In today’s business environment, foreign companies operating in Vietnam often include a non-competition provision or agreement in their labor contracts with their employees. However, as this type of provision is somewhat rare in Vietnam as well as being unfamiliar to Vietnamese administrative agencies and Courts, there are few persons with knowledge of the effects and implications of such a provision. Therefore, in this Insight, we would like to share with you our knowledge and experience with regard to (i) the definition of what constitutes a non-compete agreement in employment, (ii) why non-compete agreements are typically compulsory provisions in most labor contracts of foreign companies operating in Vietnam (though Vietnam law does not require or regulate them), and (iii) how non-compete agreements are applied and interpreted in the context of Vietnam law. Definition of a Non-Compete Agreement During the formation and development of a company, a significant amount of useful information is collected, developed and secured by the company. This may consist of information concerning customer relationships, products, trade secrets, business know-how, price, etc. (Confidential Information). A recruited employee’s access to Confidential Information is dependent on their position and job duties with the company. A potential risk is that the employees will use such Confidential Information to create benefits for themselves, such as: Disclosure of the Confidential Information to competing companies for illicit benefits; or Employees may establish or participate in a competing company operating along the same business lines as the former company and use the Confidential Information that they obtained to compete with the business operations of the former company. For instance, the employee may use the information...