A non-compete agreement in Vietnam, where the employee promises not to work for a competitor or run a competing business for a period after leaving, is neither authorised nor prohibited by the Labour Code. The Code only lets an employer agree with staff who work directly with business or technology secrets on how those secrets are protected (Article 21(2) of the Labour Code). At the same time the Constitution and the Labour Code guarantee the right to choose a job and a workplace.
So there is no reliable yes or no on whether a non-compete is enforceable in Vietnam. Courts have gone both ways, and Precedent 69/2023/AL, often described abroad as confirming non-competes, decides only that an arbitral tribunal may hear the dispute. In our view, a non-compete agreement in Vietnam stands the best chance when it protects real trade secrets, is narrow, pays the employee during the restricted period and is enforced through money rather than an order to stop working. This guide reflects the law in force on 17 October 2026 and is written for HR and legal teams of foreign-invested companies. Confidentiality agreements are covered in our handbook entry on NDAs in Vietnam.
What the law says, and does not say, about a non-compete agreement in Vietnam#
The Labour Code speaks only of secrets. Article 21(2) allows a written agreement on "the content and duration of protection of business secrets and technology secrets, benefits and compensation in case of breach" with employees whose work directly involves those secrets. Article 4 of Circular 10/2020/TT-BLDTBXH lists what such an agreement may cover: the list of secrets, scope of use, period of protection, protection methods, each side's rights and duties, and handling of breaches. It can sit in the labour contract or in a separate document. Nothing in Article 4 mentions working for a competitor. Some commentators treat Article 21(2) as the legal basis for a non-compete clause in Vietnam; we read it as recognising the employer's interest in its secrets, which may justify a narrow restriction, but not as permission to restrict employment.
The employee's side has express provisions. Citizens have the right to work and to choose their occupation, job and workplace (Article 35(1) of the 2013 Constitution), and citizens' rights may be restricted only by law and only where necessary for national defence, security, public order, social morality or public health (Article 14(2)). The Labour Code gives employees the right to choose their job and workplace freely (Article 5(1)(a)) and to work for any employer anywhere the law does not prohibit (Article 10(1)). The Law on Employment 74/2025/QH15, in force since 1 January 2026, restates the principle (Article 3(1)).
The employer's side relies on freedom of contract. Agreements that do not breach a prohibition of law or social morality bind the parties (Article 3(2) of the Civil Code), and a "prohibition of law" means a provision that does not allow a person to perform a specific act (Article 123). No law prohibits non-competes in those terms. The counter-arguments are that an employee signing a standard pack to get a job is not fully free (Article 117(1)(b)) and that waiving a constitutional right is not something the employer can buy.
In our reading the employer's textual argument is stronger, but Articles 5 and 10 are direct rules, and the refusal case described below relied on them. Do not draft on the assumption that the court will side with the employer.
Is a non-compete enforceable in Vietnam? Case law and Precedent 69/2023/AL#
Is a non-compete enforceable in Vietnam in practice? Courts are split. An article proposing a precedent, published on the Supreme People's Court precedent portal, describes two lines: courts refusing to recognise non-competes as contrary to Article 35 of the Constitution and Articles 5 and 10 of the Labour Code, and courts upholding them as independent civil agreements under Article 3(2) of the Civil Code. In the refusal case it describes, the employee had not been given confidential information and had seven years in the trade before joining. We have not seen the original judgments, so we do not cite case numbers here.
What Precedent 69/2023/AL actually decides. The precedent was adopted on 18 August 2023 and published by Decision 364/QD-CA of 1 October 2023. Its source decision is Decision 755/2018/QD-PQTT of 12 June 2018 of the People's Court of Ho Chi Minh City, which refused to set aside an arbitral award. The facts matter:
- The employee, head of recruitment, signed a separate "confidentiality and non-competition agreement" barring similar work for any competing business anywhere in Vietnam for 12 months after leaving, with an arbitration clause.
