Are NDAs legally binding in Italy? A guide for employers [2024]
Managing a remote team and ensuring effective, compliant onboarding can be challenging for any global company. But, one step you must take when hiring Italian employees is including a non-disclosure agreement (NDA) in your employment contract. While Italian laws offer some protection for confidential information, an NDA is necessary to fully safeguard the company's sensitive information and intellectual property rights.
In Italy, Article 2105 of the Italian Civil Code prohibits employees from disclosing information about the company's organization and manufacturing processes. However, without a confidentiality agreement, proving the unlawful disclosure of confidential information can be difficult.
So, how can you protect your company under Italian law? Are NDAs legally enforceable in Italy? Keep reading to learn the answers to these questions and more.
What is an NDA?
A non-disclosure agreement (NDA) is a legal contract that stops the parties involved from sharing confidential or proprietary information with outside parties. NDAs (in Italian, "accordi di riservatezza") are frequently used to protect trade secrets, proprietary information, and other confidential information in the workplace, preventing competitors from gaining access.
Are NDAs enforceable in Italy?
In Italy, NDAs are enforced in employment relationships through legally binding contracts governed by the Italian Civil Code.
For an NDA to be legally binding in Italy, it needs to be written down and include precise details about who's involved, details on the confidential information, and how it will be used. Any exceptions to the use of confidential information must also be stated, along with how long the information will be kept confidential. All parties must sign the agreement willingly and without pressure.
(Note: our guide is for informational purposes and isn’t intended to provide legal advice.)
Three things you need to know about NDAs in Italy
Although the Italian Civil Code offers some safeguards for intellectual property and confidential information, it may not be enough to fully protect your company in Italy.
- An NDA must be specific. In 2018, a judgment in the Tribunal of Milan considered a confidentiality clause null due to its vagueness and limited its effect and protection. Broad definitions or vague obligations of the receiving party under the NDA may not protect your company as you’d expect. The information the parties consider confidential must be clearly identifiable by the non-disclosure agreement.
- Penalty clauses in an NDA. It’s recommended to include a penalty clause in an NDA to encourage employees to comply and mitigate the risk of disclosure of know-how. When drafting the compensation amount in the clause, it's essential to keep it reasonable to avoid any reduction in the amount of compensation awarded by a judge in case of damages.
- Without an NDA, you may not be able to prove unfair competition. Again, the protections offered by the Italian Civil Code aren’t enough to protect your company, especially in the case that a dispute makes it to court.
According to the Italian Civil Code, there is a duty to keep information confidential. However, without an NDA, an employee can legally switch jobs and disclose confidential information to a competitor. In 2018, the Tribunal of Bologna ruled that it is lawful for employees and directors to use their knowledge to carry out similar activities for a competing employer as long as there is no written agreement regarding confidentiality.
When would an employee or contractor sign an NDA?
You can include the NDA with the employment contract or offer letter as part of the onboarding process. It’s best for them to sign it before their first day.
Frequently asked questions about NDAs in Italy
Are NDAs enforceable in Italy?
Yes, Italy does enforce NDAs in different business settings, including employment relationships.
These confidentiality agreements are legally binding contracts governed by the Italian Civil Code. While Italian law already protects confidential information, taking additional measures to safeguard the company's interests is still crucial.
Are NDAs enforceable overseas?
The enforcement of NDAs can differ overseas depending on the jurisdiction and laws.
To ensure proper enforcement, the NDA should specify the jurisdiction and governing law before signing, so that lawyers can enforce it accordingly.
What information can be covered by an NDA?
A well-written NDA can help employees understand expectations about what's confidential and what consequences they will face if they breach the agreement. An NDA can cover the following:
- Trade secrets. In Italy, trade secret information is protected by Articles 98 and 99 of the Industrial Proprietary Code. It refers to any confidential information with commercial value that is not publicly available and which the owner can prevent third parties from using or acquiring without authorization. On top of that, trade secrets are protected from unlawful acquisition, use, and disclosure by Article 623 of the Italian Criminal Code.
- Customer data includes the names, contact information, and buying habits of a company's customers that can be valuable to a competitor.
- Intellectual property. The company must safeguard its intellectual property rights, which include patents, copyrights, and other valuable and confidential information.
- Employee data. Under the Italian Privacy Code, employers must protect employees' private information, such as their salaries.
- Business strategy includes financial information, marketing details, and other information that maximizes the company's protection against unfair competition.
An NDA can’t protect public domain information because it’s already accessible to the public and competitors. However, whistleblowers can still report fraud under an NDA if they do so in good faith. Italy enacted the Whistleblowing Decree in March 2023, which permits the breach of NDAs to expose wrongdoing.
When should you use an NDA?
Common situations to use an NDA in Italy include:
- When assessing a possible business agreement that involves exchanging confidential business data
- When onboarding a new employee or contractor, before sharing sensitive company information
- When sharing financial information with a potential partner or investor
- When embarking on a new business partnership to safeguard all aspects of your company
- When bringing a new vendor on board, ensure confidential information is not shared without authorization
Is an NDA the same as a confidentiality agreement?
Yes. Non-disclosure agreements, NDAs, and confidentiality agreements all mean the same thing.
Is an NDA the same as a non-compete agreement?
No. A non-compete, written agreement restricts an employee from participating in any activities that may be viewed as competitive, such as accepting a position with a rival company, for a specific duration after resignation or employment termination.
In Italy, the employee's non-compete obligation toward their employer is regulated by the Italian Civil Code. This non-compete clause applies during and after the employment relationship. According to Article 2125 of the Code, such agreements cannot exceed three years (or five years for managers). They must be in writing, specify the prohibited competitive activities and their location, and provide compensation for the loss of professional skills. These agreements must provide financial compensation to the employee, paid on top of their regular salary—ranging from 20% to 40% of their gross annual remuneration. The non-compete clause must be reasonable to be valid.
Benefits of confidentiality in Italy
An NDA helps safeguard your company's reputation and prevents competitors from accessing your overall business strategy to gain unfair competition. Because it is a legally binding contract, it gives the employer the right to take legal action in the case of a breach—this includes business secrets being leaked, proprietary information being disclosed, and so on.
What happens if an NDA is breached?
In the event of a breach of the confidentiality agreement, the disclosing party reserves the right to terminate the agreement, pursue legal recourse to enforce the penalty clause and seek compensation against the breaching party.
It's crucial to locate a reputable, local law firm in Italy with a comprehensive understanding of case law to ensure enforcement of the NDA and a beneficial court decision. The specific circumstances of the breach will determine the legal process.
The employer is entitled to all remedies available to intellectual property rights holders if the disclosed proprietary information is also a trade secret safeguarded under the Italian Civil Code of Industrial Property.
Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.
