As Vietnam’s economy continues to integrate globally, businesses are increasingly exposed to risks involving trade secrets, confidential client data, and talent mobility. Companies are becoming more dependent on intangible assets-proprietary know-how, pricing structures, internal procedures, or customer databases that can be easily transferred if an employee or partner walks away.

To mitigate these risks, employers often turn to non-disclosure agreements (NDAs) and non-compete clauses to safeguard their interests. Yet, despite their popularity, the enforceability of these agreements in Vietnam is nuanced and often misunderstood. Some contracts are drafted too broadly, rendering them unenforceable, while others lack key provisions needed to stand up in court.

This guide will explain what NDAs and non-compete agreements are, their enforceability under Vietnamese law, how to draft them properly, and the legal options available in the event of a breach.

What Is a Non-Disclosure Agreement (NDA) in Vietnam?

A Non-Disclosure Agreement (NDA) is a legal contract designed to protect confidential or proprietary information shared between parties. In Vietnam, NDAs are widely used across employment, vendor, partnership, and investment relationships.

Typical elements of an NDA in Vietnam include:

• Definition of confidential information;
• Permitted and restricted uses;
• Duration of confidentiality obligations;
• Penalties for breach;

NDAs may be standalone documents or embedded as clauses within larger contracts. For example, a new employee in a tech company may sign an NDA as part of their onboarding process to protect access to internal systems and source code. Similarly, during merger or acquisition negotiations, NDAs are frequently signed to protect financial records and business strategies disclosed during due diligence. These practical uses ensure that sensitive information remains confidential during and after the business relationship. Vietnamese law does not provide a separate statute specifically for NDAs, but enforcement is supported under the Civil Code, Commercial Law, and Intellectual Property Law especially where trade secrets or industrial know-how are involved.

What Is a Non-Compete Agreement?

A Non-Compete Agreement (or Clause) restricts a former employee or business partner from engaging in similar competitive activities for a set period after leaving the company.

These clauses typically define:

• Prohibited activities (e.g., joining a competitor or starting a rival business);
• Geographical restrictions;
• Duration (usually between 6 to 24 months).

Non-competes are especially common in sectors like:

• Technology and software;
• Pharmaceuticals and healthcare;
• Financial services;
• Manufacturing;

In Vietnam, non-compete clauses are often included in employment contracts or confidentiality agreements, but must be narrowly drafted to have legal weight.

Are NDAs Enforceable in Vietnam?

Yes, NDAs are generally enforceable in Vietnam as long as they are clearly written and mutually agreed upon. The Civil Code (2015) recognizes parties’ freedom to contract and honors contractual penalties and damage clauses when obligations are breached.

Key factors that impact enforceability include:

• The clarity of the confidentiality definition;
• Whether the agreement is reasonably limited in scope and duration;
• Whether the party receiving the information had a chance to review and consent to the terms.

In court, the disclosing party must prove that the information qualifies as confidential and that a breach occurred, resulting in measurable loss. Strong written documentation and audit trails increase the chance of success.

Enforceability of Non-Compete Clauses in Vietnam

Unlike NDAs, non-compete clauses are not explicitly governed by the Labor Code. Vietnamese labor law generally favors the employee’s right to work freely. Therefore, non-competes are treated as civil contractual agreements and not as enforceable labor obligations.

Courts will consider the following:

• Whether the clause is reasonable in duration, geography, and scope;
• Whether the employer has a legitimate business interest worth protecting;
• Whether the restriction unfairly limits the employee’s right to earn a living.

A clause that prevents an employee from working in an entire industry, in any capacity, or for an extended period (typically beyond 12 to 24 months) is likely to be struck down as overly broad. Vietnamese courts have generally viewed restrictions exceeding two years or those not tied to a specific role or competitive risk as disproportionate. Similarly, clauses that attempt to block an individual from working anywhere in the country or across all related industries, regardless of their prior duties or access, are unlikely to be enforced. Narrower clauses that limit activities by geography, product line, or specific competitors tend to be viewed more favorably. (e.g., 3+ years) and is more likely to be struck down as overly broad. However, tailored non-competes particularly for senior executives or access-holders of critical IP are more likely to be upheld.

Employers must also be prepared to demonstrate actual risk or damage if the clause is violated.

