Italian Supreme Court clarifies compensation rules for non‑compete clauses and board member pay

The Court of Cassazione issued two rulings in early 2026 that reshape how Italian employers must handle compensation tied to restrictive covenants and the remuneration of company directors.

In the non‑compete decision (ordinance No. 436/2026), the Court reaffirmed that a valid agreement must be in writing, specify a clearly defined prohibited activity and geographic scope, and provide a compensatory payment that is determinable and proportional to the worker’s sacrifice. Annual payments during the employment relationship are permissible, but the amount must not be merely symbolic.

In a separate ruling (ordinance No. 21867/2026), the Court held that a director’s remuneration can only arise from the act of appointment or a shareholder resolution pursuant to article 2389 of the Civil Code. Absent such formal authorisation, a claim for unjust enrichment under article 2041 is barred. The decision underscores the strictly corporate nature of the director‑company relationship.

Both judgments provide clearer parameters for drafting employment and governance contracts, aiming to protect employee rights and ensure transparent corporate remuneration practices.