Note on Non-Disclosure Agreements under the Labor Code
This is a very important agreement that may easily lead to controversy or even disputes if it is not stipulated or clearly explained during the process of concluding the labor contract between the employer and the employee.
Clause 2, Article 21 of the Labor Code 2019 provides:
“Where an employee works in direct relation to business secrets or technological secrets as prescribed by law, the employer has the right to reach a written agreement with the employee on the contents and duration of protection of business secrets and technological secrets, the employee’s entitlements, and compensation in case of violation.”
This provision is further elaborated in Article 4, Chapter II of Circular No. 10/2020/TT-BLĐTBXH, effective from January 01, 2021, on the protection of business secrets and technological secrets:
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Where an employee works in direct relation to business secrets or technological secrets as prescribed by law, the employer has the right to reach an agreement with the employee on the protection of business secrets and technological secrets, either in the labor contract or in a separate written agreement in accordance with law.
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An agreement on the protection of business secrets and technological secrets may include the following principal contents:
a) The list of business secrets and technological secrets;
b) The scope of use of business secrets and technological secrets;
c) The duration of protection of business secrets and technological secrets;
d) The method of protection of business secrets and technological secrets;
đ) The rights, obligations, and responsibilities of the employee and the employer during the protection period;
e) Handling of violations of the agreement on protection of business secrets and technological secrets. -
When detecting an employee’s violation of the agreement on protection of business secrets and technological secrets, the employer has the right to request compensation from the employee in accordance with the parties’ agreement. The order and procedures for handling compensation shall be carried out as follows:
a) Where the violation is detected during the term of the labor contract, the handling shall follow the order and procedures for handling compensation for damage as prescribed in Clause 2, Article 130 of the Labor Code;
b) Where the violation is detected after termination of the labor contract, the handling shall be in accordance with the provisions of civil law and other relevant laws. -
For business secrets and technological secrets included in the list of state secrets, the protection shall comply with the provisions of the law on protection of state secrets.
Legal basis:
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Clause 2, Article 21, Labor Code (2019);
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Article 4, Chapter II, Circular No. 10/2020/TT-BLĐTBXH (effective from 01 January 2021).
