When is a non-compete agreement void?

The non-competition agreement is an agreement between the employer and the employee by which the latter undertakes not to carry out competitive activities even in the post-contractual phase, i.e.
after the termination of the employment relationship.
The law, in fact, prohibits the employee from carrying out activities in competition with the employer, but this prohibition depends on the employment contract and is aimed at protecting the company from possible damage.
Consequently, upon expiry of the contract the employee can work for a company competing with the former employer or start a similar business on his own.
Although this is legal, it is possible that the former employer could thus suffer damages due to the skills and information acquired by the worker while carrying out the activity as an employee.
With the non-competition agreement you can circumvent this obstacle in a completely legitimate way, as long as the requirements established by law are respected.
Otherwise, the non-compete agreement is void and the former employer has no protection.
Void non-competition agreement When the non-competition agreement is void 1.
It was not stipulated in written form 2.
The ban lasts longer than allowed by law 3.
The worker does not receive compensation 4.
Limits to non-competition What is risks if the agreement is void When the non-competition agreement is null The non-competition agreement must comply with the precise requirements established by law, so that the employer can protect itself but without this resulting in an excessive burden for the worker.
Failure to comply with the essential requirements entails the nullity of the agreement and the impossibility for the parties to take action against each other in the event of failure to comply with the conditions.
Specifically, this is when the non-compete agreement is void.
It was not stipulated in writing The competition agreement must be in writing, as required by law.
It is not necessary to formalize the agreement in the presence of the notary, but a private agreement is also sufficient, provided it exists.
Very often the non-competition agreement is explicitly stated directly in the employment letter, but it is also possible to do so in a separate document.
In the absence of writing, for example with a verbal agreement, the agreement is void.
The ban lasts longer than allowed by law.
The non-competition agreement cannot have an arbitrary duration, because extending the ban for an excessive time would compromise the worker's career.
It is necessary to balance this aspect with the need to protect the employer and the company, therefore the law imposes different limits depending on the qualification of the employee.
In particular, the non-competition agreement can have a maximum duration of 3 years for employees hired as managers, clerks and workers, but goes up to 5 years for managers.
The non-competition agreement that imposes a higher prohibition is void for the excess, but remains valid for the maximum period established by law.
The worker does not receive compensation.
The employee must not be forced to accept the non-competition agreement by virtue of the employment relationship, but has the right to receive compensation, also because by virtue of the agreement his ability to find employment is lower and therefore must be protected.
Consequently, the non-competition agreement is void when it does not provide compensation for the employer, but also when the expected compensation is not proportionate to the sacrifice requested.
In fact, it is necessary to consider the extent of the limits imposed on the worker and the duration, agreeing on a suitable fee.
In implementing this analysis, judges often take into account the gross annual salary received by the employee at the end of the employment relationship, precisely in reference to employment limits.
Be careful, however, that this criterion cannot be adopted as a basis, since it is independent of the employment contract, but only as a further evaluation parameter.
The remuneration must in fact be at least determinable regardless of the employment contract.
Limits to non-competition The non-competition agreement must contain the precise limits of object and place that the worker must respect, therefore if there is no indication on the prohibited activities and the geographical extension of the prohibition the agreement is null and void.
Not only that, the Court of Cassation has often recalled that the non-competition agreement is to be considered null even if the indications of place and object are excessively broad, too burdensome for the employee without being justifiable by the needs of the employer.
For example, the non-competition ban extended generically to the entire national or even European territory is to be considered null and void.
Prohibited activities must also be delimited and comply with competitive risks.
The determination of the activities and geographical extension is then fundamental for the evaluation of the consideration.
What is the risk if the agreement is null When the non-competition agreement is null the worker is not required to respect its limits, after the termination of the employment relationship he can carry out the activities he prefers without the employer being able to take action against him for breach of contract, obtain compensation for damages and the restitution of the consideration, as well as the cessation of the conduct.
read also Non-competition agreement and duty of loyalty: the rules for employees

Author: A.W.M.

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