- A VIAC tribunal granted the employer's claim for VND 205,197,300, three times her monthly salary just before she left. The precedent does not quote the agreement's compensation clause.
- The part published as the precedent (paragraph 8) holds only that the agreement was independent of the labour contract and, since the company was a trader, fell within commercial arbitration under Article 2(2) of the Law on Commercial Arbitration. The reasoning also rests on two facts specific to the case: the employee lost her right to object by not raising jurisdiction before the tribunal (Article 13), and her own lawyer had told the tribunal that the agreement was independent of the labour contract.
In paragraph 6, outside the precedent text, the court said the agreement was valid because it was signed voluntarily by a person with full capacity. That was said in set-aside proceedings, where the court does not retry the merits (paragraph 9). We therefore do not read Precedent 69 as confirming that non-competes are valid. What it does show is that a separately signed agreement with an arbitration clause can go to arbitration rather than to a labour court. More on that route in our handbook entry on commercial arbitration in Vietnam.
Five factors that make a non-compete easier to strike down, based on the statutory text and the reasoning reported so far:
- The employee had no access to secrets; Article 21(2) is tied to staff who work "directly" with them.
- The scope is open-ended: the whole country, any "similar" work, any business that "competes or will compete".
- Nothing is paid for the restricted period, although Article 21(2) itself refers to the employee's "benefits".
- The agreed compensation is out of proportion to salary and duration.
- The clause was buried in a standard recruitment pack; unfavourable terms inserted by the drafting party are construed in favour of the other party (Article 404(6) of the Civil Code).
During employment: moonlighting, managers and notice periods#
A restriction while the contract is running is less controversial but still limited. Employees may hold several labour contracts with different employers as long as they perform each in full (Article 19(1) of the Labour Code). A blanket ban on any second job is easy to attack; a ban on working for a direct competitor or using company time, assets and information is easier to defend. Discipline is possible only for conduct listed in the internal labour rules or the contract (Article 127(3)), and moonlighting alone is not a ground for dismissal; disclosing business or technology secrets, if listed in the rules, is (Article 125(2)).
Managers already owe statutory loyalty duties: they may not use the company's information, know-how or business opportunities for themselves or others (Article 71(1)(b) and Article 165(1)(c) of the Enterprise Law). These provisions do not say the duties survive departure.
A longer notice period is the one lawful buffer. Enterprise managers as defined in the Enterprise Law (members of the board or members' council, the director or general director and other managerial titles named in the charter, not every department head) on indefinite contracts or contracts of 12 months or more must give at least 120 days' notice when resigning (Article 7(1)(b) and (2)(a) of Decree 145/2020/ND-CP), against 30 or 45 days for other staff. Common-law style garden leave is riskier: an employee may resign without notice if not given the agreed work (Article 35(2)(a) of the Labour Code). Agree it in writing when the employee resigns.
Drafting a non-compete agreement in Vietnam that has a chance#
Pick the right people and link them to identified secrets. Business secrets are protected only if they are not common knowledge, give an advantage and are kept confidential by necessary measures (Article 84 of the Law on Intellectual Property, consolidated text 160/2026/VBHN-LQ-VPQH). Secrets an employee generates while doing assigned work belong to the employer unless agreed otherwise (Article 121(3)). List the secrets each signatory sees and keep evidence of access controls and document marking: the file supports both the non-compete and any trade secret claim.
Keep the scope narrow. There is no statutory maximum. The 6 to 12 months commonly quoted is market practice, not law. Tie the duration to how long the information stays useful, the territory to where the company actually trades, and the restricted activity to named competitors and defined roles.
Pay for the restricted period. Payment is not required by law, but an unpaid restriction is the easiest target for the "not voluntary" and "right to work" arguments. A common structure in practice, not a legal requirement, is a monthly payment of a percentage of final salary, stopping on breach, with an employer right to waive the restriction shortly after notice is given (and then pay nothing). Keep it separate from the amounts that must be settled within 14 working days of termination (Article 48(1) of the Labour Code), so it cannot be read as withholding the employee's money. Personal income tax treatment should be confirmed with a tax adviser.
