Foreign Executives Working in Italy: When Does Italian Employment Law Override the Contract?

Cross-border executive appointments are routinely documented under a foreign governing law and a foreign jurisdiction clause. The contract is signed with a Luxembourg holding company, an English entity or a Swiss group service company, and the parties assume the chosen law governs everything from notice to non-competition to termination remedies.

That assumption is only partially correct, and the part that is wrong is usually the expensive part.

Where an executive habitually works in Italy — or works from Italy across a region — Italian employment law will, in defined respects, apply notwithstanding the choice of foreign law. The mechanism is not hostility to party autonomy: it is Article 8 of Regulation (EC) No 593/2008 (Rome I), which preserves the employee’s protection under provisions that cannot be derogated from by agreement in the law that would apply absent choice. Jurisdiction follows a parallel logic under Regulation (EU) No 1215/2012 (Brussels I bis). The resulting hybrid regime is often discovered only at termination.

This article assumes the separate question of classification — in particular whether the person is a dirigente — and moves to applicable law, mandatory protection and the enforceability of foreign-law clauses.

Three questions, not one

Three separate questions are routinely collapsed into one.

Applicable law is determined by Rome I (Articles 3 and 8) for contracts concluded after 17 December 2009 (Article 28); earlier contracts fall under the 1980 Rome Convention.

Competent courts are determined, for individual employment contracts, by Section 5 of Chapter II of Brussels I bis (Articles 20–23), applicable to proceedings instituted on or after 10 January 2015.

Overriding mandatory provisions apply irrespective of the governing law. Article 9(1) of Rome I defines them as provisions regarded as crucial by a country for safeguarding its public interests, applicable to any situation within their scope; Article 9(2) preserves those of the forum. Recital 37 makes clear that the concept is narrower than, and distinct from, the “provisions which cannot be derogated from by agreement” of Article 8(1). Article 21 permits refusal to apply a foreign provision only where the result is manifestly incompatible with the public policy of the forum.

A prior question conditions all three: these regimes apply only to an individual contract of employment. In Bosworth and Hurley v Arcadia Petroleum (CJEU, First Chamber, 11 April 2019, C-603/17, EU:C:2019:310), on the equivalent employment title of Lugano II, the Court held that a relationship of subordination is essential, and that none exists where the persons concerned have control and autonomy over the day-to-day operation of the business and the performance of their own duties, and can determine the terms of their own contracts. The Italian equivalent is subordination under Article 2094 of the Civil Code. Very senior figures may therefore fall outside the protective regime altogether.

Rome I and the executive employment contract

Article 8(1): The parties may choose the governing law under Article 3, and that choice is valid. But it “may not have the result of depriving the employee of the protection afforded to him by provisions that cannot be derogated from by agreement” under the law that would have applied under paragraphs 2 to 4. The consequence is a comparison exercise, not a substitution: the chosen law continues to govern, save that the employee retains any more protective non-derogable rules of the objectively applicable law (Recital 35).

Article 8(2): Absent choice, the contract is governed by the law of the country “in which or, failing that, from which” the employee habitually carries out the work. Temporary employment in another country does not change that country.

Article 8(3): This applies only where the law cannot be determined under paragraph 2. In Koelzsch (CJEU, Grand Chamber, 15 March 2011, C-29/10, EU:C:2011:151), interpreting the corresponding Rome Convention provision, the Court held that the habitual place of work must be construed broadly: even where the employee works in several States, the criterion applies wherever the court can identify the State in which or from which, in the light of all the factors characterising the activity, the employee performs the greater part of the obligations owed to the employer. Article 8(3) is therefore residual — a reading confirmed in Voogsgeerd (CJEU, 15 December 2011, C-384/10, EU:C:2011:842).

Article 8(4): Where the circumstances as a whole show the contract is more closely connected with another country, that country’s law applies. In Schlecker v Boedeker (CJEU, Third Chamber, 12 September 2013, C-64/12), the employee had managed the German employer’s Netherlands business for over eleven uninterrupted years. The Court held that the national court may nonetheless disregard the law of the habitual place of work where the circumstances as a whole disclose a closer connection with another country; the factors canvassed included taxation of employment income and social security affiliation.

Article 8(4) is not a general escape from Italian law: it operates on the objectively applicable law, not on Article 8(1). Article 8(4) can therefore exceptionally displace the law of the habitual place of work in favour of another country with which the contract is more closely connected, including, where the factual integration points towards Italy, Italian law itself. And it cuts both ways — a German-rooted assignment may remain German-connected despite execution in Italy.

