SERVICES
Employment contract – ancillary agreements
Non-compete covenant void: the compensation paid becomes part of remuneration
Supreme Court (Cassation), Labour Section
An employee had entered into a non-compete agreement with the company at the time of hiring, providing for the payment of a monthly sum of ITL 200,000 (EUR 103.29). This amount, paid throughout the employment relationship, was shown on the payslip as a fixed item of remuneration.
Both the Labour Tribunal and, on appeal, the Milan Court of Appeal found the covenant void for lack of the statutory validity requirements, but classified the sums paid as a component of remuneration, recognising their nature as consideration for work performed.
The company appealed to the Supreme Court, arguing that the amount constituted an autonomous payment linked to the post-contractual non-compete obligation. The Supreme Court dismissed the appeal, confirming the lower court’s decision. According to the Court, where a non-compete agreement is declared void, sums paid on that basis cannot be reclaimed, as they are deemed to have been acquired by the employee as remuneration.
The ruling reiterates that the classification of a payment as remuneration depends on its actual connection to the employment activity and its regular inclusion in payslips: in the absence of a valid non-compete agreement, the amount paid becomes remuneration for all legal purposes.