Non-Disclosure agreement plays a critical role in the technology age to protect the intellectual property and sensitive information of the organization.
The Non-Disclosure agreement takes different roles as their intellectual properties are at risk of getting accessed by the employees, therefore the agreement between the employer and employee enhances the protection of the critical information that belongs to the organization.
The trade secrets, patents, creative ideas, and inventions made by the organization are protected effectively by signing an agreement with the employees. Therefore the article discusses the common questions that arise related to the topic and thereby shares its significance.
Employee Non-Disclosure agreement acts as a promise that the critical information of the organization received through the employer will not be revealed to outside parties. This agreement comes into play while taking up a job and restricts the employee’s actions and thereby restricts the employee to carry out the same trade utilizing the intellectual property of the organization.
5 Commonly Asked Questions about Employee Non-Disclosure Agreement:
1. What is Employee Non-Disclosure Agreement?
The Employee Non-Disclosure agreement is used when the hidden essential information of the organization is revealed to the employees during the period of employment. These agreements build the assurance and limit the employees revealing the organization’s intellectual property or utilizing them across other business procedures.
2. What are the terms and conditions that must be mentioned in the agreement?
- Defining or specifically mentioning the sensitive information that requires protection
- Validity of the agreement’s duration
- Conditions related to the termination of the duration and what should be done when the agreement comes to end, whether the information obtained should be returned or destroyed.
- Geographical limitations within which the agreement is valid.
- Event of administrative inquiries or legal authorities demands to share the information.
- Mentioning the legal charges and other expenses incurred during the dispute.
3. What is the Employment agreement confidentiality clause?
The Non-disclosure agreement contains more number of confidentiality clauses that the employees are not allowed to reveal. Whereas, the employment agreement confidentially clause is included in the employment agreement contract.
4. Why is the “Ownership of confidential information” term used in the employee Non-disclosure agreement?
The material items delivered to the employees by the employers which will be used by the employees during the period of employment have to be returned to the organization. The employees cannot exercise ownership of these properties or materials. The term states that the license or the other ownership rights are not provided to the employees. The Owners cab also make Risk analysis and make Trademark Registry of Unique assets.
5. What are the benefits of the Employee Non-Disclosure agreement?
The competitors are focused on the intellectual properties of the companies. Therefore protecting critical information from competitors gains a competitive advantage for the company. Therefore the competitors cannot copy the product quality of the technology developed by the company.
There are several commonly asked questions related to the topic on the internet. However, the benefits of the Employee Non-Disclosure Agreement are not fully realized by the startups in several parts of India. Moreover, the effective precautions to be taken are to be considered before drafting the agreement between the parties. You can Know about NDA for Employees from our Expert Panel.
Benefits of Employee Non-Disclosure agreement:
- The clear mentioning of the “confidential matter” in the Employee Non-Disclosure agreement and the utilization of the confidential clauses help the employee be aware of not disclosing them even accidentally. Therefore the key information related to the organization is protected. Since the employees are legally imbibed to the regulations and obligations stated in the agreement, critical information is effectively protected.
- The timeline mentioned in the agreement determines the length of the validity.
- The legal liability imposed on both the parties infringing on the agreement is considered the strength of drafting the Employee Non-disclosure agreement. Otherwise, the parties are expected to compensate for the damages caused. The Non-Disclosure agreement disputes and related cases are governed by the Indian Contract Act which was passed in the year 1872 and ensures the enforceability of the agreement.
- Based on the level of violation, the case can be taken to court and ranked based on the severity of the condition. All those Assets for Company the NDA is Necessary.
What are the Precautions to be taken while drafting the agreement?
Although the key questions related to the topic were answered, the precautions to be taken by the organization or the employer enhance the value of the Employee Non-Disclosure Agreement.
The Employee Non-Disclosure agreement is drafted by the disclosing party and they are expected to follow these precautions mentioned below:
- The confidential information related to the organization that will be shared thereafter is clearly and unambiguously mentioned in the Non-Disclosure agreement. This prevents any confusion that might occur on the other parties’ side and they can escape from being liable for the conditions mentioned. Therefore the agreement should state the confidential information clearly.
- The parties who are signing the agreement must understand their obligations and rights and the sole purpose of signing the agreement. They also should be aware of their liabilities clearly before they sign the document.
- The nature of the other parties must be analyzed carefully and then the agreement is drafted accordingly. Therefore the disclosing party is expected to remove the unfair clauses in the employment Non-Disclosure agreement.
- The clauses mentioned in the agreement shall not be confusing or conflicting or provide any circumstances of confusion anytime in the future.
- Include the key provisions and the geographical limitations that the parties must imbibe to the regulations stated.
- Consequences of breaching the obligations must be mentioned in the agreement, and the specification of the penalties, and the right to seek the court and get a stay must also be mentioned in the agreement. In several organizations, the information carries huge value and the monetary compensation doesn’t suffice.
- The dispute resolution clause must be included in the agreement, as this would easily resolve the disputes on mutual agreement.
When can the Employee choose to disclose the information?
There are situations when the employee, is aware of the consequences faced by breaching the laws related to the Non-disclosure agreement. For instance, consider the following situations:
- A situation might arise where the employee comes across an illegal activity that is against the best interest of the company and its employees. In such situations, the employee had to consult the situation with the attorneys and then can choose to disclose the critical information which was mentioned in the Employee Non-Disclosure Agreement.
If the employee had to face or experience injustice or a harsh work environment and the management doesn’t act to change the environment, the employee might choose to consult a lawyer and then chooses to disclose the critical information mentioned in the Employee NDA. The lawyer experienced in the field offers strategies and ways to breach the contract for the betterment of the employees working in that organization.
Conclusion:
The Employee Non-Disclosure agreement is considered a vital legal document that protects intellectual property and keeps the business going. Any company irrespective of its size must consider drafting the Employee Non-Disclosure agreement as early as possible, therefore taking the help of experienced attorneys from Vakilsearch help you to carefully consider your requirements and pitfalls that must avoid while drafting the Employee Non-Disclosure Agreement.
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