Non-competition agreement: the payment is valid even if paid during employment (Norme & Tributi Plus Diritto – Il Sole 24 Ore, 7 September 2021 – Alberto De Luca, Roberta Padula)

The Court of Cassation, with order no. 23418 of 25 August 2021, returned to deal with the subject of requirements for validity of non-competition agreements. The Court’s ruling is based on appeal lodged by a bank manager who (among other claims submitted) had challenged a signed non-competition agreement, considering it vitiated, since the payment was paid during employment and was random and at any rate inconsistent, thus amounting to a violation of the requirement cited in art. 2125 of the Italian Civil Code. In the case in question, the non-competition agreement included the manager’s commitment not to perform, in certain regions of north and central Italy, similar activities or duties as those performed for the Bank for the duration of three months, for a payment equal to 10,000 euro per annum, to pay annually together with the monthly salary.

The Court of Milan, asked to rule on the merits, had acknowledged and declared the nullity of the non-competition agreement, and with that releasing the manager from payment of the penalties for breaching it, however sentencing the plaintiff to return the sum received as payment. During the next challenge of the ruling, the Milan Court of Appeals, overturned the decision of the lower court on the point, declaring the non-competition agreement valid holding that no irregularity existed (in terms of randomness or inconsistency) regarding the quantification of the payment that, on the contrary could, according to the Court, be validly paid during employment along with remuneration. Objecting to the higher court’s ruling, the manager lodged an appeal with the Court of Cassation.

Continue reading the full version published in Norme & Tributi Plus Diritto of Il Sole 24 Ore.