Trattamento di Fine Rapporto (TFR) and Tredicesima Mensilità (thirteenth-month pay)
Reference information: rules, amounts and deadlines change. Check the date of the material and the official sources.
Trattamento di Fine Rapporto (TFR)
The TFR (severance pay) is a sum of money that the employer sets aside for each employee and pays out when the employment contract ends. It is a form of additional social security that provides the employee with financial support once their working life is over.
How the TFR works:
- Accantonamento (accrual): each year the employer sets aside a portion equal to about 7.41% of the employee’s gross pay. This sum builds up and is revalued every year.
- Rivalutazione (revaluation): the accumulated sum is revalued at a rate set by law, made up of a fixed part and a percentage linked to inflation.
- Pagamento (payment): when the employment contract ends (through dismissal, resignation or retirement), the employee is entitled to receive the full TFR accrued over their period of employment.
- Opzioni (options): the employee can choose to have their TFR paid into a supplementary pension fund (previdenza complementare); in that case the employer must transfer this portion directly to the chosen fund.
Tredicesima Mensilità
The Tredicesima Mensilità (thirteenth-month pay) is an extra payment made to employees in Italy, usually in December. It amounts to one thirteenth of the annual salary and is a financial reward for the work done during the year.
Features of the tredicesima:
- Calcolo (calculation): it is calculated as one thirteenth of the gross pay the employee received during the year (including any overtime and bonuses).
- Tempistiche (timing): it is usually paid by 24 December each year and helps with Christmas expenses.
- Diritti (entitlement): part-time employees are also entitled to the tredicesima, calculated in proportion to the hours worked.
- Impatto fiscale (tax treatment): the tredicesima is taxed in the same way as ordinary pay, but it is often subject to separate taxation, which can give employees tax advantages.
Conclusion
The TFR and the Tredicesima Mensilità are important tools that give employees in Italy a degree of economic stability, both after their employment contract ends and during the working year.
