European Employment Insights – January 2026

| Insights

Practical Guide to Non-Compete Clauses:

The monthly in-depth publication dedicated to updates in the field of employment law, prepared by Andersen professionals in over 28 European countries, opens the new year with a practical guide to non-compete clauses from a comparative European perspective.

The guide provides a clear and operational overview of national regulations on non-compete obligations and post-contractual restrictions—among the most sensitive and often misunderstood tools available to employers to safeguard strategic business interests.

Understanding how the rules operate across different jurisdictions enables employers to make informed decisions: assessing whether to include a non-compete clause only when strictly necessary, considering possible alternative instruments, and effectively planning the costs and legal risks associated with the post-termination phase of the employment relationship.

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Non-compete regime in Italy

For Italy, the topic was examined in depth by Partner Uberto Percivalle, Head of the Employment & Labor service line, who outlined the non-compete framework both during the employment relationship and in the period following its termination.

Non-compete during the employment relationship:

The Italian Civil Code expressly prohibits employees from engaging in activities that compete with their employer for the entire duration of the employment relationship. The prohibition does not only concern formally competing activities, but also conduct that may be detrimental to the business.

This principle is directly linked to the duty of loyalty, a cornerstone of the employment relationship, which requires employees to safeguard the employer’s interests.

Case law interprets these obligations broadly, considering relevant even conduct that, while not strictly falling within the employee’s assigned duties, may nonetheless harm the company. In line with European regulations, however, the employer may not prohibit employees from carrying out secondary activities outside working hours, except where justified by reasons relating to health and safety or conflicts of interest.

Post-termination clauses:

Post-contractual non-compete agreements are expressly regulated by the Italian Civil Code, which sets out their validity requirements, including written form, consideration, duration, and a clearly defined scope of application.

In practice, companies also rely on other restrictive covenants that are not specifically governed by statute, such as non-solicitation of employees and non-solicitation of clients clauses. From an operational standpoint, these instruments represent effective alternatives, and the Supreme Court (Corte di Cassazione) has clarified that they are not subject to the same limitations applicable to non-compete agreements.

Additional tools frequently used include confidentiality obligations expressly extended to the period following termination of the employment relationship.

Duration of the non-compete agreement:

For a non-compete agreement to be valid, its duration cannot exceed three years, extendable up to five years for executives. If a longer duration is stipulated, the clause remains valid but is automatically reduced to the legal limits.

Fair consideration for the non-compete agreement:

A key element is the recognition of adequate and proportionate consideration for the sacrifice required of the employee.

Case law has identified guiding criteria: in many instances, an amount equal to approximately 40% of the employee’s gross annual salary is considered appropriate. Payment can be made during the employment relationship—a solution deemed legitimate by the Supreme Court (Corte di Cassazione)—or after termination, either as a lump sum or in installments.

Formal requirements for the validity of a non-compete agreement

Additional essential requirements include:

a. A clear and precise definition of the prohibited activities. The scope must be defined or definable, while still allowing the former employee a real opportunity to engage in work consistent with their skills.
b. Specification of the geographical area of application, which must be specific and proportionate to the company’s relevant market.
c. Written form, which is required under penalty of nullity.

Remedies and sanctions in case of breach:

In the event of a breach of the agreement, the employer may seek the cessation of the competing activity, compensation for damages, and the return of any sums paid as consideration. In practice, penalty clauses are frequently included.

Conversely, if the employer fails to comply—for example, by not paying the agreed consideration—the former employee may obtain a judicial order for payment and can request the annulment or ineffectiveness of the agreement.

Flexible obligations in favor of the employer:

In the past, clauses allowing the employer to unilaterally activate the non-compete agreement at a later time were common. Today, such provisions are heavily debated and often deemed null by case law, as are clauses granting the employer a unilateral right to withdraw from an already agreed-upon non-compete agreement.