Employment Law Updates for 2026: Italy

Italy is entering 2026 with an ambitious and comprehensive agenda for labour law reform. These developments, which relate to compensation, wage transparency, artificial intelligence, employee protection, union representation, and financial incentives, signal a clear shift toward greater transparency, stronger employee protection, and increased expectations for employer compliance.

Some changes are already in motion, while others will take shape throughout 2026 through implementing decrees and secondary legislation. For employers, this isn’t just a regulatory adjustment, but also an opportunity to future-proof their internal policies and strengthen their governance practices.

In this blog, we explore the key aspects of these developments and what they mean for employers in everyday practice. We, as Parakar, can support your organization in dealing with these changes, complying with regulations, and translating new requirements into manageable, day-to-day processes.

A new approach to employee remuneration and collective bargaining

With Law No. 144/2025 (in force since October 18, 2025), the Italian government has been given broad powers to reform remuneration, collective bargaining, and wage transparency. The reform is grounded in Article 36 of the Italian Constitution, which ensures workers a fair and adequate wage.

One of the main objectives is to better align minimum wages with the national collective bargaining agreements (NCBAs) that are most commonly applied within each sector. In addition, service contracts must now meet the minimum wage standards of the NCBAs, eliminating the possibility of falling back on lower contractual thresholds.

The implementing decrees are expected by April 18, 2026. In the meantime, employers would be well advised to review salary structures and compliance with the minimum wage, assess the alignment between individual contracts and applicable collective agreements and also prepare for possible updates to internal policies on wage transparency.

EU Pay Transparency Directive: a step towards greater equality

Italy is also getting ready to implement the EU Pay Transparency Directive in 2026. The goal is clear: to reduce the gender pay gap and give workers more control by providing them with better access to pay information.

Employers will be required to:

• Apply gender-neutral pay criteria
• Communicate pay scales during recruitment
• Provide information on average pay levels for comparable jobs
• Remove or invalidate pay secrecy clauses

Although the final implementation measures are still pending, preparation can begin today. By assessing remuneration structures, identifying potential pay gaps, and designing reporting processes, organizations can stay ahead of compliance requirements, particularly those with complex or decentralized remuneration structures.

This reform is not just about compliance, but also offers an opportunity to strengthen employer branding and demonstrate a genuine commitment to fairness.

Artificial intelligence in the workplace:

With Law No. 132/2025, Italy is introducing a regulatory framework for the use of artificial intelligence in employment decisions, which is scheduled to take effect in 2026.

The focus is on transparency, data protection, and anti-discrimination measures. Employers who use automated systems, whether for recruitment, performance management, disciplinary measures, or workforce, organizations must clearly inform their employees about this and comply with privacy and equality legislation.

Now is the ideal time to:

• Identify AI-driven tools in HR and workforce management
• Review privacy statements and disciplinary procedures
• Ensure that communication with employees is clear and accessible

Responsible use of AI can increase efficiency, but transparency and compliance are crucial.

Stronger protection for employees with serious illnesses

Law No. 106/2025 strengthens the protection of employees with cancer or serious chronic illnesses, including employees with a recognized disability rating of 74% or above. Some provisions have been in effect since July 2025, but additional rights will take effect from January 1, 2026.

The main developments are:

• Up to 24 months of unpaid leave (consecutive or intermittent) after other leave entitlements have been used up
• Job certainty during the leave period
• Priority for flexible working arrangements upon return (to the extent compatible with the duties of the position)
• From 2026: 10 hours of paid leave per year for medical appointments for affected employees and parents of minors with serious illnesses

For employers, this means reviewing their leave policies, contracts, and NCBA provisions and taking steps to ensure that long-term leave is managed in a compliant and sympathetic manner.

Trade union representation

A remarkable development in labor relations follows judgment no. 156/2025 of the Constitutional Court (effective as of October 30, 2025). Trade unions that are relatively more representative at the national level can now establish Rappresentanze Sindacali Aziendali (RSAs), even if they have not participated in the relevant collective bargaining process.

This broadens the scope of trade union representation in the workplace and may lead to a greater formal presence of trade unions within organizations.

Employers will need to review current union arrangements and establish clear internal processes to respond to requests to establish an RSA.

2026 State Budget: implications for HR and costs

The Italian State Budget for 2026, which is expected to be finalized by the end of 2025, contains measures that will have a direct impact on employers from January 1, 2026.

The draft proposals include:

• Tax relief initiatives
• Social security exemptions
• Parenting support measures
• Funding for the wage guarantee fund
• APE Social extensions
• Pension reforms

Although the final text is not yet known, employers should already be considering the potential implications for workforce planning, compensation strategies, and long-term HR costs.

A new incentive framework and measures against relocation

Decree-Law No. 184 of November 27, 2025, known as the incentive code, was published on December 10, 2025, and will apply from January 1, 2026. It restructures the system of financial, tax, and social security incentives for employers.

Priority access is granted to companies that:

• have a gender equality certificate
• employ more workers with disabilities than the mandatory quotas
• promote employment for young people and women

At the same time, stricter anti-relocation rules are being introduced, with prior notification requirements and possible sanctions, including forfeiture or repayment of incentives.

Employers should therefore review their current and planned incentive schemes, confirm eligibility criteria, and ensure that their relocation strategies are fully compliant with the new requirements.

How Parakar can support

Expanding into Italy presents exciting opportunities, but navigating its employment laws and HR landscape can be complex. That’s where Parakar comes in. We provide tailored HR solutions to help your business hire quickly and compliantly, manage remote employees, streamline HR administration, and handle employee relations with confidence.

Our team simplifies hiring by managing contracts, payroll, and compliance, allowing you to onboard employees in Italy without establishing a local entity. For remote workers, we ensure full adherence to Italian employment and tax regulations, so your team can work seamlessly from any city.

Beyond hiring, Parakar offers comprehensive HR administration, including payroll management, contract drafting, and compliance with collective bargaining agreements. We also provide expert support in employee relations, guiding you through disputes and HR challenges to maintain a positive and legally compliant workplace.

Get in touch with Parakar today to ensure your business is fully equipped to handle these important responsibilities, allowing you to focus on what truly matters, supporting your employees.