Jurisdiction: why a foreign forum clause rarely helps

Under Article 21(1) of Brussels I bis an employer domiciled in a Member State may be sued there, or in the courts for the place where or from where the employee habitually carries out the work, or last did so. Article 21(2) extends the latter head to employers not domiciled in a Member State, allowing the employee to sue them in the courts of the Member State where or from where the work is habitually carried out, even if the employer is domiciled outside the EU — of direct importance for US, UK and Swiss employers. Article 20(2) deems a non-EU employer with an establishment in a Member State domiciled there for disputes arising out of that establishment’s operations. Article 22(1) permits the employer to sue the employee only in the employee’s domicile.

Article 23 is decisive for drafting: the Section may be departed from only by an agreement entered into after the dispute has arisen, or one allowing the employee to sue in other courts. A pre-dispute exclusive foreign jurisdiction clause therefore does not deprive an executive habitually working in Italy of access to the Italian labour courts, which will then apply Article 8(1) — and, where relevant, Article 9(2) — of Rome I to the merits.

Habitual place of work in practice

The CJEU’s method is indiciary, not formal. In Nogueira and Others v Crewlink and Moreno Osacar v Ryanair (CJEU, Second Chamber, 14 September 2017, joined cases C-168/16 and C-169/16, EU:C:2017:688), the Court held that the place where the employee habitually carries out the work is where, or from where, the employee in fact performs the essential part of the duties owed to the employer, and that “home base” is a significant indicium though not equivalent to that concept. Koelzsch supplies the indicia: where the employee actually performs the work, receives instructions and organises the activity; where the working tools are; and the place of return after completing tasks.

Transposed to executives, the indicia typically include: where the executive is based; where subordinate teams sit and report; whose infrastructure and IT systems are used; where client relationships are conducted; where group instructions are received; and the geographical radiation of travel. Residence, taxation and social security affiliation matter chiefly at the Article 8(4) stage.

Mobile and regional executives. A “Southern Europe Managing Director” based in Milan, running Italian direct reports and travelling across the region, will ordinarily be found to work from Italy within the second limb of Article 8(2). The multiplicity of destinations does not defeat the criterion.

Genuine assignment versus stable Italian work. Recital 36 supplies the test: work in another country is temporary if the employee is expected to resume working in the country of origin afterwards; a new contract with the original employer, or with a same-group employer, does not preclude that characterisation. What matters is the genuineness of the expectation of return, evidenced by a defined duration, a preserved home relationship and an identified repatriation position. Assignments silently rolled over, or which lose their return position, migrate towards stability.

Substance over form. A recital deeming the place of work to be London does not create one if the executive works in Milan; nor does a foreign payroll. The analysis is factual.

Mandatory Italian protections

Italian protections reach a foreign-law contract through two channels. First, as non-derogable provisions of the objectively applicable law under Article 8(1) Rome I, which is the ordinary and much broader channel. Second, in a narrower circle, as overriding mandatory provisions under Article 9 Rome I (norme di applicazione necessaria, preserved by Article 17 of Law No 218/1995). Only a limited core of Italian employment rules will generally qualify as overriding mandatory provisions in this strict sense, whereas the wider catalogue of Italian employment protections operates via Article 8(1). 

• Health and safety: Legislative Decree No 81/2008 applies territorially to work performed in Italy.
• Non-discrimination: Legislative Decrees No 215/2003 and No 216/2003 and the Equal Opportunities Code (Legislative Decree No 198/2006). 
  • A discriminatory dismissal is null under Article 3 of Law No 108/1990 and, for ordinary employees, triggers the strong protection regime for null dismissals (reinstatement and back pay) irrespective of headcount, under Article 18 of Law No 300/1970 as subsequently amended and the parallel Jobs Act regime for post‑2015 hires. 
  • Dirigenti, although formally outside Law No 604/1966, benefit from equivalent protection against discriminatory and otherwise null dismissals, grounded in constitutional and EU principles and in the case law that has extended reinstatement‑type remedies to such cases. 

• Privacy: The GDPR and Legislative Decree No 196/2003, with Articles 4 (remote monitoring) and 8 (prohibited enquiries) of Law No 300/1970.

The privacy analysis also requires a more precise formulation. In current law, Regulation (EU) 2016/679 applies directly, while Legislative Decree No. 196/2003, as amended, operates as the national coordinating framework together with the specific employment-law limits contained in Articles 4 and 8 of Law No. 300/1970. 

Accordingly, the relevant constraints do not derive from a single domestic source, but from the combined operation of directly applicable EU law, the amended Italian Privacy Code and the Workers’ Statute. In cross-border structures, this matters because some data-protection obligations bind the controller independently of the contractual governing-law clause and may therefore constrain plan design, monitoring practices and intra-group HR data flows even where the contract is expressed to be governed by foreign law.

• Working time: Legislative Decree No 66/2003, subject to its own exclusions for dirigenti and personnel whose working time is not measured or predetermined.

