Logistics, maintenance, cleaning, IT services, stages of production: outsourcing is a widespread and legitimate way to organise a business. Italian law, however, leaves a significant share of the contractor’s risks with the client. Foreign groups operating in Italy are often surprised by how far this liability extends. Understanding it makes it possible to choose suppliers, draft contracts and organise oversight accordingly.

Genuine contracting versus unlawful labour supply

Under the Italian Civil Code, an appalto (a contract for works or services) is one in which the contractor undertakes to deliver a work or service for a price, organising the necessary means and bearing the business risk (Article 1655 et seq.). Article 29 of Legislative Decree 276/2003 clarifies that, depending on the requirements of the work or service, the contractor’s organisation of means may consist in directing and managing the workers involved, together with bearing the business risk, a test that is decisive above all in labour-intensive contracts.

If the contractor merely supplies staff while instructions, shifts and supervision in fact remain with the client, the arrangement may be recharacterised as unlawful labour supply. The consequences are serious: workers may ask the court to declare that they are employees of the client, and recent legislation has also tightened penalties, including criminal ones. Courts look at how the relationship actually works, not at the label on the contract.

Joint liability for wages and social security

Under Article 29(2) of Legislative Decree 276/2003, a client acting as a business or employer is jointly liable with the contractor, and with any subcontractor, for the wages (including accrued severance pay, known as TFR), social security contributions and insurance premiums owed for the period during which the contract was performed. Claims must be brought within two years of the end of the contract. Civil penalties for late payment remain with the defaulting party only.

Since 2024, the same provision also requires that staff working under a contract or subcontract receive overall pay no lower than that set by the national and local collective agreement most widely applied in the sector and area closely connected with the outsourced activity. In addition, Article 1676 of the Civil Code allows the contractor’s employees to claim directly against the client, up to the amount the client still owes the contractor.

Health and safety, tax and logistics

On health and safety, Article 26 of Legislative Decree 81/2008 (the Italian Workplace Safety Code) requires the client to check the contractor’s technical and professional suitability, to cooperate and coordinate with it and, where required, to prepare a risk assessment covering interference between the two workforces. The client is also jointly liable for workers’ injuries not covered by mandatory insurance.

On tax, Article 17-bis of Legislative Decree 241/1997 requires clients, for higher-value contracts relying mainly on labour at the client’s premises, to verify that the contractor has paid over the income tax withheld from its workers. In logistics, Article 1677-bis of the Civil Code provides that, where a contract jointly covers two or more logistics services (receipt, processing, storage, custody, shipment, transfer and distribution of another party’s goods), the rules on contracts of carriage apply, where compatible, to the transport of the goods.

Contractor changeovers and transfer of undertaking

When one contractor replaces another, staff often move to the new supplier under collective agreements or contractual clauses. Article 29(3) of Legislative Decree 276/2003 provides that this does not amount to a transfer of undertaking if the new contractor shows elements of discontinuity giving it a distinct business identity. Otherwise, Article 2112 of the Civil Code may apply, with employment relationships continuing and joint liability for workers’ claims. Changeovers therefore deserve careful advance planning.

Protective measures, and when to seek legal advice

The client’s liability cannot be excluded, but it can be managed. The most effective tools are:

  • supplier due diligence covering social security compliance, financial standing and organisational structure;
  • contracts that precisely define scope, service levels and the contractor’s organisational autonomy;
  • periodic reporting on wages and payments, with a right to withhold payment if irregularities emerge;
  • rules on subcontracting, guarantees and indemnities;
  • consistent day-to-day practice: instructions to the contractor’s staff should go through the contractor’s own management.

Legal advice is valuable when designing an outsourcing project, reviewing existing contracts, handling a contractor changeover and, of course, when labour inspections, employee claims or challenges from the authorities arise. Acting early allows the overall exposure, which is at once employment-related, social security, tax and reputational, to be assessed as a whole.

This article is for general information only and does not constitute legal advice.