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Restrictive Covenants Are Enforceable Only Within a Reasonable Scope
Former Employer v Former Senior Employee
Composite summary — not a single reported case. This entry distils a settled line of Thai Supreme Court (Dika / ฎีกา) authority for legal education. It is not a transcript of one reported judgment, and the heading is not a citable case number. Do not cite it as specific case law — consult a Thai-qualified lawyer for the authoritative Dika number and current application.
Facts
A senior employee with access to customer lists and pricing data signed an employment contract containing a post-termination non-compete clause restricting work in the 'same or similar business' for two to five years across all of Thailand (in some versions, worldwide). After resignation, the employee joined a competitor. The former employer sued for injunction and damages.
Legal Issue
Whether and to what extent post-employment non-compete covenants are enforceable under Thai law, and how Section 5 of the Unfair Contract Terms Act and CCC Section 150 affect enforceability.
Holding
The Supreme Court has confirmed that post-employment restrictive covenants are not per se invalid, but courts will review them for reasonableness as to (i) geographic scope, (ii) duration, (iii) the protected interest (genuine trade secret or goodwill, not mere competition), and (iv) the seniority and role of the employee. Where the restriction is excessive, the court may strike down the clause entirely or pare it back under the Unfair Contract Terms Act to a reasonable scope.
Reasoning
Thailand recognises freedom of contract but balances it against constitutional freedom of occupation and the worker-protective policy of the Labour Protection Act. Excessively broad clauses suppress legitimate competition and the employee's right to earn a living. The Unfair Contract Terms Act B.E. 2540 (1997) empowers courts to refuse to enforce, or to modify, clauses that impose unreasonable burdens on the weaker party.
Significance
Sets the practical ceiling for Thai non-compete clauses — typically 6–24 months, narrow geographic and industry scope, and limited to roles with genuine access to trade secrets.
Practical Takeaway
Employers: keep non-competes short (12–24 months), targeted to a specific industry or customer set, and consider paying a 'garden leave' premium. Employees: an excessive non-compete is rarely fully enforceable but can still cause expensive litigation — negotiate the scope at signing.
Cited Statutes
- Civil and Commercial Code, Section 150
- Unfair Contract Terms Act B.E. 2540 (1997), Section 5
- Constitution of the Kingdom of Thailand B.E. 2560 (2017), Section 40 (freedom of occupation)
- Trade Secrets Act B.E. 2545 (2002)
This entry summarises a representative line of authority from the Thai Supreme Court (ฎีกา). It is intended for general legal education only and is not a substitute for advice from a Thai-qualified lawyer. Individual Dika case numbers are being verified against primary sources; until then these entries are presented as composite doctrinal summaries.
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