Are Non-Compete Clauses Enforceable in Vietnam? What Draft Precedent 33/2026 Means for Employers
By Dee (Diep) Hoang, Khai Ho
Your senior manager signed a two-year non-compete. She resigns and joins a competitor the next month. Can you enforce the clause in Vietnam? The Supreme People’s Court’s Draft Precedent No. 33/2026 answers: no.
Non-compete clauses are standard in Vietnam. Companies routinely bar departing executives and technical staff from working for competitors for one to two years. For years, the Labour Code left one question open: do these clauses actually bind? Draft Precedent No. 33/2026 now sets the direction. A clause that stops an employee from working for a competitor after they leave has no legal value.
What the Labour Code left unresolved
The Labour Code 2019 (Law No. 45/2019/QH14) protects an employee’s freedom to choose work. It also lets an employer protect confidential information. What it never addressed directly is the post-employment non-compete - a promise not to work for rivals after the job ends.
That silence produced inconsistent outcomes. Some first-instance courts treated a signed non-compete as a binding civil agreement and ordered departing employees to pay damages. Others refused. Employers could not predict which way a court would go. Draft Precedent 33/2026 removes that uncertainty.
The case behind Draft Precedent 33/2026
Mr. D was a technician at Company T, a technology company. In 2019, he signed a labour contract and a separate confidentiality and non-compete agreement. The non-compete clause barred him, for 12 months after leaving, from working for or cooperating with any party on projects at the refinery of Company N.
Mr. D left Company T in March 2021. In June 2021, he signed a labour contract with Company N and worked at the same refinery. Company T sued him for VND 251.8 million (approx. USD 9,900), claiming he had breached the non-compete.
The first-instance court accepted the claim in 2022 and ordered Mr. D to pay. Mr. D appealed and the Procuracy issued a protest. On 10 January 2023, the Thanh Hoa Provincial People’s Court (Appellate Judgment No. 03/2023/LD-PT) reversed the decision and rejected Company T’s claim in full. That appellate judgment is the source of the draft precedent.
The court’s reasoning: the constitutional and statutory basis
The court held that the non-compete clause was invalid because it conflicted with the employee’s fundamental right to choose his work. That right is guaranteed at two levels - the Constitution and the Labour Code. An employee’s signature does not waive a right the law guarantees.
Constitution 2013 - two provisions:
- Article 35(1): “Citizens have the right to work, and to choose their occupation, employment and workplace.” The right to pick where you work is a constitutional right, not a contractual favour.
- Article 33: “Everyone has the right to freedom of enterprise in the sectors not prohibited by law.” A clause locking a person out of an entire field cuts against this broader economic freedom.
Labour Code 2019 - two provisions:
- Article 5(1)(a): the employee has the right “to work; to freely choose employment, workplace, occupation, vocational training and skills development; and to be free from discrimination, forced labour and sexual harassment at work.”
- Article 10(1): the employee has “the right to freely choose employment, to work for any employer and in any place not prohibited by law.”
The non-compete restricted exactly what these provisions protect. Because it conflicted with the Constitution and the Labour Code, the court held it had no legal value. It could not be used to order Mr. D to pay compensation.
The court added a second ground. Company T produced no evidence that Mr. D had disclosed or used any confidential information. Company N was not in the same business line and was not a competitor. So even the alleged breach was unproven. The constitutional point, however, is the one that matters for every employer.
A draft precedent - not yet binding, but a clear signal
One point of precision. This is a draft precedent proposed by the Legal Department of the Supreme People’s Court. It becomes a binding precedent (án lệ) only once the Council of Judges adopts it and the Chief Justice publishes it. After that, courts must apply it to similar cases.
The appellate judgment it rests on is already final. Read together, the message is unambiguous: a post-employment clause that bars an employee from working for competitors is unenforceable in Vietnam. Companies should plan on that basis now, not wait for formal adoption.
The important distinction: this does not outlaw confidentiality agreements. Article 21(2) of the Labour Code expressly allows an employer, where an employee’s work relates to business or technology secrets, to agree in writing on the content and duration of protection, the employee’s benefits, and compensation if the employee breaches. The lawful route is to protect your information - not to block the person’s next job.
Recommendations for employers
Vietnam’s position is now clear enough to act on. The burden shifts from controlling where staff go next to controlling what they take with them. Dilinh Legal advises the following steps:
(1) Replace non-competes with targeted confidentiality agreements. Anchor them in Article 21(2). Name the companies and information covered, state what counts as disclosure, set the protection period, and fix the compensation for breach. A specific, information-based agreement is enforceable where a blanket non-compete is not.
(2) Audit and amend your contract templates. Remove post-exit non-compete clauses from labour contracts and executive packages. Left in, they give false comfort, cannot be enforced, and invite employee counterclaims. Make the confidentiality terms stand on their own.
(3) Protect trade secrets through IP law. Business secrets are also protected under the Intellectual Property Law. Combine contractual confidentiality with proper trade-secret handling for roles that genuinely hold sensitive know-how.
The question is no longer “Can I stop my employee from leaving?” It is “What can they take with them - and have I done the lawful things that limit it?” For a review of your employment contract templates and confidentiality framework in Vietnam, contact Dilinh Legal at contact@dilinh.com.
About the author
Diep Hoang is the Founding Partner of Dilinh Legal, a business law firm in Ho Chi Minh City. She founded the firm in 2010 and has built it into one of Vietnam’s leading practices in Corporate and M&A. Diep has been ranked by Chambers as a leading lawyer in Corporate & M&A since 2020. Dilinh Legal is ranked by Chambers Asia in Corporate & M&A, Dispute Resolution, and Labour & Employment, and by Legal500 in Corporate & M&A and Dispute Resolution.
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This article is for general information only and does not constitute legal advice. For further information, please contact Dilinh Legal at contact@dilinh.com | +84 (28) 73000864 | dilinh.com