Employees Taking Side Jobs or Competing With the Employer: Conflict-of-Interest Rules That Are Not Too Broad

One sales employee photographs weddings on days off. Another opens an online shop selling goods that have nothing to do with the company. A third takes the same kind of work the company sells, using the company's customer list and laptop. Many owners feel all three are wrong, so they write "employees may not take any other work of any kind". The result is hard to enforce, makes the innocent employee feel unfairly treated, and when a real case arrives the over-broad ban is the company's own weak point.

This guide separates harmless side work from conflicts of interest that deserve control, and then sets rules that are narrow, clear and provable: declaration and approval, work rules, protecting customer data, and investigation when something looks wrong. Related topics are in the guide on former employees using the customer list and the guide on internal investigations of employee fraud. For an employee who resigns without handing over, see the guide on employer options when an employee resigns without handover.

The core answer

A company should not ban every kind of side work. It should define clearly what counts as a conflict of interest: competing with the employer, using work time, using customer data, company assets or the brand, and diverting customers or suppliers. Employees then declare side work on a form, a named person approves it, and the consequences of breach are written into the work rules.

The rule (Thai law). An employer with ten or more employees must prepare work rules in Thai under section 108 of the Labour Protection Act B.E. 2541. A dismissal without severance is possible only on the grounds listed in section 119, which include breach of the work rules after a written warning. Valuable confidential information is protected under section 3 of the Trade Secrets Act B.E. 2545. Information about individual customers falls under the Personal Data Protection Act B.E. 2562 (section 37 sets the controller's duties). A non-compete that applies after employment ends is enforced only to the extent fair and reasonable under section 5 of the Unfair Contract Terms Act B.E. 2540.

Our practical view. A narrow rule with a reason behind it usually protects a company better than a wide ban nobody believes is enforceable. Ask what the company really needs to protect, such as customers, data, time or reputation, and write the rule only for that. Remember that a rule never announced, or never enforced consistently, is hard to rely on on the day you need to discipline someone.

Hypothetical. A small solar installation company in Khon Kaen has 30 employees. A sales manager installs systems for small customers in his own name after work, using the list of customers who intended to buy from the company and copying the company's quotation as a template. Another employee in accounting teaches online bookkeeping on Saturdays. We call the business "the solar company". The first case must be dealt with. The second should not be a problem as long as it does not affect the work and does not use the company's data or assets.

1. Which side work is harmless and which is a conflict of interest?

The first test is not whether the employee does other work, but whether that work harms the company's interests. Five features deserve attention.

• Competing with the employer. Taking the same kind of work the company sells, for the same group of customers.
• Using work time. Answering private customers, doing private work or travelling to side jobs during hours the company pays for.
• Using customer data. Taking names, prices, terms or purchase history to pitch private work.
• Using company assets or brand. For example the laptop, software the company bought, quotations, the logo or the company email.
• Diverting customers or suppliers. Inviting customers to buy from oneself, or taking discounts or private benefits from the company's suppliers.

Work that is usually harmless is in a different industry, done outside hours, with the employee's own equipment, without the company's data or name, and without affecting concentration or working hours, such as tutoring, selling personal second-hand items or community service. The key is to ask about the risk that actually arises, not to draft a ban covering everything.

In the solar company example, the sales manager falls under several of the five features at once. The accountant teaching bookkeeping falls under none, so the company need only have it declared for the record.

If the employee is also a director of the company, the director has duties under section 1168 of the Civil and Commercial Code, which include not carrying on a business of the same nature that competes with the company without the consent of the general meeting. See the guide on related-party approval for director leases and purchases. For someone who has worked for the company as a freelancer on a long-term basis, first check whether the person is in fact an employee, using the guide on long-term freelancers versus employees.

2. What should a declaration and approval process look like?

A workable system has four parts.

1. A declaration form for side work and possible conflicts. Completed on joining, when new side work starts and in an annual review. It records the nature of the work, the customers, the time spent and whether company assets or data are used, including any relative or close associate who is a supplier or competitor.
2. A named approver. The supervisor screens, HR or a manager decides, and the reasons are kept. A supervisor with an interest should not approve alone.
3. Conditions of approval. For example no use of work time, no use of customer data, no contact with the company's customers and suppliers, and a fresh declaration if the work changes.
4. Follow-up. Record the decision, review on a schedule and give employees somewhere to ask before they act.

