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Many businesses today include in employment contracts or separate agreements a provision prohibiting employees from working for a competitor for 12 months after resignation. However, this restriction is not always lawful; its validity depends on the nature of the job and the applicable legal grounds.
According to Clause 1, Article 35 of the 2013 Constitution:
“Citizens have the right to work, to choose their occupation, employment, and workplace.”
Pursuant to Point a, Clause 1, Article 5 of the 2019 Labor Code:
“Employees have the following rights:
a) To work; to freely choose employment, workplace, occupation, vocational training, and to improve their professional qualifications; and not to be discriminated against, forced to work, or sexually harassed at the workplace.”
Additionally, Clause 1, Article 10 of the 2019 Labor Code affirms that employees have the right to freely choose their employment and to work for any employer at any location not prohibited by law.
Furthermore, Clause 6, Article 9 of the 2013 Employment Law stipulates that employers must not obstruct, hinder, or cause harm to the lawful rights and interests of employees. Clause 1, Article 4 of the same Law also emphasizes that employment policies must ensure the right to work, the freedom to choose employment, and the freedom to choose a workplace.
Based on the above regulations, employees have the right to freely choose their occupation, job, and workplace for any employer, unless otherwise restricted by law.
Therefore, a company prohibiting an employee from working for a competitor for 12 months after resignation is not consistent with the law, as it infringes on the employee’s constitutionally and legally protected freedom to work.
However, the law still allows certain restrictions on the freedom to work in specific situations where it is necessary to protect a company’s business secrets or technological secrets. Specifically, Clause 2, Article 21 of the 2019 Labor Code states:
“When an employee works in a position directly related to the employer’s business secrets or technological secrets as prescribed by law, the employer has the right to enter into a written agreement with the employee regarding the protection of such secrets, including the scope, duration, rights, and compensation obligations in case of breach.”
This is further detailed in Chapter II of Circular 10/2020/TT-BLĐTBXH, which allows employers and employees to agree in writing on:
The content and duration of protecting business and technological secrets;
The employee’s benefits during the commitment period;
Compensation obligations in case of breach.
This means:
An employer may only require an employee not to work for a competitor if the employee’s role directly involves business secrets or technological secrets.
The agreement must be in written form, clearly stating the employee’s corresponding benefits during the restricted period.
Conversely, if an employee performs ordinary duties and does not access or handle confidential information, strategic data, or core technologies, then the employer cannot impose a 12-month non-competition restriction.
Applying such a clause in these circumstances is unlawful as it infringes upon the employee’s freedom to work guaranteed by the Constitution and the Labor Code.
Employers cannot arbitrarily prohibit employees from working for competitors after resignation unless there is a valid written agreement related to the protection of business or technological secrets.
The agreement must be clear, reasonable in duration, and must ensure corresponding benefits for the employee during the restricted period.
If these conditions are not met, a provision prohibiting an employee from working for a competitor for 12 months has no legal validity.
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