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 10, 2026
Thailand’s Office of the Personal Data Protection Committee (PDPC) recently released draft guidance on records of processing activities (ROPA) for personal data controllers and processors under the Personal Data Protection Act B.E. 2562 (2019) (PDPA). The draft guidance, which was presented to the public on July 7, 2026, addresses both controller records of collection, use, and disclosure of personal data and processor records of processing activities carried out on behalf of controllers. If implemented, the guidance will significantly expand organizational expectations for ROPA preparation, maintenance, and use across all sectors. Key Takeaways The draft guidance contains several important implications for organizations subject to the PDPA: ROPA reframed as a core accountability tool. The guidance elevates ROPA from an administrative record to a central accountability mechanism, connecting controller duties with recordkeeping obligations. ROPA as a source for privacy notices and governance documents. ROPA should serve as the primary source for privacy notices and align with consent management, retention schedules, DPIAs, incident response plans, and vendor contracts. Expanded scope across all activities. ROPA must cover all processing activities across the organization—including security, finance, HR, and external contractors—with correct controller or processor classification for each. Ongoing maintenance and auditability. ROPA must be updated for any change to systems, purposes, or processors, reviewed at least annually, and maintained with version control and a designated owner. Enhanced vendor, processor, and cross-border transfer requirements. Organizations must document all processors, external recipients, and cross-border transfers, specifying purposes, access scope, and destination countries. Linkage with risk assessment, DPIAs, and LIAs. ROPA should assign risk levels to each activity and identify when data protection impact assessments (DPIAs) or legitimate interests assessments (LIAs) are required, functioning as a risk-management tool. ROPA and data breach readiness. Incomplete ROPA can delay breach response and notification. Organizations should map data flows, vendors,
Read More
August 7, 2026
On July 31, 2026, the Trade Competition Commission of Thailand (TCCT) launched a one-month public consultation period on proposed regulatory guidelines for competition in three business segments: (1) digital platforms; (2) modern trade and credit terms; and (3) ride-hailing and on-demand delivery, including food delivery and mart/quick commerce. At the same time, the TCCT released a market report on ride hailing and on-demand delivery that is likely to influence the guidelines and their interpretation and enforcement. The consultation runs until August 31, 2026. Stakeholders have a limited window to submit practical, evidence-based input that may shape the next phase of Thailand’s regulatory framework for competition. Scope of the Consultation The public consultation targets updating existing guidance in three business sectors that have experienced transformative growth and structural change: Digital platforms: The TCCT has actively monitored this sector in recent years and has coordinated with other regulators, primarily the Electronic Transactions Development Agency (ETDA) and the Ministry of Commerce. In March 2026 the TCCT’s Guidelines on Multi-Sided Platforms and E-Commerce Businesses took effect, and in July the TCCT established a digital platform subcommittee to regulate and prevent unfair trade practices in digital platform businesses. This activity followed a TCCT market report on e-marketplace businesses in September 2025. Modern trade and credit terms: This sector was the focus of the TCCT’s 2019 Guidelines on Unfair Trade Practices between Wholesale and Retail Operators and Manufacturers or Suppliers (widely known as the “Modern Trade Guidelines”) , as well as its 2021 Guidelines on Unfair Trade Practices regarding the Credit Terms under which Small and Medium Enterprises (SMEs) Sell Products or Services to a Purchaser (also known as the “Credit Term Guidelines”), which were amended the following year. Ride-hailing and on-demand delivery (including food delivery and quick commerce): The TCCT published the Guidelines on
Read More
August 6, 2026
Introduction: A Trademark Paradox in Sustainable Packaging Walk into any Thai supermarket, and the label-free water bottle is no longer a novelty. Thailand’s packaging market, valued at approximately USD 15.68 billion in 2025, is shifting toward minimalist, plastic-light designs as ESG pressures reshape how brands present their products. The country generated roughly 5.68 million tons of plastic waste in 2021, with a recycling rate of only 19 percent, and regulators are now considering rules that would allow label-free bottled water relying on embossing, laser printing, or QR codes instead of wrap-around labels. As packaging itself becomes the brand identifier, a paradox emerges: designs built to say the least often struggle hardest for protection under Thai intellectual property law. The Trademark Barrier: When Shape Is Not Enough Section 7, paragraph 2(10) of the Thai Trademark Act deems a shape distinctive only if it is not the natural form of the goods, is not necessary to achieve a technical result, and does not add value to the goods. The Department of Intellectual Property’s 2022 examination guidelines apply this test conservatively, as the following examples illustrate. A plain water bottle relying on subtle contours to signal its brand is typically read as just another bottle, not a source identifier. Acquired distinctiveness offers a theoretical escape route, but it demands extensive evidence of sales, advertising, and consumer recognition—an especially heavy burden for new entrants whose minimalist packaging has not yet achieved market prominence. The result is a structural bias against precisely the design innovation that sustainability goals are meant to encourage. Design Patents: A Partial, Imperfect Substitute Design patent protection, covering a product’s shape, configuration, or ornamentation, appears to offer an alternative route. In practice, it is constrained by the same forces driving the minimalist trend. Because many brands converge on similar solutions—clear
Read More
August 6, 2026
Every month, VAT-registered businesses in Thailand calculate their output and input VAT and file a return to pay the net amount due or claim a refund. Yet a common and costly dispute arises when a business that has paid input VAT to its supplier—and done everything asked of it—later finds that input VAT rejected on the grounds that the tax invoice was issued by “a person not entitled to issue tax invoices.” In these cases, a buyer may have confirmed the supplier’s VAT registration on the Revenue Department’s website, paid through the banking system, received a complete tax invoice, and kept full payment and inventory records. Even so, if the Revenue Department later determines that the supplier did not genuinely make the sale or collected the VAT without remitting it, the department can disallow the input VAT and assess additional tax, surcharge, and penalty—often more than a year after the transaction. A new article from tax and dispute resolution specialists at Tilleke & Gibbins in Bangkok examines how the Revenue Department and the courts approach these disputes, including two recent Supreme Court (Tax Division) decisions confirming that the taxpayer bears the burden of proving a supplier genuinely sold and delivered the goods and received payment. It considers why the VAT registration system offers no legal safe harbor, why the evidentiary burden falls hardest on online and cross-border transactions where buyers and sellers never meet, and how the Revenue Department’s own digital infrastructure could detect non-remitting suppliers at the source rather than shifting the loss to good-faith buyers. The article also sets out practical guidance: how to build a comprehensive “know-your-supplier” file at the time of a transaction, the procedural steps and strict deadlines for challenging a VAT assessment, and why dispute readiness belongs alongside tax planning at the center
Read More