Speaking in Strasbourg, the MEP said Andy Hall “should have been rewarded” rather than given a prison sentence.
She told a news conference the case amounted to a “silencing of human rights.”
Hautala said, “Thailand should protect labour rights not abuse them.”
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The case of Hall was raised in the European Parliament on Thursday when MEPs adopted a resolution regretting the sentence.
Parliament called on the Thai government to take "all measures necessary" to ensure that the rights of Hall and other human rights defenders are respected.
Thailand recently convicted Hall, a British human rights activist, for revealing serious human rights violations and illegal activities in a Thai pineapple processor Natural Fruit Company Ltd.
He was sentenced to a three year suspended term of imprisonment for his work on a 2013 report of a Finnish NGO Finnwatch.
Hall, from Lincolnshire, was also fined 150,000 baht. His sentence was suspended for two years, meaning he will not go to jail. Because the report was published online in Thailand, he was also found guilty of violating the Computer Crimes Act.
The sentence raised worldwide criticism and a spokesperson for the British embassy in Bangkok said they would be raising the matter with the Thai authorities. Finnwatch said it was "shocked" by the verdict.
"Andy has been made a scapegoat in order to stifle other voices that speak out legitimately in support of migrant worker rights," said executive director Sonja Vartiala.
Hautala, a Greens member, said she is worried about its consequences to exposing human rights breaches in the future.
She told the press conference, "Andy Hall should have been awarded for revealing the workers’ abuses.
“This court decision can lead to further silencing of human rights defenders in Thailand. Thailand has recently made some progress in the work against labour exploitation, for example by ratifying the ILO convention 187 on promotional framework for occupational safety and health.
“Still, Thailand should abolish the crime of defamation and to revise the computer crime act which currently contains disproportionate prison sentences for such violation," Hautala said.
Hautala told a news conference she hopes that the case will push the European Commission to “pay more attention” to the human rights situation in partner countries when trade policies are negotiated.
According to her, "corporate social responsibility and its common rules are a cornerstone for improving the human rights situation in many countries."
She said, "Transparency and responsible business conduct is today's thinking. Companies should be thankful for researchers and civil society organisations looking into workers' rights and environmental responsibility in supply chains.
“Consumers have the right to know the origin of the products and the truth about the production conditions. By defending Andy Hall, taking the report findings seriously and supporting him all the way through the process, the Finnish retail company S-group has done what all companies should do. I hope others will follow their example.”
UK Labour MEP David Martin, the co-author of the resolution, told this website, “This verdict wasn’t against Andy Hall, it was against freedom of speech and the rights of migrant workers.
“Andy’s tireless, selfless work has exposed serious problems within the Thai labour market and in its justice system. He should have been commended for his actions, instead he was condemned to three years in prison."
The US-based Human Rights Watch said Hall had co-ordinated "important research" and that prosecuting him raised "serious questions about Thailand's readiness to protect workers' rights".