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Thai Non-Compete Clauses: When Are They Enforceable?
Post-employment non-compete clauses can be enforceable under Thai law but must be reasonable in scope, duration, geography, and consideration. Thai courts apply CCC §150 (good morals) and §388 (unconscionable contracts).
TL;DR
Post-employment non-compete clauses can be enforceable under Thai law but courts apply CCC §150 (good morals) and §388 (unconscionable contracts) plus the Unfair Contract Terms Act B.E. 2540 (1997) to strike down overreaching restrictions. Reasonable scope (limited industry), duration (commonly 6-24 months), geography (Thailand or specific region), and adequate consideration are the four court-tested factors.
Four Factor Test (Court Practice)
| Factor | Reasonable | Unreasonable |
|---|---|---|
| Scope | Same business / role | All-industry blanket |
| Duration | 6-24 months | 5+ years without justification |
| Geography | Thailand or specific province | Worldwide |
| Consideration | Separate payment / equity / training value | Nominal / none |
Remedy on Breach
- Liquidated damages clause (capped at reasonable amount).
- Injunctive relief — courts grant rarely but possible.
- Actual-damages claim — common.
Practice Notes
- Better positioned with during-employment non-compete + post-employment confidentiality.
- Garden leave often more enforceable than naked non-compete.
- Industry-specific clauses (key-customer non-solicit) are more readily enforced.
Common Mistakes
- Overreaching scope — court strikes down entirely (no severance).
- No separate consideration.
- Treating senior-employee templates as universal.
FAQs
1. Non-solicit vs non-compete?
Non-solicit (customers / employees) is generally more enforceable than naked non-compete.
Related Reading
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