You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

February 24, 2022

Non-competition and Non-solicitation: Protecting Startups and Online Businesses from the Loss of Employees

Subscribe to Updates

For the past two years, the COVID-19 pandemic has had a severe impact on most businesses in Thailand, and many traditional businesses have had to take drastic measures to survive, such as reducing wages and benefits, temporarily ceasing their operations, and even laying off employees. However, a number of innovative startups and online businesses have bucked this trend, and have instead seen rapid growth during this period. These companies face a different problem: a struggle to retain their employees in the face of a fierce battle among competitors to attract top talent. This is particularly true for technicians and programmers whose expertise and technical knowledge are valuable assets for companies in these sectors.

The loss of employees to competitors can pose many risks to a business, including the exposure of trade secrets and the loss of key business contacts. To protect these interests, businesses can prepare employment contracts which contain non-competition, non-solicitation and confidentiality clauses. These clauses can be used to restrict employees, including after they leave the company. This article will explain how businesses can make use of such contract clauses.

Non-competition

Non-compete clauses prevent an employee from working for a competitor during and after their employment. The Thai Supreme Court has recognised and enforced non-compete clauses. However, courts must balance the interest of the business against the human rights of the employee, including the right to work. In particular, the court will consider whether the business has a legitimate interest and whether the non-compete clause is necessary to protect it. In doing this, the court will focus on a number of different features.

  • Employee’s position and duties. One key consideration is the role of the employee and their exposure to the company’s confidential information and technology.

    If staff are not exposed to confidential information, there is no need to prohibit them from working for a competitor. For example, an employee working on a food production line would not normally have access to proprietary technology or confidential recipes. In such circumstances, a Thai court would not enforce a non-competition clause against the employee. The competitor would not gain an unfair advantage by hiring the employee and the business of the first employer would not be impacted.

    If an employee does have access to specialised or confidential information, it may be necessary to prohibit them from working for a competitor, although the scope of the prohibition might depend on their exact role. A bank cashier who deals with customer information may be reasonably prohibited from working with a competitor for a short period of time to prevent the unfair use of that information. By contrast, a managing director may be prohibited from working for a competitor for a longer period of time because they have unrestricted access to confidential information, supplier contracts, trade secrets, and more.

  • Geographic distance. Non-competition clauses often apply to a particular geographic area. This might be a distance from the employer’s premises or a particular area, such as a city. In determining whether the clause strikes a reasonable balance between the interests of the business and the rights of the employee, the court will consider the geographic scope of the clause. Clauses that apply to wide geographic areas can severely impact on an employee’s ability to work, and are less likely to be enforced by a court. However, the Supreme Court has previously upheld a non-competition clause that applied to the whole of Southeast Asia in a case involving the managing director of a large regional company.
  • Prohibition period. Another factor in determining the reasonableness of a non-competition clause is the amount of time after termination during which the employee is prohibited from working for a competitor. What is reasonable might vary depending on the employee’s position, the sector, and the ways in which a competitor could gain an unfair advantage by hiring the employee. In several cases, the Supreme Court has upheld two-year prohibition periods, although it also upheld a five-year prohibition period in a case involving a managing director.
  • Damages. A contract containing a non-competition clause can also set out the damages payable for breaching the term. Such clauses are enforceable, although a court may reduce the damages award if it considers the amount set by the contract too high.

Non-solicitation

Non-solicitation clauses prevent an employee who has moved to a competitor from approaching clients or employees of their former employer to entice them to move to their new company. Thai courts are usually willing to enforce non-solicitation clauses, especially if the employee’s role allowed them to build strong relationships with clients or if the employee worked collaboratively in a specialist team.

Courts will only enforce these sorts of restrictive clauses if doing so is reasonably necessary to protect the interests of the business. This may mean that, depending on the circumstances, a court will enforce a non-solicitation clause but not a non-competition clause. In order to give the business the broadest possible protection, employment contracts should include both clauses.

 

This article was originally published in the Bangkok Post and is reproduced here with permission and thanks. The original story can be viewed on the Bangkok Post website.