The table below is a starting classification. Adapt it to your business.

Sample clause (a template; adapt to the size of the business and have a lawyer review before use)

Clause __ Side work and conflicts of interest
1. An employee may do other work outside working hours unless the work falls under any of the following:
   (a) it is of the same kind as the company's business and competes with the company;
   (b) it requires working time or affects the employee's performance of duties to the company;
   (c) it uses the company's customer data, commercial information, assets, software, name or marks;
   (d) it involves soliciting or contacting the company's customers, suppliers or employees for the benefit of that work.
2. The employee must declare side work or a possible conflict to HR in writing on the company's form
   before starting that work, and declare again when the nature of the work changes.
3. The company will decide within __ working days and may approve with conditions or decline with reasons.
4. Clause 1 (c) and (d) apply throughout the period of employment.
5. A breach, or an intentional failure to declare, will be dealt with under the company's work rules.

3. Work rules and dismissal: sections 108 and 119

A ban can support discipline when it is written in advance, known to the employee and applied consistently. Under section 108 of the Labour Protection Act B.E. 2541, an employer with ten or more employees must prepare work rules in Thai, announce them and submit them to the labour inspector within the required time, and adding a conflict-of-interest chapter follows the same procedure. If there is a union or an agreement on conditions of employment, also check the Labour Relations Act B.E. 2518.

When a real case arises, discipline should scale with seriousness, from a verbal reminder to a written warning to dismissal. Section 119 says the employer need not pay severance only for the listed grounds, and those relevant here are:

• dishonesty in duty, or an intentional criminal act against the employer;
• intentionally causing the employer damage;
• breaching the work rules, regulations or lawful and fair orders after a written warning, except in serious cases where no warning is needed, and the warning is valid for 1 year from the date of the offence.

Three cautions. First, a side job alone is not automatically a section 119 ground. Look at whether the rules ban it clearly and whether the actual conduct is serious enough to amount to dishonesty or intentional damage. Second, taking customer data to sell private work, with documents to prove it, is very different from tutoring on Saturdays. Third, if the Labour Court finds a dismissal unfair, it may order compensation under section 49 of the Labour Court Establishment and Procedure Act B.E. 2522, which is a risk when the reason given is weak. Each case depends on its facts and the court's discretion. For the employee's side and the dismissal process, see the guide on employee dismissal rights.

4. Trade secrets and customer data: how do we protect them?

Trade secrets. Section 3 of the Trade Secrets Act B.E. 2545 requires that trade information is not generally known, has commercial value because it is secret, and that its owner has taken appropriate measures to keep it secret. If an element is missing, protection under the Act weakens. What a company can do straight away is limit access to those who need it, sign confidentiality agreements with employees, mark important documents and keep a record of who accessed what.

Customers' personal data. The names, phone numbers, addresses and purchase history of individuals are personal data under the Personal Data Protection Act B.E. 2562. The company, as controller, has the duty under section 37 to provide appropriate security measures and to prevent unauthorised use or disclosure. An employee taking data for private use can therefore put the company in difficulty under data protection law as well as confidentiality law. Set access rights, keep access logs and bar forwarding customer data to personal email or apps. For handling of employee and customer data, see the guide on PDPA and employee data for HR.

In the solar company example, the list of customers who intended to buy and the prices negotiated are information that may qualify as a trade secret and consist of personal data. The company should record who pulled that data from the system and when.

5. Non-compete during and after employment

During employment. A ban on competing with the employer and on using its information is easier to impose, because the employer has an evident legitimate interest and the employee is still being paid. Write it to match the real risk, as in section 2.

After employment ends. A term that restricts a former employee's right to work or to do business has a different footing. Under section 5 of the Unfair Contract Terms Act B.E. 2540 it is not automatically enforceable and not automatically void. If it places on the restricted person a burden heavier than would normally be expected, it is enforceable only to the extent fair and reasonable in the circumstances. A court looks at the points below, and the draft should be narrow on each.

