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HomeEmployeesEmployee non-compete agreement

Learn more about Employee Non-compete Agreement

The employee non-compete agreement is very frequently inserted in an employment contract. It prohibits an employee who wishes to leave the company from creating or joining a company whose activity would compete with that of the company to which he currently belongs. The purpose of this clause is obvious: it is for the company to protect its interests. Some employees thus have access to confidential or sensitive company data. By inserting a non-competition clause in the employment contract, the employer ensures that his employee will not take advantage of this information for his own account or for a third party if he leaves the company. With Themis Partner, download your employee non-compete agreement in Thai and English adapted to Thai law and protect your company accordingly.

Table of contents

What is an employee non-compete agreement?

The employee non-compete agreement is an article that the employer can insert in the employment contract. The purpose of this non-competition clause is to restrict the freedom of an employee to perform the same functions for a competitor or on its behalf. Indeed, when an employee leaves a company or a business, it is in the legitimate interest of his former employer to anticipate the hiring of a competitor. The non-competition clause was created to avoid this type of situation. This clause applies in case of termination of the employment contract, whether it is due to a dismissal, a resignation, an amicable termination, a poaching or other. However, in order to be valid, the non-competition clause must meet certain criteria determined by case law, i.e. by the decisions of the Thai courts.

Why download our employee non-compete agreement?

With Themis Partner, get your employee non-compete agreement to protect your business from your employees. Our document is written in Thai and English and includes the following clauses:

Non-Competition: Specify the period of time during which your employee will not be allowed to work as an employee for a competing company
Non-Solicitation: Protect your business by prohibiting your employee from contacting your employees, customers, business partners for a specified period of time

What are the criteria for a non-competition clause?

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

When does a non-compete clause apply?

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.

Can an employer refuse to establish a non-competition clause?

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.

What are the penalties for breach of the non-competition clause?

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.

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