italy dismissals](https://cms.law/en/int/expert-guides/cms-expert-guide-to-dismissals/italy).

## Frequently asked questions

Does Italy have a statutory notice period?

Italy has no single national statutory notice floor. Notice periods are set by the sector-specific CCNL (National Collective Bargaining Agreement) and vary by employee category and seniority. During probation (up to 6 months under Civil Code art. 2096), either party may terminate with no notice at all. Always identify the applicable CCNL before calculating notice for an Italian employee.

What is TFR and when must it be paid?

TFR (trattamento di fine rapporto) is Italy's mandatory deferred-pay entitlement, governed by Civil Code art. 2120. It accrues from day one at annual gross salary divided by 13.5, with no qualifying service requirement and no cap on the cumulative total. It is due on every exit: resignation, dismissal, contract expiry, or retirement.

When does unfair dismissal protection apply in Italy?

There is no qualifying period. Protection against unfair dismissal applies from the first day of employment under Law 604/1966 and the Workers Statute (Law 300/1970). Employees hired after 7 March 2015 under permanent contracts fall under the Jobs Act increasing-protections regime, where unlawful dismissal by a large employer can attract an indemnity of up to 36 months of pay.

When do collective redundancy rules apply in Italy?

Law 223/1991 applies when an employer with 15 or more employees proposes 15 or more redundancies within a 120 days window. The consultation process can run for up to 45 days at union level, extendable to 75 days in total. Failure to follow the procedure can render all individual dismissals void.

Can you end an Italian employment contract by mutual agreement?

Yes, but the structure matters. A standard mutual termination (risoluzione consensuale) does not entitle the employee to NASpI unemployment benefit. To preserve NASpI access, the exit is often structured as a formal employer dismissal followed by a negotiated package. Any settlement waiving statutory claims must be signed before a trade union representative, a recognised conciliation body, or the Labour Inspectorate to be binding.

Teamed Legal Operations

The TFR surprises employers who are used to UK or US practice. It is not a redundancy payment you owe only when you make someone redundant. It is a deferred-pay entitlement that has been building since the employee's first day and is owed on every exit, including a voluntary resignation. You cannot avoid it. You can only manage it well.

A note from Tom Price-Daniel

Italy's TFR means your termination liability is visible from month one, not a surprise at exit.  
The risk is in the procedure, not the payment. A dismissal without a valid reason, or without the written charge and response, is void.  
EOR is the right model for Italy until your Italian headcount makes an entity the better call.

Tom Price-Daniel · Co-founder, Teamed

## Related Italy guides

- Hiring in Italy, overviewparent
- [Portugal termination and severance](/country-hiring-guides/portugal/termination-and-severance)neighbour
- [Employer of Record overview](/lp/employer-of-record)core
- [Pricing, Zero FX Fixed](/pricing)core
- [EOR vs Entity Crossover Calculator](https://www.teamed.global/tools/crossover-calculator)tool
- [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost)tool
- [Talk to an expert](https://www.teamed.global/contact)CTA

A note on this page.

This is a guide, not legal, tax or accounting advice. Rules change and vary by jurisdiction, so verify current requirements with the relevant Italian authorities, including the Ministero del Lavoro e delle Politiche Sociali (Ministry of Labour) and INPS, or speak to a qualified professional, before relying on any specific framework. Italian notice periods are governed by sector-specific CCNL agreements that change on renewal; confirm the applicable CCNL before any termination. The July 2025 Constitutional Court ruling on small-employer dismissal remedies is live and being interpreted by Italian courts.