Analysis of Άρειος Πάγος (Hellenic Supreme Court) Decision No 1183/2025 & Law 5239/2025
Introduzione
The recent decision of the Supreme Court (Areios Pagos) No 1183/2025 marks a significant development in Greek employment law regarding post-termination non-compete clauses. Under this ruling, such clauses must include a provision for reasonable financial compensation to the employee, if they are to be valid and enforceable. At the same time, the enactment of Law 5239/2025 introduces further regulatory changes in the employment field, which must be read in context. In this article, we provide an in-depth legal analysis of the Court’s reasoning, its implications for employers and employees, and practical guidance for drafting and enforcement of non-compete provisions.
Legal Background: Non-Compete Clauses in Greek Law
Non-compete clauses (συμφωνίες μη-ανταγωνισμού) in employment relationships restrict an employee, after termination of the employment contract, from engaging in professional activities competitive to the employer. Historically, Greek case-law considered several factors when assessing validity: duration, geographic scope, subject-matter of the restricted activities, the legitimate interest of the employer, and good faith (καλή πίστη) and fairness. Until now, the presence of explicit compensation for the restriction had been considered as a factor—but not necessarily a strict prerequisite for validity.
A key feature is the balancing of interests: the employer’s right to protect confidential information, business secrets, client‐lists, investment in training, and other legitimate interests; and the employee’s right to exercise professional freedom (περιορισμός της επαγγελματικής ελευθερίας) following termination. Good faith and proportionality principles play a central role.
Decision No 1183/2025: Key Findings
Although the full text of decision 1183/2025 is not publicly accessible via standard online databases at the time of writing, the reported holdings are as follows:
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The Court holds that a post-termination non-compete clause is invalid if it does not provide reasonable compensation to the employee for the restriction imposed.
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In the Court’s own words:
“In the context of the balancing of the conflicting interests of the employer and the employee, as required by the principle of good faith, a critical and indispensable criterion for the validity of such a post-termination non-compete clause is the inclusion, or not, of a provision for reasonable compensation in favour of the employee. An agreement prohibiting the employee from engaging in competition after termination must not and cannot be deemed valid when, as consideration for such restriction, no reasonable compensation has been provided by the employer.”
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This holding effectively shifts the jurisprudential landscape: the absence of compensation now renders the clause automatically invalid (rather than being one factor amongst many).
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The Court did not define precisely what constitutes “reasonable compensation”, but emphasised that the measure should reflect the duration and territorial scope of the restriction and be proportional to the employee’s salary.
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The decision aligns Greek case-law with prevailing scholarly opinion, which long held that compensation is a necessary element given the significant encroachment on the employee’s freedom to work.
Interaction with Law 5239/2025
On 17 October 2025, Law 5239/2025 (Government Gazette A’ 178) was published. Key provisions (which have been analysed in our earlier newsletters) include reforms in employment contracts, non-competition regimes, and employer/employee obligations. While the law does not appear to explicitly codify the compensation requirement for post-termination non-compete clauses, the new legislative framework provides context and impetus for employers to reassess their contractual architecture in light of the new jurisprudential standard.
In practice, employers should anticipate closer scrutiny of non-compete clauses, and adjust their drafting practices to comply with the heightened threshold of validity established by the Supreme Court.
Practical Implications for Employers & Employees
Employers should take note of the following:
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Existing employment agreements with post-termination non-compete clauses lacking a clear compensation provision may be vulnerable to invalidation.
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When drafting new or renewing existing clauses, ensure inclusion of a clear compensation clause, specifying amount, method and timing of payment, and link to the period/territory of restriction.
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The clause should still satisfy the classic validity criteria: (a) protect a legitimate business interest (trade secrets, client lists, etc); (b) delineate the restricted professional activity with precision; (c) define a reasonable territorial and temporal scope; (d) define the compensation.
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Compensation benchmarks: While Greek jurisprudence has not yet quantified “reasonable compensation”, comparative practice in European jurisdictions suggests amounts of ≈ 40-50% of former remuneration during the restriction period can serve as a guideline.
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Proactive review: Companies should audit all non-compete clauses and implement amendments or replacements where required.
Employees should be aware:
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If your post-termination non-compete clause does not provide for reasonable compensation, you may challenge its validity in court.
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When negotiating such clauses, request clarity on the compensation amount, its calculation, payment mechanism and duration of the restriction.
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Be aware of the scope: restrictions on your ability to work may not be enforceable if the geographical scope or term is excessive, even if compensation is provided.
Drafting Checklist for Valid Post-Termination Non-Compete Clauses
To maximise enforceability under current Greek jurisprudence (and likely under the evolving legislative framework), follow this checklist:
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Legitimate interest: clearly state the employer’s protected interest (e.g., “access to trade secrets, client-lists, confidential R&D, training investment”).
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Restricted professional activity: precisely describe what is prohibited (e.g., “direct or indirect employment or self-employment in lines of business X, Y or Z for identified competitors A, B or C”).
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Territorial scope: define the geographic area (e.g., “within Greece”, “within the Region of Attica”, etc). Ensure that it is no broader than necessary to protect the legitimate interest.
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Duration: the term post-termination should be reasonably limited — global practice trends toward shorter periods (often six months), though up to two years may be acceptable if properly justified.
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Compensation: include a clear commitment by the employer to pay the employee an agreed sum during the restriction period. Specify payment terms (e.g., “the Employer shall pay the Employee an amount equal to 50% of the average monthly base remuneration over the previous 12 months, payable monthly in arrears for the duration of the non-compete period”).
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Good faith and proportionality: include a clause reaffirming adherence to good faith (καλή πίστη) and proportionality principles.
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Severability / reduction clause: in case a court finds part of the restriction excessive, include a clause allowing revision or reduction rather than rendering the entire clause void.
Outlook and Recommendations
The decision of the Supreme Court underscores a shift from viewing compensation as a “factor” to a sine qua non for validity of post-termination non-compete clauses in Greece. Employers and legal practitioners must adjust accordingly. Given the emerging legislative backdrop (Law 5239/2025) and increased awareness of employee-rights protection in the labour market, we recommend the following:
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Immediate audit of existing non-compete clauses and employment contracts, focusing on compensation provisions.
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Development of template clauses aligned with the new standard, allowing scalability and compliance across contracts.
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Training for HR and in-house legal teams on negotiation strategies with employees, balancing commercial protection and contractual enforceability.
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Monitoring of forthcoming case-law to capture further clarifications of what constitutes “reasonable compensation” in Greek courts — particularly amounts, method of calculation, and relationship to restriction duration/territory.
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Collaboration with employment/labour law specialists to navigate complex cases where multiple restrictions (e.g., confidentiality, non-solicitation) intersect with non-compete obligations.
Conclusione
The ruling of the Supreme Court in decision 1183/2025 marks a watershed in Greek employment law: post-termination non-compete clauses will no longer be deemed valid unless they incorporate a reasonable compensation provision. For employers, this means a shift from optional to mandatory treatment of compensation in non-compete agreements. For employees, it strengthens the enforceability of professional freedom post-termination.
At Tsamichas Law Firm, we stand ready to assist enterprises and employees in reviewing, drafting and negotiating such clauses, ensuring alignment with the highest academic, legal and professional standards. Please feel free to contact us for further clarification or to arrange a tailored compliance review.