Non-compete covenants: what to read before you sign

A non-compete covenant often appears at a positive moment: a new job, a role change, a pay rise. In that context, it can seem like a formality, just another clause among many. Its real weight is only felt years later, when an interesting offer arrives from a company in the same sector and one must question whether they are free to accept it.

What the covenant governs

A non-compete covenant (in Italian, patto di non concorrenza) restricts the work an employee can perform after their employment ends, for a defined period. During employment, a duty of loyalty already exists; the covenant serves to extend certain restrictions to the post-employment period. Because it affects an individual's ability to work, Italian law sets specific requirements: it must be in writing, with defined limits on its scope, duration, and territory, and include consideration for the employee. However, the assessment of each element depends on the specific case, and there is extensive case law on these matters.

Duration

The law sets maximum durations, which differ for executives (dirigenti) and other employees. Within these limits, it is wise to consider how long the restriction will last in relation to your career path. A few months has a very different effect from several years, especially in sectors where skills evolve quickly.

Restricted activities

This is the element that requires the most careful reading. Does the covenant prohibit working for direct competitors, for any company in the sector, or from carrying out a specific activity? Is it limited to the role held, or does it extend to different duties? A very broad formulation can, in effect, prevent you from using your professional skills. A precise formulation, by contrast, allows for a clear understanding of what you will be permitted to do.

Territory

Does the restriction apply to a city, a region, Italy, or Europe? The geographical scope should be read in conjunction with the restricted activities. A wide territory may be consistent with a very specific activity, whereas the combination of a wide territory and a generic scope is what most limits future opportunities.

Compensation

The covenant must provide for consideration, which can be paid during the employment or at its termination. The adequacy of this compensation relative to the scope of the restriction is one of the most debated aspects. It is advisable to check how it is calculated, when it is paid, and what happens if the employment ends early. A monthly amount on the payslip, for example, has a very different value if the employment lasts for one year versus ten. The company's right to waive the covenant, and under what conditions, should also be considered.

Consequences for future choices

The most useful question to ask before signing is a practical one: if I wanted to change jobs in a few years, what opportunities would remain open? Which would be excluded? Professional repositioning helps clarify which roles or sectors you want to move towards; reading the covenant, in turn, helps to understand if and how the restriction affects that direction. Anyone comparing two job offers should perform both checks, as a covenant in a current contract can influence the choice, and one in a new proposal can weigh on subsequent moves. The same applies when resigning, when it is useful to re-read the covenant before communicating your decision.

A clear and proportionate covenant is not necessarily a problem: it protects the company's legitimate interests and provides compensation to the employee. It becomes critical when it is signed without a full understanding of its scope. For this reason, it is worth reading it carefully and, if anything is unclear, seeking advice before signing.