In today’s competitive business environment, information plays a critical role in a company’s success. Confidential information, trade secrets, customer data, business strategies, and more need to be strictly protected.

Consequently, non disclosure agreement in employment contracts (ECs) are becoming increasingly important. This article will delve deeper into this clause, including its legal basis, content, validity, and some related practical issues.

1. Legal basis

While the Labor Code 2019 doesn’t have a specific provision on information security, the general principles regarding the rights and obligations of employees (EEs) and employers (ERs) are still a crucial legal basis. Specifically:

• Article 16 of Labor Code 2019: Stipulates the obligations of EEs to perform work according to the EC, comply with labor discipline, internal labor regulations, and comply with the lawful management and direction of the ER.
• Article 17 of Labor Code 2019: Specifies the right of ERs to manage, direct, and supervise EEs; to request that EEs perform work according to the EC.
• Law on Intellectual Property 2005 (amended and supplemented in 2009): Protects intellectual property rights for trade secrets and confidential information of businesses.
• Law on Cybersecurity 2018: Regulates the protection of information in cyberspace, including business information.
• Decree 13/2023/ND-CP on the protection of personal data: Stipulates the protection of personal data, including information related to customers and partners of businesses.

2. Content of the non disclosure agreement

A non disclosure agreement typically includes the following key content:

• Definition of confidential information: It is necessary to clearly define what type of information is considered confidential (e.g., trade secrets, customer information, product formulas, business strategies, financial information…).
• Scope of security: Clearly defines the scope of subjects, time, and place where the EE must keep information confidential.
• EE’s obligations: Clearly stipulates prohibited acts related to the disclosure and use of confidential information (e.g., not to disclose to third parties, not to use for personal purposes, not to copy, store illegally…).
• Confidentiality period: Defines the confidentiality period, which may be during the term of employment and after the termination of the EC (usually 1-3 years).
• Penalties for violations: Clearly specifies the forms of handling violations if the EE violates the non disclosure agreement (e.g., compensation for damages, labor discipline, termination of the EC…).

3. Validity of the non disclosure agreement

For a non disclosure agreement to be valid, the following conditions must be met:

• Legality: The content of the clause must not violate the provisions of the law, nor infringe upon the legitimate rights and interests of the EE.
• Clarity: The content of the clause must be clear and easy to understand, avoiding misunderstandings or disputes.
• Voluntariness: The EE must voluntarily sign the EC, including the non disclosure agreement.
• Reasonableness: The scope of confidentiality, the confidentiality period, and the handling of violations must be reasonable, consistent with the nature of the work and the importance of the confidential information.

4. Practical issues

• Difficulty in determining damages: In many cases, determining the damage caused by an EE’s disclosure of confidential information is very difficult, especially for trade secrets.
• Competition for human resources: Imposing overly strict security clauses can make EEs apprehensive, affecting the company’s ability to attract and retain talent.
• Enforceability: Monitoring and controlling compliance with the security clause by the EE is a major challenge for businesses.

5. Solutions

• Carefully drafting the non disclosure agreement: It is necessary to consult with a legal expert/lawyer to ensure the non disclosure agreement is legal, clear, reasonable, and appropriate for the characteristics of the business.
• Raising employees’ awareness of security: Organize training sessions and workshops on information security for EEs, helping them understand the importance of information security and related regulations.
• Applying technical measures: Use security tools and software to protect the company’s confidential information.
• Building a culture of security: Create a working environment where all EEs are aware of information security and consider it their responsibility.

6. Conclusion

The non disclosure agreement is an important tool for protecting intellectual property and competitive advantages of a business. However, for this clause to be truly effective, a combination of legal, technical, and management measures is needed. Businesses need to proactively build and implement comprehensive information security policies and procedures, while also raising awareness of security among EEs.