Sign it separately if you want arbitration. A non-compete clause in Vietnam placed inside the labour contract makes any dispute an individual labour dispute for a labour mediator, labour arbitration council or court (Articles 179 and 187). A stand-alone agreement with an arbitration clause follows the structure accepted in Precedent 69. It does not remove the right-to-work argument, but it puts the dispute before a contract-focused forum. State that the agreement is independent of the labour contract and survives its termination.
Use compensation, not deposits or fines. Article 21(2) and Article 4(3) of Circular 10/2020 speak of "compensation as agreed", not penalties; in Precedent 69 the employer claimed, and the tribunal awarded, three months' salary. A stand-alone agreement can contain a contractual penalty under Article 418 of the Civil Code, though a court may view a penalty against an individual employee very differently from one between companies. The 8% cap in Article 301 of the Commercial Law applies to commercial activities and, in our view, is hard to apply to an employee's undertaking; a draft amendment of the Commercial Law before the National Assembly from 17 October 2026 would repeal Article 301, with the rest of its chapter, from 1 March 2027. Whatever the agreement says, the employer may not:
- take a cash or asset deposit as security for performing the labour contract (Article 17(2) of the Labour Code). The fine is VND 20 to 25 million (Article 15(2)(b) of Decree 283/2026/ND-CP), which is the amount for an individual; companies pay double (Article 7(1) and (2)(b));
- fine employees or cut wages instead of discipline (Article 127(2)); fine VND 20 to 40 million for an individual, double for a company (Article 25(3)(c) of Decree 283/2026);
- deduct non-compete damages from salary, since deductions are allowed only for damage to tools, equipment or property under Article 129 (Article 102(1)).
Decree 283/2026 has no penalty for signing a non-compete as such.
Consider a training bond instead. If the aim is to keep staff the company has paid to train, Article 62 of the Labour Code is firmer ground: a training contract is mandatory for employer-funded upskilling and must state the post-training service period, the cost and the repayment obligation. An employee who resigns unlawfully must repay training costs (Article 40(3)), and a training contract missing its required content is itself fined (Article 20(1) of Decree 283/2026). It does not stop the move to a competitor; it puts a price on it.
Turning a group template into a non-compete agreement in Vietnam#
Foreign-invested companies often receive a group form written under English, Singapore or US state law and want to use it as their non-compete agreement in Vietnam. The "Fix" column is LexData's view.
| Template clause | Position in Vietnam | Fix |
|---|---|---|
| Foreign governing law for a Vietnamese employee | A contract between a Vietnamese company (foreign-owned or not) and a Vietnamese employee, performed in Vietnam, usually has no foreign element (Article 663(2) of the Civil Code), so a foreign law choice is hard to sustain. For labour contracts, a chosen law cannot reduce the employee's minimum rights under Vietnamese law (Article 683(5)), and foreign law is not applied where the result contradicts fundamental principles of Vietnamese law (Article 670(1)(a)) | Use Vietnamese law for agreements signed by the Vietnamese entity |
| Injunctive relief, acknowledgement of "irreparable harm" | The clause cannot create an injunction; a court or tribunal decides under procedural rules | Keep the right to seek interim measures, but rely on the agreed compensation |
| Worldwide scope covering every group company | Breadth increases the risk of refusal | Limit to the business actually run in Vietnam and named competitors |
| Long garden leave | Employee may leave at once under Article 35(2)(a) of the Labour Code; managers already have 120 days' notice | Agree terms when notice is given |
| Blue-pencil severability | The Civil Code allows partial invalidity where the rest can stand (Article 130) but gives courts no power to rewrite scope | Draft a reasonable scope from the start; put each covenant in its own clause |
| Forfeiture of parent-company RSUs or options on breach | Governed by the parent's plan, usually under foreign law; we have seen no guidance on whether a Vietnamese court would treat it as part of the employment relationship | Often the most practical lever, but needs advice in both jurisdictions |
| English-only text | A Vietnamese employee may argue they did not understand what they signed | Bilingual text with a prevailing language |
For expatriates employed in Vietnam the relationship does have a foreign element, but Article 683(5) still applies. An agreement signed directly with the overseas parent can choose foreign law, but enforcement in Vietnam brings back the fundamental-principles test.
