When Employees Become Competitors and Poachers of Your Team

Non-competition: A Frequently Overlooked Risk

An employment relationship typically begins with mutual trust. If it nevertheless ends in termination, tensions are often unavoidable. In some cases, employees find it difficult to accept the outcome. Alongside the legitimate desire for a fresh start, there may also be an element of wanting to compensate for disappointment, for example, by moving to a competitor.

Depending on the individual’s approach and professionalism, this may lead to risks of client poaching Thailand as well as employee poaching Thailand, both of which are recurring concerns for HR Thailand teams managing sensitive departures.

Reputable companies are generally cautious about hiring directly from competitors. Still, such moves can at times be driven more by access to internal knowledge than by a genuine long-term interest in the role, creating a risk that the employee becomes more of a means to an end. In practice, this may also lead to risks of client poaching and broader competitive conduct, including attempts to recruit former colleagues.

This makes it all the more important for companies to take precautions and ensure appropriate safeguards are embedded in the employment contract Thailand framework. Well-drafted clauses, including non-solicitation Thailand provisions, are key tools under Thailand labor law to protect legitimate business interests.

Non-Solicitation vs. Non-Compete Clauses

Blocking a former employee from becoming directly or indirectly a competitor is addressed in most companies’ employment contracts. Yet in practice, one of the biggest risks is not only direct competition as such but also

• Former employees targeting existing customers or business partners (customer poaching).

• Poaching by former employees recruiting key staff (employee poaching).

Both risks can significantly damage a business, especially in relationship-driven markets like Thailand. Non-solicitation clauses can address this - but only if they are carefully drafted.

To be enforceable, such clauses should contain:

• Clearly distinguish between employee and customer solicitation.

• Be limited to relevant employees or clients (not “anyone”).

• Define what constitutes “solicitation”.

• Be also reasonable in duration.

Non-Compete Clauses: Many Are Not Enforceable in Thailand

Post-contractual non-compete clauses after termination of employment are, in principle, permissible under Labor Law Thailand. However, their enforceability is far from guaranteed.

Thai courts are generally strict and tend to protect employee interests. This means that such clauses must be reasonable and proportionate. The main criteria typically include:

• The duration of the restriction.

• The scope of the restricted activities.

• The geographic reach of the clause.

Moreover, such clauses must focus on protecting a legitimate business interest, such as confidential information, trade secrets, or client relationships. If a clause goes beyond what is necessary, it risks being declared invalid.

Do Not Rely on Templates

Every position within a company has a different function and level of exposure. For this reason, it is rarely advisable to rely on a standard non-compete clause as a one-size-fits-all provision in an employment contract Thailand setting.

In practice, many companies still use global contract templates without adapting them to the specific position of the employee. Such standard clauses often fail in court. Common problems include:

• Overly broad restrictions.

• Excessive time periods.

• Unrealistic geographic limitations.

• Unreasonable wording.

• Restrictions that effectively amount to a ban on practising a profession and therefore disproportionately hinder the employee’s future prospects.

It may therefore be crucial for the validity of such a clause that it is drafted as broadly as necessary, but also as narrowly as possible.

Specifying competitors with a comparable customer portfolio, range of services, and regional target market can significantly strengthen the practical effectiveness of such a clause in later legal proceedings.

Furthermore, a non-compete clause in an employment contract should generally be clearly distinguished from a clause prohibiting the solicitation of customers or employees. In turn, a non-solicitation clause should also distinguish carefully between customer-related and employee-related restrictions, including their respective scope and duration.

Sanet: Practical Legal Guidance for Thailand

At Sanet Legal, a member of the Bangkok-based Sanet Consulting Group, we support international companies in navigating both investment decisions and day-to-day operations in Thailand. With strong expertise in Labor Law Thailand, we help design employment contracts that are not only compliant but also enforceable in practice.

Contact us directly for a thorough review of your company’s contractual practice via our contact form or by e-mail at management@sanet-group.com.

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