Health and safety obligations under Legislative Decree No 81/2008, applicable territorially to work performed in Italy, are commonly treated as overriding mandatory provisions. By contrast, the Italian rules on privacy in the employment context (GDPR, Legislative Decree No 196/2003 and Articles 4 and 8 of Law No 300/1970) and on working time (Legislative Decree No 66/2003) are best characterised as non‑derogable employee protections that typically operate via Article 8(1) Rome I, even though certain core anti‑discrimination and equal treatment provisions may also be considered overriding mandatory in specific circumstances. 

That distinction should, however, be stated with some caution. In cross-border employment situations involving Italy, the better view is that many employment protections operate in the first instance through Article 8 of Rome I as non-derogable rules of the law objectively applicable to the contract; but certain rules may also, depending on their function and the concrete facts, present an overriding-mandatory profile under Article 9 where they protect fundamental public interests rather than merely the bilateral balance of the employment relationship. This is particularly relevant for anti-discrimination rules and, in specific contexts, for rules governing the protection of personal data, employee monitoring and the use of intrusive technologies, whose rationale extends beyond the individual synallagma and serves broader constitutional and public-order interests.

• Remuneration: Article 36 of the Constitution requires pay proportionate to the quantity and quality of the work and sufficient for a dignified existence; Italian courts treat it as directly enforceable, with the applicable collective agreement as the customary parameter.
• Deferred severance accrual: Article 2120 of the Civil Code (trattamento di fine rapporto) applies to all subordinate employees, including dirigenti, and is often overlooked in foreign-law packages.
• Duties: Article 2103 of the Civil Code.
• Post-termination restraints: Article 2125 of the Civil Code invalidates a non-competition covenant not in writing, unsupported by consideration, or unlimited as to subject-matter, duration or territory; the maximum term is five years for dirigenti and three years otherwise.
• Waivers and settlements: Article 2113 of the Civil Code makes waivers and settlements of rights arising from mandatory provisions challengeable unless concluded in a protected forum (judicial, administrative or trade-union conciliation).

Social security is a separate system. Regulation (EC) No 883/2004 is not a conflict-of-laws instrument and is unaffected by the choice of law. Article 11 subjects a person to the legislation of a single Member State, in principle that of the place of work. Article 12(1) preserves home-State affiliation where an employee is posted for an anticipated duration not exceeding 24 months and does not replace another posted person. Article 13 governs activity in two or more Member States, residence-State legislation applying where a substantial part of the activity is performed there.

Posting. Legislative Decree No 136/2016, as amended by Legislative Decree No 122/2020 implementing Directive (EU) 2018/957, imposes a core set of Italian terms on genuinely posted workers and extends nearly all Italian terms after twelve months (extensible to eighteen by reasoned notification) — while excluding the rules on conclusion and termination of the contract. Where a posting is not genuine, the worker is deemed employed by the entity that used the services.

Classification: “executive” is not “dirigente”

Article 2095 of the Civil Code divides subordinate employees into dirigenti, quadri, impiegati and operai, without defining them. The definitions come from collective agreements and case law: the CCNL for dirigenti of industrial undertakings requires subordination under Article 2094 plus a role marked by a high degree of professionalism, autonomy and decision-making power exercised to promote, coordinate and pursue the undertaking’s objectives.

Three consequences follow. First, a foreign title carries no weight. A “Vice President” with no autonomous decision-making power in Italy may be a quadro; a “Country Manager” with genuine managerial authority may be a dirigente. Where the label lacks substance, Italian case law treats the person as a “pseudo-dirigente”, entitled to the full statutory dismissal protections of the underlying category — a worse outcome for the employer than correct classification would have produced.

Second, there is no single regime for dirigenti. Which national collective agreement applies (industry, commerce, credit) affects notice, the indennità supplementare payable on unjustified dismissal, arbitration mechanisms and post-termination treatment. Treating all executives as subject to a uniform regime is a drafting error.

Third, classification governs the dismissal analysis entirely.

Dismissal: distinct regimes, distinct consequences

Article 10 of Law No 604/1966 confines that statute to impiegati and operai. Dirigenti therefore fall outside the statutory giusta causa/giustificato motivo regime and remain subject, as a matter of statute, to Articles 2118 (notice) and 2119 (cause) of the Civil Code. Two carve-ins apply: the written-form requirement of Article 2(1) of Law No 604/1966, extended to dirigenti by Article 2(4); and Article 18(1) of Law No 300/1970, which expressly applies to dirigenti where the dismissal is discriminatory, otherwise null, or oral.

Above that floor sits the contractual notion of giustificatezza, created by collective bargaining. Where a dirigente’s dismissal is not “justified” in that sense, the collective agreement provides an indennità supplementare, generally determined by an arbitral panel. Settled Court of Cassation authority distinguishes giustificatezza from giustificato motivo: it excludes arbitrary, pretextual or unreal reasons and is assessed globally against good faith and fair dealing, without the repêchage obligation applicable to ordinary employees.

