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

November 2, 2012

Noncompetition Provisions in Employment Relationships

Bangkok Post, Corporate Counsellor Column

Employers often have concerns about their employees competing with them after they leave. Many employers put substantial resources into training their employees and giving them valuable work experience. Thus, departing employees are a cause for concern in terms of potential loss of customers and business. To address this risk, many employers ask us whether they should include noncompetition provisions in their employment agreements, and whether such provisions are enforceable.

Noncompetes are governed primarily by Section 14/1 of the Labor Protection Act and the Unfair Contract Terms Act. Principally, noncompetes are enforceable in Thailand, subject to some restrictions.

The Labor Protection Act provides that, “for an employment contract between an employer and employee, work rules, regulations, or orders of an employer that provide for the employer to have an improper advantage over employees, the court shall have the power to order that such employment contract, work rules, regulations, or orders be applicable only to the extent that they are fair and appropriate in the circumstances.

Similarly, the Unfair Contract Terms Act stipulates that “contract terms that are not void but cause the person whose right or freedom has been restricted to shoulder more of a burden than a reasonable person could have anticipated under normal circumstances, shall only be enforceable insofar as they are fair and reasonable in the circumstances.”

In evaluating noncompetition provisions, Courts must consider the geographic scope of the area specified and the period of restriction of right or freedom. They must also consider the ability and opportunity of the employee to carry on his or her occupation or otherwise engage in business, as well as all legitimate advantages and disadvantages of the contracting parties.

In determining the extent to which terms are enforceable as fair and reasonable, courts will take all circumstances into account, including good faith, bargaining power, economic status, knowledge and understanding, adeptness, anticipation, guidelines previously observed, other alternatives, and all advantages and disadvantages of the contracting parties according to actual conditions; ordinary usage applicable to such kind of contract; time and place of performance or making the contract; and whether one party is made to bear a much heavier burden than the other.

The statute does not require employers to give additional consideration or other benefits to an employee or former employee during a noncompete period. However, it is possible that terms providing for such an arrangement may be included in an employee’s employment agreement, and that a departing employee may negotiate such an arrangement with his or her employer. In either case, the employer’s obligation to pay would be enforceable.

A noncompetition provision is acceptable and enforceable under Thai law as long as it is not contrary to public order and good morals, and is fair and reasonable. Considerations are to be based on:

  1. The period of restriction and the geographic area of restriction.
  2. The opportunity and ability for the employee to profess his or her occupation.
  3. All other lawful interests of the parties.

Thus, the Thai court will typically enforce a noncompetition provision, as long as it is lawful, is used to reasonably protect the employer’s business, and does not impose undue hardship on the employee.

As a general matter, enforcement of noncompetes is problematic with respect to professionals. For a doctor or lawyer, a noncompetition provision, depending on its scope, could easily have the effect of eliminating all opportunities to practise one’s occupation. Thus, a court would consider this within the context of the factors described above, with the likely result of modification of the term or not enforcing it at all.

When an employer seeks to enforce a noncompete, proving damages can also be difficult. While a noncompete may be enforceable, employers may face problems proving that the employee’s breach of the noncompete actually caused the employer to suffer economic damages. Moreover, given the time taken for the case to get to court, it is likely that, in many cases, the period of restriction may have already expired.

Several Supreme Court judgments have ruled that a restriction period of 24 months (without stated geographic restrictions) prohibiting an employee from directly or indirectly carrying out or engaging in businesses in competition with those of his or her employer, is justifiable and enforceable. In one case, the Supreme Court held that a noncompetition provision applicable to a foreign employee, with a restriction period of five years and geographic area of Thailand, Vietnam, Cambodia, Laos, and Myanmar, prohibiting the employee from directly or indirectly carrying out or engaging in businesses in competition with those of his employer, was justifiable and enforceable.

Thus, when crafting noncompete provisions, it is important to consider what a court would likely enforce. Generally, we would advise you to work with your counsel to carefully construct noncompete provisions, such that they specify a restriction period of not more than 24 months, within a specific geographic area. Importantly, the noncompete provision must not operate to eliminate any possibility of employment for the employee. While a court always has discretion, such an approach offers the employer a reasonable level of protection.

