DO YOU HAVE NON-COMPETE CLAUSE IN YOUR EMPLOYMENT AGREEMENT?
Are you one of the many employees in Thailand who willingly accepted a non-compete clause in your employment agreement? Or perhaps you were forced to accept a non-compete as a condition for getting the new job?
In more and more countries around the world, the non-compete clause is illegal or it comes with a lot of restrictions. But unfortunately not yet in Thailand where employers can still demand that an employee cannot take work with a competitor for years.
Here’s my question: If an employee has made a name and career in a particular industry over the last 20 years (say in pharmaceutical), comes with an educational background that is used in the pharmaceutical industry, basically that is what the person is really good at, then how will such employee be able to make a living (income) if prohibited from working with any other company in the pharmaceutical industry?
Are you also thinking: modern slavery?
In contract law, a non-compete clause is a clause under which one party (employee) agrees not to enter into or start a similar profession or trade in competition against another party (employer). Some courts refer to these as “restrictive covenants.” or “restraint of trade”
Here is an overview on selected countries and how they deal with non-compete agreements; quote from Wikipedia.
The majority of U.S. states recognize and enforce various forms of non-compete agreements. A few states, such as California, Montana, North Dakota, and Oklahoma, totally ban non-compete agreements for employees, or prohibit all non-compete agreements except in limited circumstances.
Canadian courts will enforce non-competition and non-solicitation agreements, however, the agreement must be limited in time frame, business scope, and geographic scope to what is reasonably required to protect the company’s proprietary rights, such as confidential marketing information or client relations and the scope of the agreement must be unambiguously defined.
In Belgium, non-compete agreements are restricted to new employments within Belgium and for no more than one year. The employer must pay financial compensation for the duration of the non-compete, amounting at least half of the gross salary for the corresponding period.
In France, such agreements must be limited in time to a maximum of two years and to a region where there the employee’s new work can reasonably be seen as competitive. The employer can be forced to pay financial compensation, typically 30 percent of the last salary, depending on the circumstances surrounding the termination of the employment. The non-compete may not unreasonably limit the possibilities of the employee to find a new employment.
In Germany, non-compete clauses are allowed for a term up to two years. The employer must provide financial compensation for the duration of the non-compete period amounting to at least half the gross salary. Unreasonable clauses – for example, excluding similar jobs throughout the whole of Germany – can be invalidated.
So when will Thailand follow these countries and force companies to compensate employees who they wish to keep away from their industry?
As the labor market tightens and the difficulty in hiring increases, employers are no doubt searching for all kinds of ways to make the process easier for themselves. The problem is that some of them are against the law.
Non-compete agreements are extremely popular now, with some evidence suggesting 18 percent of the U.S. workforce is bound by them. Once an employee signs one, they cannot quit and work for the employers identified in the agreement. The non-compete agreements are legal, although not always enforceable, depending on how they are drawn up. Simply put: The broader and more general they are, the harder they are to enforce.