Employer of Record in Italy
The Employer of Record, commonly known as “EOR”, is widely used in several European countries as a flexible solution for companies wishing to hire or relocate employees without immediately setting up a local entity.
For international businesses, the model can appear particularly attractive. The EOR formally employs the worker, manages payroll and local employment administration, while the employee carries out activities for the client company.
But is the Employer of Record model possible in Italy?
From an Italian immigration perspective, the answer is not straightforward. While EOR solutions are commonly used in other jurisdictions, in Italy they must be assessed carefully due to the interaction between immigration rules, employment law compliance and the identity of the sponsoring employer.
What is an Employer of Record (EOR)?
An Employer of Record is a third-party provider that formally hires an employee on behalf of another company. Typically, the EOR manages payroll, social security, tax withholding, employment contracts and administrative compliance.
In practice, however, the employee usually works for the client company, which benefits from the work and may also direct the employee’s day-to-day activities. This separation between the formal employer and the company actually using the employee’s services is the key issue under Italian law.
Why the EOR model may be problematic in Italy
Under Italian labour law, if a worker is formally employed by one company but performs their work in the interest and under the direction of another company, the arrangement may fall within the rules on labour supply, known in Italian as “somministrazione di lavoro”.
Labour supply is a regulated activity in Italy and can only be carried out by authorised employment agencies. These agencies must be licensed to perform labour supply activities and enrolled in the relevant national register of employment agencies.
As a result, an EOR provider that merely acts as the formal employer, while the client company actually directs and benefits from the employee’s work, may create legal risks if the arrangement is not properly structured.
For immigration purposes, this is particularly important. Italian immigration applications are generally linked to the sponsoring employer, the work activity, the place of work and the legal basis of the employment relationship. If the employment structure is not compliant from a labour law perspective, it may also create issues in the immigration process.
Can an EOR sponsor a work visa in Italy?
In most cases, an EOR should not be treated as a simple shortcut to sponsor a foreign worker in Italy without a compliant local employment structure.
Italian immigration authorities will usually look at the employer sponsoring the application, the role to be performed in Italy, and the legal relationship between the parties. If the worker is formally employed by an EOR but is in practice working exclusively for another company, the structure may require further legal assessment.
This is why the key question is not only “Who signs the employment contract?”, but also:
- Who directs the employee’s work?
- Who benefits from the employee’s services?
- Where is the work performed?
- Is the provider authorised to supply labour in Italy?
- Is the structure compliant with Italian immigration and labour rules?
Where legally appropriate, companies may use an authorised employment agency licensed to carry out labour supply activities in Italy. In this case, the provider must be duly authorised and enrolled in the relevant national register of employment agencies.
This option should be carefully assessed to ensure that both the labour supply arrangement and the immigration process are compliant.
Possible alternatives to the EOR model in Italy
Companies wishing to hire or relocate foreign workers to Italy may need to consider alternative structures, depending on the specific case.
Possible options may include:
1. Direct hiring through an Italian entity (EU Blue Card)
An EU Blue Card in Italy can be applied for by a non-EU highly qualified worker with a binding job offer or work contract sponsored by an Italian company. The Italian sponsor may be a company in the same group as the sending company or an unaffiliated Italian host company.
2. Representative office, branch or subsidiary (ICT work permit)
For companies planning a more stable presence in Italy, setting up a representative office, branch, or subsidiary may provide a clearer legal basis for business operations and immigration planning.
Once an eligible Italian host entity has been established, that host entity may apply for an ICT work permit for the temporary intra-corporate transfer of an eligible employee who remains employed by the overseas group company.
3. Genuine service agreement (Service Agreement work permit)
In some cases, the activity may be structured as a genuine service agreement. However, the service provider must have real organisational autonomy and cannot merely supply personnel to the client company.
FAQ: Immigration Considerations for EOR Arrangements in Italy
- Is Employer of Record legal in Italy?
Italy does not have a standalone Employer of Record framework equivalent to that available in some other jurisdictions. In practice, where an EOR arrangement involves one company formally employing the worker while another company directs and benefits from the employee’s work, the structure may fall within the Italian rules on labour supply.
Where the arrangement qualifies as labour supply, this activity cannot be carried out by any company, but only by employment agencies that are duly authorised and enrolled in the relevant national register. For this reason, any EOR-type structure should be carefully assessed from both a labour and immigration compliance perspective. - Can an EOR be used for Italian work visa sponsorship?
Potentially, but using an EOR for Italian work visa sponsorship is not straightforward and should not be treated as a standard solution. It may only be possible where the EOR is able to act as a lawful sponsoring employer under the applicable Italian immigration route. - What is the main risk of using an EOR in Italy?
The main risk is that, if not fully compliant, the arrangement may be viewed as unauthorised labour supply where the EOR is merely a formal employer and the worker is effectively directed by the client company. - What is the safest alternative to an EOR in Italy?
The most suitable structure depends on the company’s needs, the employee’s role and the immigration route. Common alternatives include direct hiring through an Italian entity (EU Blue Card), establishing a local presence in Italy and applying for an ICT work permit, or opting for a service agreement model.
Related articles
- Intra-Company Transfer Work Permit in Italy
- EU Blue Card in Italy: Work Permit for Highly Qualified Workers
- Service Agreement Assignment in Italy
- Staff leasing agreement under Italian law (Italian Ministry of Labour and Social Policies)
