UK Redundancy Pay vs Italian TFR and Collective Dismissals (Law 223/1991)

“Redundancy” in the UK is a defined legal concept with a statutory payment and a consultation process. Italy has no direct equivalent of statutory redundancy pay. Instead, every employee builds up TFR (trattamento di fine rapporto) from day one, paid whatever the reason employment ends, and business-reason dismissals follow their own rules.

UK redundancy pay  

An employee with two years’ continuous service who is dismissed for redundancy is entitled to statutory redundancy pay: half a week’s pay for each full year under age 22, one week’s pay for each year aged 22 to 40, and one and a half weeks’ pay for each year aged 41 or over, up to 20 years. Weekly pay is capped, and so is the total. See gov.uk on redundancy pay for the current caps. Many employers pay an enhanced amount under contract or policy.

Resignation, dismissal for conduct or leaving within two years gives no statutory redundancy pay.

Italian TFR: deferred pay, not redundancy pay  

Under article 2120 of the civil code, the employer sets aside each year an amount equal to the year’s pay divided by 13.5 (about 7.41% of the relevant pay before a small contribution offset, commonly quoted as about 6.91% net). The accrued fund is revalued every year by 1.5% plus 75% of the ISTAT inflation index, and is paid when employment ends, for any reason: resignation, dismissal, end of a fixed term or retirement.

Two practical points:

• It is a cost from month one. Budget TFR as part of salary cost, not as a contingency.
• The employee can choose a pension fund. Within six months of hiring, the employee decides whether future TFR goes to a supplementary pension fund. Employers with at least 50 staff (average in their first year of activity) pay TFR not sent to a fund into the Fondo di Tesoreria managed by INPS; from 2026 employers that grow later are also caught (60+ staff in 2026–2027, 50+ in 2028–2031, 40+ from 2032; INPS circular 12/2026 ).

Individual business-reason dismissal  

To make one role redundant in Italy, you need a justified objective reason (giustificato motivo oggettivo, Law 604/1966): a real organisational change that removes the role, and proof that the employee could not be redeployed to an equivalent (or, under case law, even a lower) available role. Courts check that the reason is genuine and that the selection of the person is fair. Notice or indemnity in lieu applies, plus TFR.

Unjustified dismissals lead to compensation measured in months of pay (see our dismissal guide ). The employer also pays a contribution to INPS on most dismissals, to fund the NASpI unemployment benefit (the so-called “ticket di licenziamento”). In 2026 the contribution is €649.73 for each 12 months of service in the last three years (41% of the €1,584.70 monthly NASpI cap), so up to €1,949.19 per employee; in a collective dismissal without a union agreement it is tripled (art. 2, paras. 31 and 35, Law 92/2012).

Collective dismissals: UK vs Italy  

Under TULRCA section 188 , UK employers must consult employee representatives and notify the government. The Employment Rights Act 2025 doubles the maximum protective award for failing to consult from 90 to 180 days’ pay, in force from 6 April 2026 ( s.30 ).

Italy’s Law 223/1991 procedure is more formal. The employer sends a detailed letter to the works council (RSA or RSU) and the unions, explaining the reasons, numbers, roles and timing. A joint examination follows, then, if no agreement is reached, a further phase at the labour office. Only after the procedure ends can the employer dismiss, applying the selection criteria and notifying the lists to the authorities. Errors in procedure or criteria can invalidate the dismissals.

For a small Italian headcount employed through an EOR, the collective procedure is unlikely to apply because the thresholds are counted at the employer level, but this depends on the EOR’s own size and organisation. Check before planning a team-wide exit.

Settlement and exit packages  

In the UK, a settlement agreement with independent legal advice is the usual route to a clean exit. In Italy the equivalent is a conciliation agreement signed in a protected setting (labour office, union, certification commission or court). Only these settlements are fully binding on waivers of statutory rights. An exit package (incentivo all’esodo) is common for business-reason exits, and its tax treatment differs from salary.

Budgeting the difference  

A UK employer’s redundancy exposure is often zero for the first two years. In Italy:

• TFR accrues from day one and is always paid;
• notice or indemnity in lieu is always due (except for just cause);
• a negotiated package is common for business-reason exits to avoid litigation;
• the NASpI contribution applies to most dismissals.

None of this makes Italy unaffordable. It makes exit costs predictable and front-loaded into payroll. Use the calculator to see TFR inside the monthly employer cost.

TFR advances and employee requests  

Unlike UK redundancy pay, TFR can sometimes be paid before the end of employment. Under article 2120, employees with at least eight years of service can ask for an advance of up to 70% of the accrued amount for specific purposes such as medical costs or buying a first home, within annual limits on the number of requests the employer must accept. It is rare in a young team, but it shows that TFR is the employee’s money held by the employer, not a discretionary payment.

Common mistakes UK employers make  

• Assuming a short-service employee can be let go for business reasons at no cost, as they might be in the UK before two years.
• Planning a “redundancy” for one person while hiring a similar role elsewhere in Italy, which undermines the objective reason.
• Using UK selection matrices without checking the Italian statutory criteria in a collective procedure.
• Paying an exit sum without a protected-setting settlement, leaving claims open.
• Forgetting TFR in the final payment timeline; it is due with final pay under most CCNLs.

What this means if you hire through an EOR  

Our EOR fee covers payroll and administration, including accruing and paying TFR and handling exit paperwork. If you need to close a role, tell us early: we check the CCNL, the reason, redeployment options and the cheapest lawful route, which is often a negotiated agreement signed in a protected forum.

Related guides for UK companies  

• Notice and PILON vs Italian notice
• NI, PAYE and pension vs INPS, IRPEF and TFR
• Italy vs UK overview
• Italian employment contracts

General information, not legal advice. Contact us before planning any redundancy.