Employee Non Disclosure Agreement Format
What is an Employee NDA?
This Employee Non-Disclosure Agreement (this “Agreement”) is entered into as of the ____________________, 2021 (the “Effective Date”) by and between:
Employer:________________________, a Private Limited Liability Company (the “Company”) and Employee:________________________, an employee of the Company (the “Employee”).
The Company hired the Employee as ____________________________ [Position] pursuant to the terms of that certain Employment Agreement executed between the Parties on the ______ day of _______________, 2021 (the “Employment Agreement”).
All organizations have specific information and processes that they want to keep confidential as they are too sensitive. To ensure that they remain a secret, employers make their employees sign an Employee Non Disclosure Agreement format. In addition, Non-Compete, Non-Solicitation and protection of IPR rights are also coved under the employee NDA.
Purpose: The purpose of the Employee NDA is to prevent employees from compromising confidential information of the Company for meeting their personal gains. Therefore, NDA is also referred to as a “Confidentiality Agreement.”
Pointers Should be Include Employee Non Disclosure Agreement Format:
1. Confidential Information
Shall include all information of material, products, services which has commercial value or other utility in the business in which the disclosing party is engaged. If the Confidential information is in written form, the disclosing party has to put a label or stamp with “Confidential” written on it. If the confidential information is said orally, the disclosing party shall promptly provide a written indication that states such oral communication has Confidential information.
2. Specific information
All information related to every department is included in Specific information.
(i) Accounting information: includes all books, financial information, tax returns, financial forecasts, pricing lists, purchasing lists and memos, order information, supplier costs, and every detail related to finance.
(ii) Business Operations: This includes all the processes, data, ideas, and execution methods that are either in existence or contemplated related to the Company’s work routine. It can also have the plans of the business.
(iii) Customer Information: This includes the name of the individuals, their details, representatives, contacts to whom the Company sells its goods and services. In this, all the associated information may also include.
(iv) Marketing and sales information: It includes all customer leads, sales markets, targets, advertising materials, territories, goals, sales and marketing processes, blueprints, strategy, etc.
(v) Product Information: This includes the company product information sent for sale, how it is manufactured, marketed, listed, revised, software, and documentation details.
(a) Technical information: inventions, machines, computer programs, research projects, research projects, methods, formulae, compositions, etc.
(b) Business information: Pricing data, inventions, machines, computer programs, research projects, methods, formulae, compositions, etc.
3. Exclusions from Confidential Information:
Confidential information will not remain Confidential in the following cases.
(i) If the information goes publicly known and available other than a usual result of a prior unauthorized disclosure by an employee.
(ii) If an employee has received the information through a third-party source that the employee knows well, is or is not under a specific obligation of the Company regarding any such information.
(iii) If the information is disclosed by the employee with the Company’s prior notice in written permission with approval.
(iv) If the employee independently develops the information before the Company’s disclosure without the use or benefits of any Company’s important information.
The termination clause should include: How and precisely the intention to terminate should be communicated to the other party (i.e. in writing ). It should also specify the minimum notice period required to be served before termination comes into effect.
5. Jurisdiction Clause:
The jurisdiction clause of NDA should specify which court shall have jurisdiction over the parties if a dispute arises in the future. For example, suppose the Company is registered in Mumbai and the employee is in Bangalore, and the employee breaches the data of the Company. In that case, the Company can file a complaint in the Mumbai court, and the employee has to be present in Mumbai court anyhow.
Why Use employee NDA
Data is the most important asset a company has, as the entire Company revolves and works around data.
Protection of Interest:
During the course of employment, if any update is made in the methods of improving, designing/processes/ systems or anything related to the Company by an employee, the ownership right shall solely belong to the Company as the employee is working under the Company’s payroll.
If an employee compromises any confidential information, that employee will be liable to pay a compensation amount decided by the Company. The compensation amount shall be subjective and can depend on the quantum of the breach. If necessary, legal action can also be taken. A right without a remedy is of no use, so NDA without a penalty clause shall become worthless.