Related Professionals

Location

RELATED INSIGHTS​ 

August 20, 2026
As part of its membership in Lex Mundi, Tilleke & Gibbins has released the latest edition of its Guide to Doing Business in Thailand, providing an overview of the legal, regulatory, and commercial considerations for companies establishing or expanding operations in Thailand. The 2026 edition offers practical insight into the country’s business environment, investment framework, and operational requirements. The guide covers a wide range of topics relevant to foreign and domestic investors, including: Investment incentives and promotion schemes Financial facilities and banking regulations Exchange controls and money transfers Import and export regulations Business structures and incorporation options Requirements for establishing a business Operational and compliance considerations Business cessation and insolvency procedures Employment and labor laws Taxation Immigration and visa requirements Prepared by Tilleke & Gibbins lawyers across multiple practice areas, the publication outlines key aspects of doing business in Thailand, including foreign investment restrictions, regulatory compliance obligations, corporate structures, employment requirements, and recent legal and economic developments affecting investors. The publication forms part of Lex Mundi’s Country Guides series, a global collection of jurisdiction-specific reference materials prepared by member firms around the world. Together, these guides help companies evaluate opportunities, compare regulatory environments, and plan international business activities across multiple markets. The full Guide to Doing Business in Thailand 2026 is available through the button below.
Read More
August 19, 2026
Arbitration clauses and national court jurisdiction have long existed in a delicate equilibrium, and nowhere is that equilibrium tested more often than in the drafting of multitier dispute resolution clauses. Such clauses—requiring negotiation before arbitration—are ubiquitous in international construction contracts, and they frequently employ permissive vocabulary at the arbitration tier. The formulation “either party may submit the dispute to arbitration” is intended to signal that either side is entitled to initiate proceedings. Yet it is periodically seized upon by claimants who prefer national courts, on the theory that “may” preserves a parallel right to litigate. Each apex-court pronouncement on this question is therefore significant for drafting practice and forum predictability. In 2019, the Thai Supreme Court delivered Thailand’s clearest answer to date (Judgment No. 3427/2562). Reversing an appellate court decision, the Supreme Court held that permissive wording at the point of commencement does not dilute the parties’ antecedent agreement to withdraw their disputes from the courts—doing so in regard to an International Chamber of Commerce (ICC) arbitration clause seated in Singapore, a configuration typical of foreign-invested projects in Thailand. This article examines the court’s reasoning, situates the decision within comparative jurisprudence, and draws out its practical lessons for parties and drafters operating in the Thai market. Background of the Dispute The dispute arose from a subcontract for civil engineering and architectural works concluded on September 25, 2014. Clause 19 of the subcontract governed dispute resolution. Clause 19.1 required the parties, at the request of either, to seek to resolve any dispute “in connection with, arising out of, or relating to” the subcontract through mutual consultation within sixty days of written notice. According to clause 19.2.1, if the dispute could not be resolved within that period, “either party may submit the dispute to arbitration,” to be conducted under the ICC
Read More
August 18, 2026
The Bank of Thailand (BOT) is seeking public comment on proposed amendments that would significantly expand know-your-customer (KYC) and customer due diligence (CDD) requirements for cash-related transactions at financial institutions (FIs) and specialized financial institutions (SFIs). Released on August 5, 2026, the proposed regulation would supersede BOT Notification No. 16/2569, which focused primarily on cash withdrawal transactions. The public comment period is open through September 3, 2026. The amendments reflect concerns that FIs and SFIs may be used to facilitate the movement, concealment, and conversion of criminal proceeds, potentially damaging institutional operations and public confidence in the financial system. Expanded Scope of Covered Transactions The most significant change is the broadening of the definition of “cash-related transactions.” Previously, the regulation covered only cash withdrawals and uncrossed check withdrawals. The amended regulation extends coverage to include: Cash deposits, check deposits, or receipt of funds from the public not in the form of deposit accounts; Thai baht (THB) banknote exchange (different denominations); Receipt of cash for issuing checks and drafts; and Purchase, sale, or exchange of foreign banknotes. Mandatory Identity Verification and Risk Management For all cash-related transactions, FIs and SFIs must require customers, or authorized or delegated persons, to present identification or verify their identity before every transaction, including one-time (walk-in) transactions. Specific identification requirements vary by transaction type, customer nationality, and channel (branch vs. electronic). FIs and SFIs must also establish comprehensive risk management processes and procedures for cash-related transactions. These requirements include identifying customers or authorized representatives in accordance with transaction-specific verification standards, analyzing customer behavior, implementing risk-management measures proportionate to the customer’s risk profile, and recording abnormal behavior in relevant systems. The BOT also encourages institutions to proactively guide customers toward transaction channels that offer greater traceability than cash. For corporate customers in high-risk business sectors—including foreign
Read More
August 18, 2026
Securing a favorable judgment is often only the midpoint of a dispute. For businesses and investors, the more important commercial question is whether that judgment can be converted into actual recovery. In Thailand, this typically requires the judgment creditor to enforce the judgment through the Legal Execution Department by seizing, attaching, auctioning, or otherwise executing against the judgment debtor’s assets. Thailand’s schedule of these enforcement fees was last revised by an amendment to the Civil Procedure Code that took effect in September 2025. The Civil Procedure Code Amendment Act (No. 33) B.E. 2568 (2025) updated the schedule of execution officer fees listed in table 5 of the Civil Procedure Code. While the amendment did not eliminate the costs associated with enforcement, it lowered several key execution officer fees and abolished certain fees that previously applied even where enforcement did not ultimately result in the sale or disposition of assets. The reform is intended to reduce the financial burden associated with judgment enforcement and remove unnecessary obstacles to settlement once enforcement proceedings have commenced. As a result, it has practical implications not only for judgment creditors seeking to maximize recovery, but also for debtors considering settlement after enforcement has begun and for businesses and investors assessing litigation and credit risk in Thailand. Key Changes The amendment introduced several changes to the execution officer fee structure. First, where seized or attached assets are sold by public auction or otherwise disposed of, the execution officer fee has been reduced from 3% to 2% of the sale or disposition proceeds. This fee remains separate from announcement costs and other out-of-pocket expenses incurred during the enforcement process. Second, where seized or attached funds are paid to a judgment creditor, the execution officer fee has been reduced from 2% to 1% of the amount recovered.
Read More