Procedure, however, converges. In Cass., Sezioni Unite, 30 March 2007, No 7880, the Court held that the procedural guarantees in Article 7(2) and (3) of Law No 300/1970 apply to dirigenti where the employer relies on alleged misconduct or conduct said to destroy mutual trust. Subsequent case law has confirmed that Article 7 does not normally extend to terminations grounded purely on objective or organisational reasons. Where Article 7 applies and the procedure is breached, the dismissal is not automatically null but the employer is generally precluded from relying on the disputed conduct, with the termination typically treated as unjustified and the remedies determined under the applicable dirigenti collective agreement. 

In Commission v Italy (CJEU, Second Chamber, 13 February 2014, C-596/12, EU:C:2014:77) the Court held that excluding dirigenti from the consultation procedure under Directive 98/59/EC breached Italy’s obligations. Following that judgment, Law No 161/2014 amended Article 24 of Law No 223/1991 so that dirigenti are now included in the collective redundancy information and consultation procedure. According to the Court of Cassation, this extended regime applies to dismissals notified after the entry into force of Law No 161/2014, while earlier redundancies remain governed by the previous framework. 

Probationary termination depends on the validity of the probation clause. Resignations must generally be submitted through the statutory electronic procedure. Negotiated exits are the norm at executive level, but under Article 2113 of the Civil Code a settlement signed in London does not reliably extinguish Italian statutory claims.

Why foreign-law clauses fail

They rarely fail entirely. They usually fail partially.

• No Italian entity is needed for Article 8(2) to point to Italy, and Article 21(2) of Brussels I bis lets the executive sue a non-EU employer in the Italian forum laboris. Payroll, permanent-establishment and social-security exposure follow the same facts.
• A genuinely temporary assignment with a preserved home relationship and a return expectation (Recital 36) can keep the home law applicable. An assignment renewed indefinitely, or one in which the Italian entity exercises the power of direction, cannot.
• A suspended home contract plus a local Italian contract invites a finding of a single relationship with continuous seniority, affecting notice, TFR and any indennità supplementare.
• Where the formal employer is a group service company but direction, integration and economic risk sit with the Italian entity, the substantive employer may be the Italian one.

Practical checklist

Before relocation or assignment

1. Establish whether the person is an employee at all (subordination; Bosworth).
2. Map the projected habitual place of work on the Koelzsch/Nogueira indicia, not the contractual recital.
3. Decide whether the arrangement is a genuine temporary assignment (Recital 36), with a documented return position and defined duration.
4. Classify the role under Article 2095 and identify the applicable CCNL, if any. Do not assume dirigente.
5. Align contract, operational reality, payroll, the A1 or Italian contribution position, tax residence and immigration status.

In Drafting

6. Retain the foreign law choice if commercially sensible, but price the Italian floor rather than assuming it away. 
7. Draft notice, severance and restrictive covenants to be valid under Italian law in the alternative (Article 2125). 
8. Do not rely on a pre-dispute exclusive jurisdiction clause (Article 23 Brussels I bis). Address TFR expressly. 
9. Where a group entity supplies the workforce, document the genuineness of the posting.

On Termination

10. Determine classification first; the remedy regime follows from it. 
11. Follow Article 7 of Law No 300/1970 wherever conduct is alleged, including for dirigenti (Cass. S.U. No 7880/2007). 
12. Assess null-dismissal exposure independently of classification and headcount. 
13. Execute settlements in an Italian protected forum under Article 2113 of the Civil Code. A settlement signed in London or in any other foreign venue, outside those protected venues, is vulnerable to challenge by the employee within the statutory time limits and does not reliably extinguish Italian statutory rights. The risk can be mitigated by subsequently confirming the settlement in an Italian protected forum, which stabilises the waivers under Article 2113.  
14. Where the reduction is collective, verify the Law No 223/1991 procedure, including as regards dirigenti.

Conclusion

Italian employment law does not displace a foreign-law contract wholesale; it displaces it selectively, wherever a non-derogable protection would otherwise be lost. A choice of English, Swiss or Delaware law remains effective, but it operates above an Italian floor whose height depends on where the executive actually works, what the executive actually does and how the relationship is actually organised — not on what the contract recites. What governs is the arrangement as implemented; contracts drafted with that in mind cost less and survive termination better.

AL AdvaLux advises international executives and multinational employers on precisely this hybrid regime — assessing habitual place of work and dirigente classification, structuring cross-border assignments and foreign-law contracts to remain valid above the Italian floor, and handling termination, settlement and dismissal-protection disputes before the Italian labour courts.