An employment confidentiality agreement, also known as a “non-disclosure agreement” (NDA), is a legal contract in a written form that is signed between the employer and employee. It contains necessary terms and conditions that forbid the employee from revealing confidential and exclusive information of the organization to third parties.
It takes effect during the employee’s employment and for a certain period following the employment termination specified in the NDA. The common period for this is one, two or three years and covers activities that the previous employee is prevented from doing during this period. When the employees sign this type of agreement, they accept that if they expose sensitive company information that is considered as breaking of their employment contract and this has severe consequences for them.
Purpose
All companies have sensitive and confidential information they would like to keep private, from commodity plans and lists of customers to software and blueprints. In most cases, sharing such information could do a severe harm to the company, especially if their competition gets that information.
Furthermore, in this technologically advanced world, information can spread all over the world within minutes (if not seconds). An employee confidentiality (or non-disclosure) agreement has the capacity to protect important company’s information and can enable both parties to have a trustworthy cooperation.
Elements of the employee confidentiality agreement
The employment confidentiality agreements include an article by which the signer is not allowed to reveal company’s secrets or in any way to benefit from such confidential information. Often such agreements stipulate the length of time in which the employee who leaves the company is forbidden to work for a competitor’s company to prevent rival companies and competitors gaining the information for their benefit.
The agreement should contain a clause detailing the conditions under which the employer can allow company’s information to be used by the signer. This could be permitted only in the case when the employer sees a benefit from this and not potential damage. The NDA should also contain an article by which the employee is obliged to return all documents that are company’s property and instructs the employee what to do with any copies of such documents upon the end of the employment.
Types of employee confidentiality agreements
There are two types of employee confidentiality agreements:
Unilateral – only one of the entities undertakes not to reveal the information that the other transmits.
Mutual – both parties to the contract undertake not to disseminate certain information exchanged within a specific framework and timeframe.
Penalties
The employee is liable if they fail to comply with a confidentiality agreement. The consequence of this can be a dismissal from work, as well as a civil court case for damages, that could result in significant financial penalties for the employee in case the employer has suffered any damages.
