The incorporation of ancillary clauses into a non-competition agreement and, in particular, an option clause in favor of the employer and the latter’s entitlement to the right of rescission is a widely debated issue by Italian Scholars and case-law and at present a univocal standpoint does not exist.
In the Italian Civil Code the option agreement is governed by Article 1331 which expressly provides that “when the parties agree that one of them is to remain bound by his declaration and that the other has the right to accept it or not, the declaration of the first is considered an irrevocable offer for the effects provided by article 1329“.
Considering the wording of the rule, the option can be either upon payment or free although, in light of the special protection granted to employees, the payment of a fee is the preferable solution. As a rule, in any case, it happens that whoever suffers the effects of the option receives a price or fee from the grantor due to the sacrifice he has to bear.
In origin the case-law was in favour of both the option agreement and the possibility of unilateral rescission of the employer. More specifically, it was maintained that the option did not alter the structure of the non-competition agreement, since it was considered distinct form it, and therefore the institution of fraud to the law could not be invoked in the absence of concrete avoidance of the mandatory rules on freedom of work. As for the right of unilateral rescission, it was considered legitimate based on the general principles under art. 1373 of the Italian Civil Code, excluding that the attribution of this right to the employer would result in an indeterminability of the remuneration.
The case-law has changed over the years and to date it is possible to state that there are two different lines: a first one that anyway and in any case denies the possibility of exercising a right of option and a second more favorable one that states that abstractly the option on the non-competition agreement is lawful if exercised by the employer before the termination of the employment relationship with the affected employee.
With regard to this last stance, it should be noted that in any case the employer cannot declare he does not wish to avail himself of the agreement after the employee’s resignation, with the consequent entitlement of the employee to the right to receive the amount due by virtue of the agreement. And this because when the employee resigns, he must know whether or not his future activity will be limited by the agreement; the subsequent exercise of the option does not allow this, with obvious harm to the employee who might think he is not subject to restrictions, but may have instead to comply with a non-competition agreement.
With reference to the unilateral rescission the prevailing opinion is that “the termination of the non-competition agreement remitted to the will of the employer is a null clause in contrast with mandatory rules” since it is “impossible to attribute to the employer the unilateral power to affect the duration of the obligation or to cancel the agreed capital allocation”. A different solution would conflict with the need for the prior delimitation of the duration of the agreement.
(Milan Office – Marcello Giordani – 0039 (0)2 39680538)
