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Non Disclosure Agreement

Is Employee Non-Disclosure Agreement Important?

Read this blog to know the importance of an Non-Disclosure Agreement. Non Disclosure agreements are also helpful when dealing with potential clients. Know more here.

Non-disclosure agreements are among the most prevalent contracts made between parties when entering into a business partnership or other similar connection in today’s world. This blog is discuss about Employee Non-disclosure Agreement Important

As a result, a Non-Disclosure Agreement (NDA) is an agreement in which each party promises not to divulge any information received in the business partnership to any third party until the Agreement is terminated or for such duration the parties mutually decide and guarantee.

Any private information, intellectual property such as patents, trade secrets, technical knowledge, a list of vendors or customers, or any other significant information may be included. These agreements are critical for organisations in the age of technology, and they have worldwide implications. Mutual Confidentiality Agreement, Confidential Disclosure Agreement, Secrecy Agreement, or Proprietary Information Agreement are all names for the NDA Agreement.

When signing an NDA, each party agrees to adhere to the Agreement’s terms and conditions and that any intentional breach will result in legal action being taken against the other. Though an NDA agreement can be used for various business and lawful purposes, it is especially relevant in the case of an employment contract due to the potential risk of the hired employee gaining access to business and proprietary information.

As a result, it becomes essential and sensible for the company to enter into an NDA agreement, which is also recognized as an Employee Non-Disclosure Agreement (NDA). You Can Know about the Employee Confidentiality Agreement Template in any Online Business.

Whether a large firm or a small business, information such as trade secrets or other intellectual property can be critical to maintaining the company’s integrity

Protect your intellectual property with a shield of confidentiality. Sign up for an NDA expertise at Vakilsearch to guard your business secrets.

Non-Disclosure Agreements In Action

An NDA is often used when hidden information is revealed to potential stockholders, creditors, employees, advisors, clients, suppliers, or other investors who need access to the company’s confidential information.

Confidentiality written down and signed by all sides can help build assurance in these kinds of negotiations and avert intellectual property violations.

The agreement of non-disclosure will stipulate the terminology of the undisclosed information in detail. Some NDAs also fix an individual to discretion for unlimited time, stopping the signatory from divulging the Agreement’s sensitive material. Without a formal contract, any data agreed in confidence might be distorted or wrongly made public.

Essential Employee NDA Agreement Terms And Conditions

  • Defining Sensitive Information

When requiring an employee to sign a confidentiality agreement, it is necessary to provide a clear definition of confidential information to quickly determine what information is kept confidential and what is not and avoid accidentally disclosing any information.

  • Duration of the Agreement’s Validity

Next, specify the duration of the Agreement’s validity and any other conditions that will terminate the NDA Agreement Format. For example, most employers like to stipulate that any information obtained by the employee in his job must be returned or destroyed upon termination.

  • Jurisdiction That Applies

As vital as it is to include other provisions, it is also critical to specify the geographical region where the Agreement will apply and where any parties will establish a cause of action in a dispute.

  • Information Disclosure Obligation

As with any other mutual confidentiality agreement, terms and conditions must be included that allow the employee in question to divulge secret information in the event of administrative inquiries or to any legal authority needed by law.

  • Legal Fees & Remedies

This section is the same in every NDA, and it specifies the actions that each party will take in the event of a mutual dispute. Parties may, for example, agree to refer the dispute to an arbitrator or arbitral tribunal or pursue the matter in court. The parties may also pay for legal charges and other expenses when signing the Agreement to avoid any further misunderstanding.

The Importance Of Signing A Non-Disclosure Agreement

  • Business Interests Are Safeguarded

A non-disclosure agreement is significant because every company contains sensitive information, and there is always the possibility of that information being leaked or distributed to a potential investor or competitor. Thus, regardless of the nature of his job, signing an agreement with any employee prevents him from disclosing any secret information that comes into his awareness.

  • Organizational IPRs Are Protected

The modern world is full of innovation, and changes are constantly being made to current products/services and technologies, resulting in the development and registration of more and more IPRs. As a result, IPRs have a lot of potential for an organisation to expand and profit.

Still, if the original concept or invention is divulged to a third party or competitor, it can be disastrous for the company. As a result, the NDA prohibits any employee or other individual in the business from disclosing the information to anybody outside the organisation unless otherwise permitted by the Agreement.

  • Option To Pursue Legal Action

The NDA agreement is legitimate and binding once both parties have signed it. When an employee willfully violates the terms and circumstances of the Agreement, the employer gains the right to file a lawsuit in court.

  1. Encourages Dispute Resolution Outside of Court – Everyone is familiar with the lengthy and challenging process of resolving a dispute through the Indian legal system. However, in the event of a disagreement arising out of an NDA, the parties may elect to mention the matter to an Arbitration Tribunal or a Sole Arbitrator, who will have the if both parties are same satisfying effect as a civil court.
  2. Providing a duty to uphold confidence – a company relationship is one of faith and credibility. Putting a legally binding contract in place would naturally impose an obligation on the employee to faithfully follow the terms and conditions during his Employment Contract and even after his termination, as agreed between the parties.


As a result, a Non-disclosure Agreement serves as a legitimate legal framework for safeguarding sensitive and confidential company information that they obtain due to their employment. On the one hand, it naturally instils a sense of accountability in the employee to preserve the data and not disclose it to third parties.

On the other hand, it raises the possibility of legal action against the employee if he fails to maintain secrecy. However, it is always better to exercise caution while creating the Agreement and hire a legal specialist to defend the employer’s and corporate organization’s interests effectively.

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