A ban on soliciting customers and employees (non-solicitation) and a ban on using confidential information are usually easier to enforce than a ban on working in the same industry, because they restrict a career less. But results depend on the facts and on the court. Do not draft on the assumption that you will win. Treat it as a tool alongside protecting confidentiality under section 4. The guide on a former employee taking the customer list explains more about post-employment terms.

6. When we suspect a competing side job: investigation steps and evidence

Do not discipline the moment you hear a rumour. Take these steps in order.

1. Appoint an owner. Have HR or a manager with no interest handle it, limit who knows and record the date the information arrived.
2. Review the applicable terms. Check the employment contract, work rules, the conflict-of-interest policy the employee acknowledged and any side-work declaration already submitted.
3. Preserve evidence the company is properly entitled to access. For example company email and work systems under a policy notified in advance, access logs for customer data, print and download history and quotations. Make copies and record who collected them and when.
4. Avoid investigating beyond your rights. Do not enter the employee's personal accounts, do not use passwords obtained improperly and do not hire someone to follow the employee without legal advice.
5. Let the employee explain. Put the allegation and the evidence in writing, allow reasonable time to respond and record the explanation.
6. Decide in proportion. A reminder, a written warning, removal from roles with data access, or dismissal, with reasons that match the work rules and section 119.
7. Close the remaining risk. Withdraw data access, collect assets, send a warning letter to any person using the data and assess the damage that may be claimed. For more on internal investigations see the guide on internal investigations of employee fraud and the employee investigation service.

Sample fact record for the investigation (a template; adapt to the actual events)

Subject: Suspected side work that may be a conflict of interest
Employee concerned: ______ Position: ______ Date information received: ______
Facts received: ______
Evidence preserved: (1) customer data access log dated ______
                    (2) quotation file ______ created on ______
                    (3) relevant messages/emails ______ (collected by ______ on ______)
Relevant terms: work rules clause ____ / conflict-of-interest policy clause ____
Employee's explanation: ______ (received on ______)
Conclusion and reasons: ______
Measure: ______ Decision-maker: ______ Date: ______

7. Checklist for conflict-of-interest rules

Policy and work rules

• Define conflict of interest clearly with the five features: competing with the company, using work time, using customer data, using assets or brand, and diverting customers or suppliers
• Add this chapter to the work rules, announce it to employees and submit it under section 108 if you have ten or more employees
• State the consequences of breach in order of seriousness, consistent with section 119

Declaration and approval

• Have a side-work declaration form, an approver and a time limit for the decision
• Require declaration on joining, when new work starts and in an annual review
• Keep the form and the reasons for approval in the employee file

Data and assets

• Limit access to customer data by role and keep access logs
• Have a confidentiality agreement and bar sending data to personal accounts or apps
• Notify the policy on use of company email and devices in advance, consistent with the PDPA

Post-employment non-compete

• Use only for roles with access to important information
• Draft the scope of work, territory, duration and legitimate interest narrowly
• Have a lawyer review it before use, because it is enforced only to the extent fair under section 5

Investigation

• Name an owner with no interest and set steps to preserve evidence
• Let the employee explain in writing before any discipline
• Do not access the employee's personal accounts without authority

Further reading

• A former employee uses the customer list — trade secrets and post-employment restraints
• Internal investigation when an employee commits fraud — steps to preserve evidence and investigate
• Long-term freelancer versus employee — checking the status of someone who works continuously for the company
• PDPA and employee data for HR — email monitoring and keeping employee data
• Anti-bribery internal controls — benefits from suppliers and business partners
• Employee dismissal rights — the employee's side when dismissed
• Employer options when an employee resigns without handover — what to do when someone leaves abruptly

A good rule does not ban everything. It says clearly what the company protects, who approves, and what happens on breach.

We help draft conflict-of-interest policies, side-work declaration forms, work rules, confidentiality agreements and narrow non-compete terms, and plan an investigation when something looks wrong. For an initial consultation, call +66 92 254 2045 or send us the details. See also HR documents and work rules and employee investigations.

This guide is published by Suwanvara Law Firm — a Khon Kaen law firm established in 1986. General information only, not legal advice on a specific matter.