When an employee joins a competitor: what can the employer recover?#
Money is the realistic remedy. If the non-compete agreement in Vietnam fixes a sum, claim it. Without one, the employer must prove its loss: full compensation unless agreed otherwise (Article 360 of the Civil Code), including the benefit it would have received (Article 419(2)). Loss caused by one person leaving is hard to prove, so a reasonable agreed sum is worth more than a large one.
Stopping the employee from working is much harder. The Civil Procedure Code allows an interim measure prohibiting or compelling specific conduct (Article 114(12)), requested within a lawsuit (Article 111). We have not seen it used to make an employee leave a competitor, and such a request puts the right to work directly before the court.
The new employer is not bound by the non-compete, but may be exposed on trade secrets. Disclosing or using a trade secret without permission, breaching a confidentiality contract, or inducing someone with a confidentiality duty to reveal secrets are infringements, and so is using or disclosing a secret while knowing, or being obliged to know, it was obtained that way (Article 127(1)(b), (c) and (dd) of the Law on Intellectual Property). The Competition Law separately prohibits disclosing or using confidential business information without the owner's consent (Article 45(1)(b)). Both routes depend on the secrets, not on the non-compete, which is why the secrets file matters.
Forum and time limits depend on the structure. A clause in the labour contract leads to an individual labour dispute, with six months to request a labour mediator where mediation is required and one year to go to court, both counted from discovering the breach (Article 190(1) and (3) of the Labour Code). A stand-alone agreement with an arbitration clause goes to commercial arbitration following Precedent 69. A stand-alone agreement without one may be a civil contract dispute with a three-year limit (Article 429 of the Civil Code; Article 4(3)(b) of Circular 10/2020 also sends post-employment breaches of a confidentiality agreement to civil law), but a court may treat it as a dispute "arising from a relationship directly related to the labour relationship" (Article 179(1) of the Labour Code). Work to the shortest deadline.
Non-competes outside employment: M&A, franchising and agency#
When the party giving the covenant is a business or a selling shareholder, the right-to-work debate disappears and competition law takes its place. A seller's covenant in a share purchase agreement is common. The Competition Law applies to organisations and individuals doing business (Article 2(1)), so an individual shareholder who does not trade may fall outside it. Where the seller is a business on the same relevant market as the target, the covenant may be treated as an agreement sharing customers or markets, prohibited without any effects test (Articles 11(2) and 12(1)). Agreements preventing other businesses from entering a market are prohibited between any businesses, whether or not on the same market (Articles 11(5) and 12(2)); in our reading that category targets outsiders to the agreement rather than a seller's own undertaking. We have found no specific rule or guidance on non-competes ancillary to an acquisition, so keep the covenant to the target's business, territory and a defined period, and describe it in any economic concentration filing.
A franchisee must keep the franchisor's know-how confidential even after termination (Article 289(4) of the Commercial Law), but the law sets no post-term non-compete; see our guide to franchise agreements in Vietnam. A commercial agent may act for several principals unless agreed otherwise (Article 174(1)), so exclusivity must be written in; see commercial agency contracts in Vietnam.
LexData drafts and reviews non-competes, NDAs, training contracts and trade secret rules as part of our Vietnam employment law advice; covenants in M&A, franchise and distribution deals are handled in drafting and reviewing commercial contracts in Vietnam. When someone bound by a non-compete leaves, see terminating an employment contract in Vietnam.
