For a non-competition clause to be enforceable in Thailand, it must meet a few specific cumulative conditions determining its validity. Here are the points that determine the validity of a non-competition clause:
|➤ The non-competition clause or a non-competition agreement for employees must be signed by the employee and the employer|
|➤ The non-competition clause is only applicable if it protects the interests of the company|
|➤ The non-competition clause must not prevent the employee from finding a new job|
|➤ The non-competition clause is limited in time. In other words, the prohibition must not be excessive (generally 2 years)|
|➤ The non-competition clause is limited in space. A precise geographical area must be indicated|
|➤ The non-competition clause is limited to a certain function such as manager, director, etc.|
|➤ A compensatory indemnity must accompany the non-competition clause. The employer pays this financial compensation|
A non-competition clause applies:
|➤ On the exact date of the end of the contract, once the notice period has ended|
|➤ At the time the employee leaves the company, if the notice period is waived|
The compensatory indemnity is due as soon as the non-competition clause is applied, even in the event of dismissal for serious misconduct or resignation. It must be paid only after the termination of the employment contract.
It is also important to note that this financial compensation must be reasonable. Indeed, a derisory financial consideration represents an absence of financial consideration, which means that it is not valid.
An employer can effectively waive the application of a non-competition clause:
|➤ In the cases that may be determined by the contract or by the collective agreement|
|➤ If nothing has been determined in the employment contract or even in the collective agreement with the employee's|
The waiver must be precise and not subject to justification by the employer or the employee. Moreover, it must also be notified to the employee by registered letter with acknowledgment of receipt.
For the employee, failure to comply with a non-competition clause results in the cancellation of the financial compensation. In addition, the employee may also be required to pay damages. If the employer does not reimburse the financial compensation due to the employee, the latter is no longer obliged to respect the non-competition clause. The employer may also be obliged to pay damages to the employee as compensation for his loss.