How to Draft Effective NDAs and Non-Compete Clauses in Vietnam

To maximize enforceability, NDAs and non-competes should include the following:

• Defining key terms precisely: It can be more ensured by avoiding vague language such as “confidential” or “competitive activities” without specifying examples;
• Tailoring the scope: It is better to align the restriction to the employee’s actual role and access. Blanket bans tend to backfire;
• Setting reasonable timeframes: One year is typical for non-competes; 2-3 years for NDAs concerning strategic or proprietary data;
• Including clear penalties: Pre-agreed damages or a contractual penalty clause can incentivize compliance and assist in enforcement;
• Ensuring documentation of consent: In particular in employment contexts, it is worth keeping signed copies and including the clause in both Vietnamese and English (if applicable).

Legal review is highly recommended to ensure that clauses comply with Vietnamese contractual norms and case law trends. Without proper legal vetting, employers risk drafting agreements that are either unenforceable or expose them to counterclaims by employees. Common pitfalls include overly broad restrictions, ambiguous terms, or failing to align with labor law limitations—all of which can lead to disputes, regulatory scrutiny, or reputational damage.

Legal Action for Non-Compete Violation in Vietnam

If a party violates a non-compete clause or NDA, the aggrieved party can pursue civil legal action in Vietnam’s courts. Available remedies include:

• Monetary damages: For losses caused by misuse of information or unfair competition;
• Contractual penalties: If pre-agreed in the contract;
• Injunctive relief: To prevent ongoing or future violations (e.g., disclosing a client list).

To succeed, the plaintiff must provide evidence such as:

• The original signed agreement;
• Proof of access to confidential information;
• Evidence of the breach (emails, employment records or communications);
• Quantifiable harm (lost business or diverted clients).

It’s worth noting that enforcement may be more difficult if the breach involves an overseas competitor or if the agreement was overly broad. In some cases, mediation or arbitration may be more efficient for resolving disputes, especially if cross-border parties or foreign entities are involved.

Cross-Border NDAs and Non-Compete Agreements

Vietnam-based companies often enter into NDAs or non-compete agreements with foreign contractors, vendors, or executives. These agreements should include:

• Governing law and jurisdiction: Choosing between Vietnamese law or international arbitration;
• Enforceability abroad: Considering how a Vietnamese judgment or award will be recognized in the other party’s country;
• Bilingual versions: Ensuring both parties clearly understand the obligations.

When dealing with foreign entities, it’s prudent to include arbitration clauses that reference institutions like VIAC or ICC, which have strong enforcement mechanisms under the New York Convention (1958).

Employee Confidentiality Obligations After Termination

While NDAs and non-compete clauses are often signed during the employment period, their effects usually extend well beyond the date of termination. In Vietnam, employers are increasingly emphasizing the importance of post-employment confidentiality as business competition intensifies.

Even after resignation or lawful termination, employees remain bound by the confidentiality obligations defined in the NDA or employment contract. If no specific duration is stated, courts may interpret the term based on the nature of the information and industry standards.

Risks include the leaking of sensitive client data, misuse of proprietary software, or solicitation of former clients and coworkers. Employers should take proactive steps such as issuing formal reminders at the time of exit, revoking digital access, and requesting signed acknowledgment of continuing obligations.

In the event of a breach, companies can pursue legal action under civil law. Courts will assess whether the former employee had access to protected information, whether the breach was intentional, and if damages can be proven. Well-documented offboarding processes and strong contractual clauses will improve the chances of enforcement.

Use NDAs and Non-Competes Strategically, Not Automatically

Non-disclosure and non-compete agreements are valuable tools to protect your company’s intangible assets, especially in a competitive and fast-changing economy like Vietnam’s. But they are not “set-and-forget” documents. Poorly drafted or overly broad clauses often fail under scrutiny and can weaken your legal position.

To maximize effectiveness, tailor these agreements to the specific nature of the relationship, consult local legal counsel, and ensure the terms are both clear and fair. When disputes arise, swift legal action and proper documentation can make all the difference in achieving a successful outcome.

Le & Tran is recognized as a leader in Vietnam’s legal landscape, earning praise from top legal publications like Chambers, Legal500, and Benchmark Litigation, as well as being highly recommended by AmCham Vietnam and the US Consulate. Our top-ranked Litigation Lawyers are known for delivering practical and strategic solutions that protect your rights and interests. Whether navigating complex disputes or resolving sensitive legal challenges, we’re here to guide you every step of the way with precision and professionalism. For professional support in drafting or enforcing NDAs and non-compete agreements in Vietnam, contact us at info@letranlaw.com.