Non-Compete Reform in Australia vs Art. 2125 in Italy: Restraints, IP and Privacy

Australia is moving towards a ban on non-compete clauses for most employees, while Italy has long allowed them only if they are written, limited and paid for. For an Australian company hiring in Italy, the practical point is the same: you cannot rely on a free, broad restraint. Full comparison on Italy vs Australia .

Australia: restraint of trade today and the 2027 reform  

Today, post-employment restraints are judged under the common-law restraint of trade doctrine: unenforceable unless reasonable to protect a legitimate interest. Many employers use cascading clauses to hedge.

In the 2025 Budget, the Treasurer and the Minister for Employment and Workplace Relations announced that the Government will ban non-compete clauses for workers earning less than the high income threshold in the Fair Work Act, quoted at $175,000 at the time. The announcement also targets wage-fixing and “no-poach” agreements between businesses, flags further consultation on non-solicitation clauses and on non-competes for high-income workers, and states that, after consultation and legislation, the reforms will take effect from 2027, prospectively.

Italy: art. 2125 civil code  

An Italian non-compete (patto di non concorrenza) is valid only if:

• it is in writing;
• it provides payment (corrispettivo) to the employee, proportionate to the restriction, either during employment or at the end;
• it is limited in object (activities), place (territory) and time: 5 years for dirigenti, 3 years for other employees; longer terms are reduced to these limits.

Without payment, or if so wide that it prevents the employee from earning a living, it is void. Courts look at the amount in relation to the restriction; a token sum does not work. Payments made monthly during employment can be challenged if the total depends on how long the employee stays.

There is no high-income exemption. The same rules apply to junior and senior employees.

Non-solicitation and confidentiality  

Non-solicitation of clients is generally treated as a form of non-compete and needs the same safeguards. Non-solicitation of employees is treated with more flexibility but must still be reasonable.

During employment, art. 2105 imposes a duty of loyalty: the employee must not compete with the employer or disclose or misuse its information. This applies by law, without a clause, and is a common ground for dismissal for just cause.

Intellectual property  

In Australia, copyright in works made in the course of employment generally belongs to the employer, and contracts usually add express IP assignment. In Italy:

• Inventions made as part of the job belong to the employer; the employee has the right to be named and in some cases to fair compensation (Industrial Property Code art. 64).
• Software and databases created by an employee in performing duties belong to the employer (copyright law art. 12-bis).
• A clear IP clause in the contract is still advisable.

Privacy and monitoring  

Australia’s Privacy Act has an employee records exemption for private sector employers, and surveillance is governed by state laws. Italy applies the GDPR in full to employee data, plus art. 4 of the Workers’ Statute: tools that allow remote monitoring of employees can be installed only for organisational, production, safety or asset-protection reasons, after a union agreement or labour inspectorate authorisation. Work tools such as laptops and phones are exempt from authorisation, but employees must be given a clear policy before data can be used. Reading emails or tracking activity without those steps can make evidence unusable and expose the employer to fines.

Side by side  

Common questions from Australian companies  

Can we copy our Australian restraint clause? No. Rewrite it under art. 2125: specific activities, a defined territory, a defined period and a fixed payment.

How much should the payment be? There is no statutory formula; it is often expressed as a percentage of annual pay for each year of restriction. Agree it with a lawyer for the role.

Is garden leave an option? You can release the employee from working during notice while paying them, but it does not replace a non-compete after the notice ends.

Drafting checklist for an Italian restraint  

Before you sign an Italian contract with restrictive covenants, check five points. First, define the competing activities precisely, ideally by product line or sector, not “any competitor”. Second, set a territory that matches where the business actually competes; a worldwide scope for a junior role is likely to be void. Third, keep the duration within what is needed, which is often well below the 3-year statutory maximum. Fourth, fix a payment that is certain and proportionate, stated as an amount, not as a percentage that depends on how long the employee stays. Fifth, if you want the option to waive the restraint at the end of employment, be aware that unilateral withdrawal clauses are often held invalid by Italian courts. Add separate confidentiality and IP assignment clauses, which do not need payment, and a GDPR-compliant privacy notice that explains what data is processed and why.

What this means if you hire through an EOR  

The EOR is the employer, so the non-compete, confidentiality and IP clauses are in its contract with the employee and are typically assigned or mirrored to you. Ask for a client-side IP assignment and confidentiality agreement too, and for a GDPR-compliant monitoring policy before you install any tools. See the Italian employment contract , other countries , the cost calculator or contact us .

Related guides for Australian companies  

• Unfair dismissal in Australia vs dismissal rules in Italy
• Modern awards and the NES vs the Italian CCNL
• Superannuation and PAYG vs INPS and IRPEF

General information, not legal advice.