Police caught 23 council employees in the town of Boscotrecase near Naples on camera clocking-in for friends or punching-in and leaving again, with two donning cardboard box disguises.
Six were put under house arrest, 13 were suspended for a year and four were suspended for six months. With their staff gone, four council offices have been forced to close their doors, the reports said.
The cabinet passed a decree in January cracking down on public sector shirkers.
Employers who turn a blind eye to time-stamp swindlers risk being sent home too.
The problem of time clock dodgers hit the front pages last year after 35 people were arrested in San Remo in northwest Italy and 195 people were placed under investigation for absenteeism.
A traffic cop who lives in the building he works in became the face of the scandal after he was secretly filmed by financial police as he clocked in in his underwear before apparently going back to bed, or got his wife to clock in for him in her nightie.