Tiếng ViệtIn today’s cut-throat business environment, Non-Disclosure Agreements (NDAs) and Non-Compete Agreements (NCA) have emerged as “vital shields” for enterprises. Mastering these legal regulations not only empowers businesses to safeguard their intellectual property but also helps employees mitigate unforeseen legal risks.
In the following article, Lexconsult & Partners will provide a comprehensive analysis of NDAs and Non-Compete Agreements, focusing on their legal grounds in Vietnam, key contractual provisions, and effective remedies for breach of contract.
1. Concepts and Current Legal Regulations on NDAs & Non-Compete Agreements in Enterprises
1.1. Defining NDAs and Non-Compete Agreements
Non-Disclosure Agreement (NDA): A legally binding commitment between parties to maintain the confidentiality of proprietary information owned by an enterprise. This encompasses trade secrets, proprietary technology, client databases, and other sensitive business intelligence.
Non-Compete Agreement (NCA): An agreement whereby an employee pledges not to work for a direct competitor or establish a rival business within a specific duration and geographical scope following the termination of their employment.
1.2. Legal Regulations on NDAs and Non-Compete Agreements
In Vietnam, these agreements are governed by an interlocking legal framework:
– The Labor Code 2019, as amended and supplemented in 2025: Entitles employers to enter into written agreements with employees regarding the protection of trade secrets and proprietary technology;
– The Civil Code 2015: Provides for the freedom of contract and the right to enter into voluntary civil agreements;
– The Intellectual Property Law 2005, as amended and supplemented in 2025: Protects the rights of owners over their trade secrets;
– The Competition Law 2018: Prohibits and prevents unfair competitive practices;
2. Validity of NDAs and Non-Compete Agreements
2.1. Validity of Non-Disclosure Agreements (NDAs) in Vietnam
In Vietnam, NDAs hold legal weight based on the principle of freedom of contract as stipulated in the Civil Code 2015. Once voluntarily executed, these agreements serve as the legal basis for applying penalties for violations and damages.
3 Key Factors Determining NDA Validity:
– Definition of Confidential Information: Must be clear and specific (e.g., trade secrets, client lists, source codes).
– Reasonableness: The scope of confidentiality and the duration of the commitment must not violate statutory prohibitions.
– Consensus: The receiving party must be given the opportunity to review thoroughly and provide full consent to the terms before signing.
2.2. Validity of Non-Compete Agreements (NCAs) in Vietnam
Unlike NDAs, NCAs are more complex due to their direct conflict with an employee’s freedom of occupation. As they are not explicitly regulated in the Labor Code, NCAs are often viewed by courts as civil transactions.
Vietnamese courts typically balance corporate interests against the employee’s livelihood based on:
– The reasonableness of the agreement’s scope;
– Legitimate business interests: The enterprise must prove the employee had access to vital intellectual property or trade secrets. Consequently, NCAs are usually reserved for senior-level personnel.
3. Legal Remedies for Breach of NDAs and NCAs under Vietnamese Law
Upon discovering a breach, enterprises should promptly implement the following protective measures:
3.1. Internal Labor Discipline
If the violation occurs during employment, the enterprise may apply disciplinary measures under Article 124 of the Labor Code 2019, as amended in 2025:
– Reprimand or Deferment of Pay Rise: For negligent violations or those without serious consequences.
– Demotion or Dismissal: Applicable when an employee discloses trade secrets/technology or infringes upon the employer’s intellectual property rights.
3.2. Civil Litigation or Commercial Arbitration
– Claim for Damages: The enterprise is entitled to compensation for all actual losses arising from leaks or the employee joining a competitor.
– Penalty for Violation: If specifically stipulated, the enterprise may claim this penalty without proving actual damages (subject to Court/Arbitral award).
3.3. Interim Relief
To prevent further escalation, enterprises may petition competent authorities for interim injunctive relief to immediately cease the infringing acts.
4. Post-Termination Confidentiality Obligations
4.1. Post-Employment Legal Binding
Confidentiality commitments remain legally valid regardless of whether the termination was voluntary or involuntary.
– Confidentiality Duration: If not specified, authorities/courts will determine a reasonable period based on the nature of the information and industry practices.
