An employee resigns and takes the customer list, product formulas or pricing strategy with them — can the company sue? The answer depends heavily on a seemingly administrative document: the non-disclosure agreement (NDA) signed with the employee. Why? Because trade secrets in Vietnam are protected without registration — but in exchange, the owner must prove they protected the secret with necessary measures. An employee NDA is one of those “necessary measures” (Article 84.3 of the Law on Intellectual Property, VBHN 67/VBHN-VPQH).
1. Why the NDA is the “birth certificate” of a trade secret
Article 4.23 of VBHN 67/VBHN-VPQH defines a trade secret as “information obtained from financial or intellectual investment activities, not yet disclosed and capable of use in business”. To qualify for protection, information must meet all three conditions in Article 84: (1) not common knowledge and not easily obtainable; (2) giving its holder a business advantage over those who do not hold it; (3) kept confidential by the owner through necessary measures so that it is not disclosed and not easily accessible.
Article 6.3(c) confirms that rights in a trade secret arise on the basis of “lawfully obtaining the trade secret and keeping it confidential”. The practical consequence: no NDA and no internal confidentiality rules → in a dispute it is very hard to prove “confidentiality through necessary measures” → the basis for protection is lost, however valuable the information truly is.
2. What information qualifies — and exclusions
- Protected: formulas, production processes, customer lists, pricing strategies, research data — provided the three Article 84 conditions are met.
- Excluded (Article 85): personal secrets; state management secrets; national defense and security secrets; other confidential information unrelated to business. An NDA cannot turn just any information into a trade secret — the NDA’s definition must track Article 84.
- Employee-created trade secrets: trade secrets obtained by an employee in performing assigned work belong to the hiring/assigning party, unless otherwise agreed (Article 121.3). Ownership should therefore be clarified in writing from the outset.
3. Legal basis for signing NDAs with employees
Article 21.2 of the 2019 Labor Code provides: “When an employee’s work is directly related to trade secrets or technical know-how as prescribed by law, the employer may agree in writing with the employee on the content and term of protection of trade secrets and technical know-how, and on benefits and compensation in case of breach.” Article 4.1 of Circular 10/2020/TT-BLDTBXH clarifies that this agreement may be placed inside the labor contract or in a separate document — a standalone NDA is equally valid.
4. Eight key NDA clauses (practical recommended framework)
The clauses below are a practical recommended framework, not a statutory list:
- Trade secret definition — broad enough yet identifiable (formulas, processes, customer lists, pricing strategies) — tied to the three Article 84 conditions.
- Scope of confidentiality duties: no disclosure, no use beyond work purposes, no copying or removing documents.
- Confidentiality term — including after termination of the labor contract. Note: the law sets no maximum term; the term is a matter of agreement, and no statute should be cited for a specific number of years.
- Internal security measures the company will apply (access rights, “confidential” marking, device controls) — to prove Article 84.3 in a dispute.
- Damages for breach (based on Labor Code Article 21.2); contractual penalties are permitted by the Civil Code but must be proportionate.
- Disciplinary sanctions referencing the internal labor rules (tied to Labor Code Article 125.2 — see section 5).
- Duty to return/delete/destroy materials containing trade secrets upon departure.
- Post-employment non-compete (if any) — with the cautionary note in section 6.
5. Three tiers of sanctions when an employee breaches
- Labor discipline: an employee who discloses trade secrets or technical know-how or infringes the employer’s IP rights — causing serious damage or threatening especially serious damage as stipulated in the internal labor rules — may be dismissed (Labor Code Article 125.2). The four disciplinary forms under Article 124: reprimand; wage-rise deferral of up to 06 months; demotion; dismissal.
- Civil / IP: Article 127.1(c) of the IP Law treats “breaching a confidentiality contract or deceiving, instigating, bribing, coercing, enticing or abusing the trust of a person under a confidentiality duty in order to access, collect or disclose a trade secret” as an infringement of rights in the trade secret → handled under Articles 211–214 (administrative) and civil lawsuits for damages (Articles 202–205).
- Competition: Article 45.1 of the 2018 Competition Law treats infringement of confidential business information as a prohibited act of unfair competition.
6. Caution on post-employment non-compete clauses
Vietnamese labor law has no express provision on post-employment non-compete clauses; their enforceability remains debated and depends on the court’s assessment in each case. This article does not claim “courts will uphold it”. In practice, providing reasonable compensation to the employee during the restricted period improves the clause’s viability. Likewise, an NDA does not replace technical and organizational security measures — Article 84.3 is a living condition that must be implemented system-wide, not just on paper.
7. Common NDA mistakes
- Generic NDAs copied from internet templates with no definition of the trade secret tied to the company’s actual operations.
- Forgetting the post-employment confidentiality term — precisely when risk is highest.
- Having an NDA but no accompanying internal security measures (everyone can access every “confidential” file).
- Not referencing the internal labor rules, making disciplinary sanctions hard to apply.
FAQs
Standalone NDA or clause in the labor contract?
Both are valid (Circular 10/2020/TT-BLDTBXH, Article 4.1). A standalone NDA is usually more detailed and easier to update.
What is the statutory maximum post-employment confidentiality term?
The law sets none; the term is agreed by the parties. Figures like “2 years/5 years” are only contractual practice.
Can an employee be dismissed for disclosing a trade secret?
Yes, if the act causes serious damage or threatens especially serious damage and is stipulated in the internal labor rules (Labor Code Article 125.2).
Will a court certainly uphold a post-employment non-compete?
Not certain. Enforceability is debated and case-dependent; reasonable compensation during the restricted period improves viability.
Legal sources cited
- Law on Intellectual Property — VBHN 67/VBHN-VPQH (23/3/2026): Articles 4.23, 6.3(c), 84, 85, 121.3, 127.1(c), 202–205, 211–214.
- 2019 Labor Code: Articles 21.2, 124, 125.2.
- Circular 10/2020/TT-BLDTBXH: Article 4.1.
- 2018 Competition Law: Article 45.1.
See also: Trade Secret Disputes in Vietnam: How the Victim Proves Infringement — what a plaintiff must prove in court when a breach occurs despite an NDA.
Need an NDA drafted or your internal confidentiality rules reviewed? Reach FLAT Law Firm via the Contact page.
The information above is for reference only and does not constitute legal advice.
Transparency note: This article was drafted by FLAT Law Firm\u2019s AI content production system and reviewed by the internal review board (AI Legal Council QA). It has not been reviewed by a human lawyer.