RELATED INSIGHTS​ 

October 29, 2025
On September 15, 2025, Thailand’s Senate approved a draft amendment to the Labor Protection Act (LPA), which is currently awaiting publication in the Government Gazette. The amendment, which will take effect 30 days after publication, extends labor protections to certain service contractors working for state entities, enhances maternity and spousal support leave, and updates employer reporting obligations. Expanded Protections for State-Contracted Service Providers The amendment adds a section to the LPA that extends core labor protections to individuals engaged by government bodies under service contracts. This provision covers workers hired by central, regional, and local government agencies; state enterprises governed by the State Enterprise Labor Relations Act; public organizations; and other state agencies when these entities retain individuals under service procurement contracts (or similar arrangements) and exercise supervision, direction, and control over their work. In such cases, the hiring agencies must provide terms no less favorable than those required under the LPA for remuneration, weekly holidays, traditional holidays, annual leave, sick leave, maternity leave, working days and hours, and rest periods. Ministerial regulations will establish specific criteria for implementation. Disputes regarding rights and duties under this provision will fall under Labor Court jurisdiction. This change aligns the treatment of controlled service contractors with that of regular employees, addressing a longstanding coverage gap in the public sector. Enhanced Maternity Leave and New Caregiving Provisions The amendment includes a maternity leave entitlement of up to 120 days per pregnancy (an increase from the previous 98 days), unless otherwise prescribed by royal decree, and also introduces a new postnatal caregiving leave for mothers in complex medical situations who have used their childbirth leave, granting up to 15 additional days to care for children who are at risk of complications, have abnormalities, or have disabilities. This supplemental leave requires support from a medical
October 20, 2025
Attorneys from Tilleke & Gibbins’ Yangon office have contributed Employment and Employee Benefits in Myanmar: Overview, a Q&A-style guide published by Thomson Reuters Practical Law. The resource provides a concise overview of key legal and practical considerations for employers operating in Myanmar and reflects the country’s most recent regulatory developments in employment law. The chapter addresses the following core topics: Scope of employment regulation: Application of Myanmar labor laws to foreign nationals and Myanmar citizens working abroad. Employment status: Classification of workers, statutory employment rights, and requirements for official employment contracts. Regulation of the employment relationship: Mandatory contract provisions, collective agreements, and procedures for amending employment terms. Wages and working hours: National minimum wage updates, overtime rules, and leave entitlements. Termination of employment: Notice requirements, severance payments, and protections against dismissal. Discrimination and harassment: Statutory protections and remedies under Myanmar labor law. Health and safety: Employer obligations under the Occupational Safety and Health Law and related regulations. Tax and social security: Income tax rates for resident and non-resident employees, and mandatory employer and employee contributions. Intellectual property and post-employment restrictions: Ownership of employee-created IP and enforceability of non-compete clauses. Practical Law, a leading legal reference resource from Thomson Reuters, publishes a wide range of comparative guides for jurisdictions and practice areas worldwide. Its Employment and Employee Benefits series provides practical insights into employment law regimes across numerous countries. To view the latest version of the Myanmar overview, please visit the Practical Law website and enroll in a free trial for full access.
October 15, 2025
Myanmar’s National Committee for Setting the Minimum Wage has introduced another MMK 1,000 daily allowance for private-sector workers, bringing the total minimum daily wage to MMK 7,800 (approx. USD 3.72). Notification No. 1/2025 marks the third such increase in recent years as the government continues adjusting compensation across both public and private sectors. Although the notification was issued on October 14, 2025, it takes retroactive effect from October 1, 2025. Current Minimum Wage Structure In May 2018, the committee established a base minimum wage of MMK 4,800 (approximately USD 2.29) for an eight-hour workday (MMK 600 per hour), applying to all workers regardless of location or job type. The committee has subsequently announced additional daily allowances for private-sector workers: MMK 1,000 effective October 1, 2023, and another MMK 1,000 effective August 1, 2024. With the latest MMK 1,000 daily allowance from October 1, 2025, the total additional allowance reaches MMK 3,000, resulting in a new combined minimum daily wage of MMK 7,800. Alignment with Public Sector Increases The new allowance aligns with increases granted to government personnel. The Ministry of Finance and Revenue’s Notification No. 110/2025 previously granted monthly increases of MMK 30,000 to service and Tatmadaw personnel starting in October 2023 and August 2024. With the latest increase effective October 1, 2025, the total monthly allowance for these personnel now amounts to MMK 90,000. Daily wage employees in government departments received MMK 1,000 increases in the same periods, totaling MMK 3,000 in daily allowances—mirroring the private-sector adjustment. Key Implementation Details The latest announcement confirms several important aspects of the allowance structure: Employees are entitled to the base wage and additional allowances during their entitled leave and holidays, in accordance with the 1951 Leave and Holidays Act. The MMK 3,000 daily allowance is excluded from overtime calculations, which must
October 8, 2025
On September 24, 2025, Thailand’s House of Representatives voted to approve two draft amendments to the Labor Protection Act in their first reading, aiming to enhance workers’ rights and quality of life through improved working conditions, expanded leave entitlements, and stronger antidiscrimination protections. Key provisions of the draft amendments are outlined below. Draft Bill on Workers’ Rights This draft bill focuses on improving working conditions, working hours, and annual leave entitlements. The key provisions include: Limiting normal working hours to no more than 40 hours per week, reduced from the current 48 hours per week. For hazardous work, as defined by ministerial regulations, the maximum working hours are set at 35 hours per week, reduced from the current 42 hours per week. Mandating at least 2 days off per week, with no more than 5 consecutive working days between rest days. This is an increase from the current requirement of at least 1 day off per week, with the interval between days off not exceeding 6 days. Providing annual leave entitlement of at least 10 working days after the completion of 120 consecutive working days, compared to the current entitlement of 6 days after 1 year of employment. Draft Bill on Workers’ Quality of Life This draft bill is designed to enhance workers’ quality of life and promote equality and nondiscrimination in the workplace. The new additions to the Labor Protection Act include: Menstrual leave for female employees: Up to 3 days per month, which shall not be counted as sick leave or deducted from other statutory leave entitlements. Family caregiving leave: Employees are entitled to up to 15 working days per year to care for close family members or loved ones. For absences of 5 or more days, employers may request supporting documents such as a medical certificate