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This contract states all the legal obligations of an employee to a company. It tells the hours that they have to work and all the works included in their job. All their compensation and benefits are written in it. All employees are bound to sign this kind of contract as they were starting a job. But not only that, there are employees that are bound to sign another kind of document that are given as they are just starting their works. It is the employee non-disclosure agreement. This kind of agreement is common nowadays. Together with the employee contract, an employee is summoned to sign this non-disclosure agreement. It is submitted with all the documents that they have to sign for the company. It is one of the essentials in a company these days.
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What is an Employee Non-Disclosure Agreement?
An employee non-disclosure agreement (employee NDA) is a confidentiality agreement between an employer and an employee. This contract probihits an employee to disclose any information about the company. It allows the company to protect all their trade secrets. The employee should not reveal any information or they may be bound to pay some fine by disclosing any secret of the company. These secrets can be any trade secrets or any protected data of the company. With an employee confidentiality agreement, any sensitive data will be kept within the company, and not to be divulged outside in any way. Confidentiality agreement for employees should be signed before an employee start their work in the company. This way, a company can protect their interest. It sometimes go together with a non-compete agreement, a document that bars a worker to work for the company’s competitors.
Key Elements of an Employee Non-Disclosure Agreement
Employee NDA is a complex document that the involved parties should be aware of. It has key elements that they should know before they should enter into an agreement.
Definition of Parties
The information about the parties involved in a non-disclosure agreement for employees may be explicit. The company who is protecting his data is the disclosing party, and the employee who promises to keep the data secret is the recipient. Both parties must be well-defined in the agreement.
Scope of Confidential Information
This tells the specifics of the secretive data. Both parties must be definite about this. The company should state what should they prohibit the employee to disclose. The confidential information should be written in a clause to avoid loopholes in the agreement.
The Exceptions of the Agreement
Identify the things that are not part of the confidential data. These are the things that are already well-known. This would not put much fear to the employee. It would be good if they would know the extent of what they are going to disclose. These exceptions must not bring into the breach of the contract. Sometimes an employee could tell something about a company. If there are exceptions, this could protect their right. Exceptions are important and should be included in an employee NDA. This would not make it too much.
The Rules of Agreement
The terms of the contract is clear. It is clear about the confidential information and the rules about it. It is definite on the things that should not be disclosed. All the terms should be in the knowledge of both parties. The time limit of the non-disclosure is also clear. The terms that both parties would follow is definite and clearly defined in good clauses.
The Consequences of Disclosure
If a party fails to keep the secrecy of the information, a consequence is written in a clause. It may be in the form of fines that the employee was about to pay in case they accidentally disclosed the information or made a breach on the contract. The company can sue the employee and can ask for that certain amount for damages that was done.
Additional things may be written like giving back the company’s properties when the job contract has finished. Injunction sentences and jurisdiction sentences are included. All the final provisions must be distinct.
A Simple Employee Non-Disclosure Agreement
In good consideration of being hired by __________________ (Company), the signed employee acknowledges:
1. That during my employment there can be disclosed to my knowledge trade information of this Company; this trade secrets may contain but not limited to:
(a) Technical Data: All processes, inventions, business techniques, and computer programs.
(b) Business Data: Customer data, marketing strategies, and merchandising plans.
2. I agree that I will not use and divulge all the information during the course of my employment or after the termination of my employment with the Company. No trade secrets or propriety data will be disclosed even to future employees.
3. That with the termination of my work with this company:
(a) I shall give back all the properties of this Company which includes all the documents, blueprints, and all computer programs. I hereby agree that I will not have any copies of it.
(b) The Company can show this agreement to any future employer in case of breach of contract.
(c) This agreement is binding to me and to all its successors and representatives.
This contract is signed this day of ____________________.
Benefits of an Employee Non-Disclosure Agreement
The employee non-disclosure agreement has obvious benefits that was why every company intends to use it. Here are the following benefits:
How to Write an Employee Non-Disclosure Agreement
It may not be easy to write an NDA. Here are the steps on how to write a non-disclosure agreement.
