DID YOU KNOW THAT… a non-compete agreement is null and void if it imposes excessive restrictions that prevent the employee from accessing the labor market?  

With order no. 11765 of May 5, 2025, the Italian Supreme Court ruled that a non-compete agreement is null and void when it imposes excessively broad territorial restrictions and offers only minimal compensation—resulting in an unjustified and disproportionate limitation on the employee’s right to work and earn a living. 

In the case at hand, a banking institution had required one of its employees to accept a particularly restrictive non-compete clause. The agreement prohibited the employee from engaging in any professional activity in the banking, insurance, or financial sectors—both within Italy and abroad—for a duration of 12 months. In return, the employee received compensation amounting to just 10% of their gross annual salary (i.e. “RAL”). The clause, as drafted, completely barred the individual from accessing the job market in their area of expertise. 

The lower court had already ruled the agreement null and void, primarily due to the lack of defined—or even objectively determinable—territorial limits. This issue was further compounded by the employer’s unilateral right to modify the geographical scope of the restriction through the exercise of its discretionary power (i.e. “ius variandi”), thereby rendering the scope of the clause uncertain and unstable. 

The Italian Supreme Court upheld that ruling, stating that under Articles 1346 and 2125 of the Italian Civil Code, a non-compete clause is valid only if the following conditions are met: 

• its object, duration, and territorial scope must be clearly defined or objectively determinable at the time of signing; 

• the compensation must be proportionate to the restriction imposed; 

• the restriction must not be so extensive as to completely prevent the employee from accessing the labor market. 

With specific regard to the territorial scope, the Supreme Court confirmed that the clause allowing the employer to unilaterally redefine the geographical boundaries made the agreement legally uncertain. The absence of predetermined or determinable limits undermined the enforceability of the clause and deprived the employee of any clear understanding of the restriction’s scope. 

The Italian Supreme Court therefore confirmed that a valid non-compete agreement must reflect a fair balance between the employer’s legitimate business interests and the employee’s fundamental right to work. It must allow the employee a real and concrete opportunity to continue exercising their profession, and it must provide compensation that is adequate and proportionate to the burden imposed. 

In conclusion, a non-compete clause that is overly punitive, lacks fair compensation, and deprives the employee of genuine professional alternatives will be deemed null and void, in line with the principles of contractual fairness, individual autonomy, and the free circulation of labor. ll’intero accordo, a tutela dell’autonomia professionale e della libera circolazione del lavoro.

Other related insights:  

• DID YOU KNOW THAT… non-compete agreement null and void if conditional on employer decisions affecting employment relationship?
• Non-competition agreement remuneration. How the nullity cases work (Guida al Lavoro de Il Sole 24 Ore, 19 March 2021 – Vittorio De Luca, Antonella Iacobellis)