13th and 14th Month Pay in Italy: When and Why They Are Paid

If you hire in Italy, you will meet two terms early: the thirteenth month and the fourteenth month. They are called “tredicesima” and “quattordicesima” locally. Many US teams read them as bonuses. They are not. They are deferred pay that employees have earned through regular work.

This article explains what they are, why they exist, and how to plan for them in your budget.

What they are  

The thirteenth month is an extra installment of salary paid on top of the regular monthly payments. The fourteenth month works the same way, but it is not universal. Whether an employee gets it depends on the national collective agreement that applies to the role and the industry.

The key point is that these amounts are part of annual pay. A contract might quote a gross annual salary. That figure already includes the extra installments, and it is split across more payments than the calendar has months.

This is different from a discretionary bonus. You cannot skip it in a weak year. You cannot tie it to a target. It is owed by default, and it is owed to every employee covered by the relevant agreement.

Why they exist  

The practice comes from Italian labor tradition and is now set mainly through collective bargaining. Unions and employer associations negotiate the terms for each sector. The result is a standard structure of annual pay that employees and employers both expect.

For employees, the extra installments act as a forced savings mechanism. They arrive at predictable points in the year, often when household costs are high. Workers plan holidays, school costs and tax payments around them.

For employers, the rule is simple. The agreement sets the structure, and you follow it. There is little room to negotiate it away in an individual contract.

When they are paid  

Timing also follows the collective agreement. The thirteenth month is commonly paid near the end of the year. The fourteenth month, where it applies, is commonly paid around the summer. Your agreement may set different dates, and some contracts spread the amounts into regular monthly payslips instead of paying them as lump sums.

Before you plan anything, confirm three things for each hire:

• Which collective agreement applies to the role.
• Whether the fourteenth month is included.
• Whether the extra installments are paid as lump sums or spread across the year.

These answers change your cash profile more than most people expect.

The effect on cash flow  

Here is where finance teams get caught out. A US company is used to paying salary in an even rhythm. Italian payroll is often uneven. In months where an extra installment lands, the payroll run is larger than usual.

The extra pay also carries related costs. Employer social contributions and other payroll charges apply to these amounts, so the cost of each installment is higher than the net amount the employee sees. A budget built on a simple monthly salary will understate the real cost of the role.

There is also an accrual issue. The employee earns the thirteenth and fourteenth month pay gradually through the year, even though the cash goes out later. If you only book the expense when it is paid, your monthly results will look better than reality for part of the year and worse at the payment date. Good practice is to accrue the cost month by month.

A few habits help:

• Budget on annual cost, not monthly salary. Take the full annual package, including extra installments and employer charges, and divide it across the year for planning.
• Accrue monthly. Set aside the cost as it builds up, so no payroll run produces a surprise.
• Mark the heavy months in your cash forecast. Treasury should know which months carry larger outflows before they arrive.
• Check what happens at exit. When an employee leaves mid-year, the portion of extra pay earned up to that point is generally still owed. Include it in any separation planning.

Communicating with the candidate  

Offers in Italy are often discussed in terms of gross annual salary. A candidate may ask how many payments that is divided into. Be ready to answer clearly. If your offer is a fixed annual number, say whether it already includes the extra installments. Confusion here leads to disputes later, and it can make an offer look smaller or larger than you intended.

It also helps to explain the structure to your US leadership. A hire with a given annual salary does not cost that figure divided evenly across the months. The pattern is lumpy, and that is normal.

What to do next  

Treat the thirteenth and fourteenth month as fixed parts of compensation. Confirm the applicable agreement first. Then build your forecast on the full annual cost, accrue monthly, and flag the heavier payroll months in advance.

Done this way, the extra installments stop being a surprise. They become one more line in a predictable budget.

Try the cost calculator to see the full annual cost of an Italian hire, including extra monthly installments.