Step 1 Search for an employee NDA template.
Search for a suitable template in Adobe PDF or Microsoft Word. Read a few templates and choose one that would best describe your planned NDA. This NDA should tell all the terms that you are planning to put in your NDA. Whatever you are wishing for your employee to follow, search in all the available templates.Then pick one that is rightfully justified for you to use and edit it.
Step 2 Know the reasons for your employee NDA.
First, you may want to think of all your confidential information. Identify data that you believe can be a trade secret. Think of all the company’s information that you do not want to be shared to someone else especially to your competitors. NDA also deals with patent rights, if ever you want something that can be treated as the company’s property without additional compensation. This could be one of the reasons of an employee NDA. It must be clearly stated in the document. NDA prevents you from losing this rights. You can be sure that all the patent rights will belong to the company. You must also decide to whom you will share your trade secrets. For example, not all may need to sign an NDA. Only those who will come to know all your propriety information. If you know who are all of them, you would know to whom are your NDA would refer to.
Step 3 State all the terms of your employee NDA.
Put a title to your NDA. Have a boilerplate introduction. Mention the disclosing party and the recipient. Have a clause about their agreement on not disclosing information about the company. State the confidential data. It is necessary that the recipient must know the secrets that they should not disclose. They must know it first so that they would know what to do. Be clear about it. It is also important that they understand why the company would want to make it confidential. Put in simple terms the reasons about it. For the contract to be clear, mention all the items that needs to be confidential. Some of these informations are technical data, financial data, engineering blueprints, customer information, business strategies, computer programs, business prototypes, tools, and product specifications. Then exclude information that are not confidential. Non-confidential information are the common knowledge about the company. You can do this as a consideration to the employee. Sometimes there are things that they have to tell. Tell also the obligations of the recipient. You can also put the conditions where the employee are allowed to share the confidential information for them to know when to speak about it.
Step 4 Finalize your employee NDA.
Put the terms that are needed for the employee to follow the NDA. Have a possible consequence in case they would have a breach of contract. You can also specify the things that the both of you can do in case a dispute arise. Have terms on how you can resolve it. Put a possible remedy for it. Have a resolution clause about the consequence of breach and the solution for it. Then finalize it with an integration clause that will make the agreement final. Put the state of law where the agreement will be binding and where the both of you will go in case a lawsuit would be brought in the matter. At the end of the agreement, there must be signature blocks for both parties.
Can I Know the Purpose of an Employee NDA?
An employee NDA has some purposes. Its main purpose is to prohibit an employee to disclose any trade secrets of the company. All the company’s propriety data must be kept within themselves and they must be careful that the company’s competitors would have it. An employee NDA also prohibits the employees to be hired by the company’s competitors in a particular time to protect the company’s interests.
Are Employee NDA legal?
Yes, it is legal. Once you have signed an employee NDA, you are bound to follow it. You cannot breach it or you may face the consequences of breaching it. Some NDA have large fines to be paid. An employer can bring you to court and you can be imposed to pay those fines.
Is the Employee NDA Still Valid After the Termination of My Employment?
Its validity depends on the terms that is stated within the employee NDA. If you are imposed to follow it with a particular time after your termination, then you must follow it and it is still valid. To avoid this thing, you must carefully read an employee NDA first before you sign it. This will prevent you from having extended obligations right after you are already gone in the company.
Employee NDAs are usually in trend this current age. It is one thing that we cannot avoid when we are having employment. When we are about to sign an NDA, we must be completely aware of the terms and the consequences of this contract. Some contracts may be legally binding to us even for a couple of years. We must not be ignorant when signing this thing. Consider it carefully and we must be sure that we know what we are signing. Well, anyway, it is just a thing that serves as a request of our loyalty to our company. There is not much harm in signing it. Only, we have to keep our word.