– Employees are responsible for strictly complying with the signed provisions in the NDAs or the Labor Contract to mitigate potential legal risks in the future.
4.2. Solutions for preventing and protecting the rights of businesses when employees fail to fulfill their obligations.
To optimize enforcement of NDAs and NCAs after the termination of the labor relationship, businesses should proactively conduct:
– Reminder Notices: Formalize obligations during the handover process.
– Access Revocation: Terminate all system credentials (emails, cloud, internal software).
– Acknowledgment Minutes: Require employees to sign a confirmation that confidentiality obligations survive termination.
5. Potential Legal Risks
5.1. Businesses face the risk of void agreements
– The core principle is to ensure the right to work, freedom to choose a profession and workplace of citizens. Many opinions suggest that signing NDAs/NCAs (especially clauses banning working for competitors) is an act of direct infringement on the employee’s right to earn a living.
– If the terms are too harsh and directly infringe on the basic rights of the employee (E.X: banning work in an entire industry for life), the Court may declare the agreement void.
5.2. For employees
– Limiting career opportunities: Signing a Non-Compete Agreement with overly strict content and a scope that is too wide without a proper compensation mechanism can make you unemployed or forced to change industries after resigning.
– Liability for compensation: May face violation penalties of up to hundreds of millions of VND if the commitment is breached.
6. Legal consulting services on NDAs and Non-Compete Agreements from Lexconsult & Partners
Lexconsult & Partners provides package consulting services, supporting the drafting of agreements, aiming to ensure the optimal interests of businesses/individuals and minimize the risks that may arise related to NDAs and Non-Compete Agreements (NCAs).
The scope of services includes:
– Drafting and reviewing Non-Disclosure Agreements (NDAs) and Non-Compete Agreements (NCAs) in accordance with legal regulations;
– Representing in the negotiation of terms;
– Resolving disputes at Court or Commercial Arbitration (if any).
7. FAQ – Frequently Asked Legal Questions regarding NDAs & Non-Compete Agreements
Is a Non-Compete Agreement (NCA) truly enforceable in Vietnam?
=> According to the Labor Code 2019, as amended and supplemented in 2025, employees have the right to freedom of work and the freedom to choose their employment. However, according to case law and recent judicial practice, an NCA is often recognized as a civil transaction. If the agreement is signed on a voluntary spirit and includes reasonable limits on time, geography, and field, it is fully valid and compels the infringing party to pay compensation.
If an NDA does not specify a duration, how long does the confidentiality obligation last?
=> In principle, if no duration is specified, the confidentiality obligation is usually understood to be effective until that information becomes public (no longer a trade secret). However, to avoid legal risks, businesses should clearly stipulate the duration (EX: 2 years, 5 years, or indefinite depending on the type of information) to easily provide proof before Competent Authorities.
Can employees “bypass” an NCA by working as a collaborator or having relatives stand in their name to establish a rival company?
=> This is a common violation. From a legal perspective, the business needs to prove that the employee is the “actual beneficiary” or directly participates in operating or supporting the competitor. If the business has evidence of the employee using knowledge or old customer files to seek illicit profits for a new entity (regardless of the title), the Court can still determine it as a violation of the Non-Compete Agreement (NCA).
Does the company have to pay extra money for the employee to sign a Non-Compete Agreement?
=> Current law does not have specific regulations, but this agreement is considered a civil transaction. However, a Non-Compete Agreement (NCA) without financial compensation is often considered “lacking fairness” by the Court and has a higher risk of being declared void compared to agreements with support fees. Paying an additional fee helps confirm that this is a legal “reciprocal” civil transaction.
In conclusion, NDAs/NCAs do not violate the principle of freedom of work because they represent a “voluntary limitation of rights” by the employee in exchange for other benefits (salary, bonuses, training opportunities). However, to avoid the risk of being declared void, businesses need to draft these terms in the form of a separate civil agreement with reasonable limits on time and space.
Please contact Lexconsult & Partners if you have any questions regarding NDAs & Non-Compete Agreements (NCA) to receive detailed legal advice from our lawyers, risk assessment, and support in ensuring compliance with legal regulations.
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📩 Email: info@lexconsult.com.vn
