Is non-competition compensation recoverable if the agreement is void? No, if it is disguised as salary

1. The case analysed in the judgment

The facts of the case centre on a Technical Engineer who provided services to a company specialising in the design and manufacture of industrial machinery in the province of Lleida from 2015 to 2020. His contracts included a specific post-contractual non-competition clause with a duration of 24 months.

The distinctive feature of the case lies in the structure of the compensation: the company did not pay a fixed, separate sum, but stipulated that “any salary increase the employee receives above the collective agreement (…) shall be considered compensation for the non-competition clause”. After being unfairly dismissed, the employee began working for a direct competitor in the same province just two days later. Faced with this situation, the company filed a claim demanding the repayment of €34,846.24, corresponding to the total ‘excess salary’ paid over five years.

2. The company’s stance / distinguishing feature of the case

The company attempted to protect itself through a generic absorption clause, seeking to ensure that any voluntary salary increase would simultaneously serve as payment for future non-competition.

3. Dismissal or ruling at first instance

Initially, Labour Court No. 1 of Lleida ruled in favour of the company. The trial judge considered that, given the employee’s flagrant breach of contract (having immediately joined a direct competitor), he was required to repay the sums received under that heading.

However, following the employee’s appeal, the High Court of Justice of Catalonia overturned that decision. The High Court held that the agreement was void and that the company could not claim repayment, on the grounds of the disproportionate nature of the sum and that the invalidity of the agreement stemmed from an unlawful arrangement devised by the employer itself.

4. Judgment upheld by the higher court — legal analysis

The Supreme Court, by means of the Supreme Court Judgment (Social) of 25 February 2026 (Case No. 561/2024), dismissed the company’s appeal and upheld the acquittal of the employee. The technical core of the ruling rests on three fundamental points:

• Legal Nature (Salary vs. Compensation): The Court applies the doctrine of the Plenary Session (Supreme Court Judgment 14/12/2023), emphasising that if the compensation is defined as an ‘increase in salary above the collective agreement’, it acquires a strictly salary-based nature. As it is a salary, it remunerates work already performed and cannot be deducted or claimed subsequently on the grounds of a breach of a non-competition clause.
• The Rule on Ambiguous Clauses (Article 1288 of the Civil Code): The ruling is unequivocal: a lack of clarity in the wording of a contract cannot benefit the party responsible for such ambiguity. If the company drafted an ambiguous clause that conflated salary and compensation concepts, it must bear the consequences.
• Application of the Workers’ Statute: Although Article 9.1 of the Workers’ Statute allows judges to consider the validity of remuneration following a partial nullity, the Supreme Court considers that in this case no refund is warranted. This is not a case of non-competition compensation, but of ordinary salary.

5. Conclusion. Practical implications for the company

At Belzuz Abogados, S.L.P., as expert employment lawyers with extensive experience in providing comprehensive legal advice, we consider that this Supreme Court ruling must be given serious consideration when structuring the company’s remuneration and contractual policies. The ruling demonstrates that poor drafting can deprive the company of its ability to protect itself against the loss of talent to competitors.

The main conclusion is the obligation to clearly separate remuneration for work (salary) from compensation for the restriction of professional freedom (indemnity). Attempting to have the basic salary or voluntary bonuses ‘absorb’ the cost of the non-competition clause is a strategy which, in light of this case law, not only renders the agreement null and void but also precludes any claim for reimbursement against the non-compliant employee.

We consider this ruling to be key when making decisions regarding the termination of employment contracts that may affect employees with non- r non-competition clauses. We recommend seeking legal advice on the matter given the significance of the legal implications—particularly regarding the determination of the legal nature of the payments made—of decisions relating to dismissal or contract termination.

If you require specialist advice on fair dismissal or work-life balance rights, the team at Belzuz Abogados, S.L.P. is at your disposal to analyse your specific case.

FREQUENTLY ASKED QUESTIONS (FAQ)

1. Can I agree that the employee’s voluntary bonus includes payment for non-competition?

According to recent Supreme Court case law (STS 25/02/2026), entering into a generic agreement where the amount exceeding the collective agreement compensates for non-competition is highly risky. If the clause is ambiguous or mixes concepts, the court will consider that money to be simply salary. Consequently, if the employee breaches the post-contractual non-competition agreement, the company will not be able to claim the return of those sums, as they are considered remuneration for services rendered and not compensation for the restriction of their future career.

2. What criteria must adequate financial compensation meet to be valid?

For an agreement to be legally binding under Article 21.2 of the Workers’ Statute, it must meet three criteria: a legitimate industrial interest, a time limit (a maximum of two years for technical staff) and adequate financial compensation. The latter must be a specific amount, identifiable on the payslip and sufficient to compensate for the loss of income the employee will suffer by being unable to work in their sector. If the company uses the regular salary to ‘pay’ for this agreement without clearly distinguishing it, the agreement will be declared null and void due to a lack of actual consideration.

3. How should the company draft the clause to be able to recover the money if the employee breaches the agreement?

The key is clarity and the compensatory nature of the payment. The clause must specify that a specific monthly amount is paid exclusively as compensation for non-competition. It must state that, in the event of a breach, the employee must repay that sum. It is vital not to use expressions that link this payment to ‘salary increases’ or ‘improvements on the collective agreement’, as this implies the nature of a salary and renders the money unrecoverable according to the doctrine established in Supreme Court judgment No. 194/2026.