A confidentiality agreement is a legal agreement usually written up in regard to an employer and their employee. They are also called non-disclosure agreements, and the terms are interchangeable, depending on personal preference. The agreement is a contract that lays out the terms and conditions of a person’s employment, when they are working with sensitive information. The contract prevents the employee from legally disclosing any confidential company information.
The agreement remains effectual for the duration of an individual’s employment and up to a period of time after they finish their employment. The usual term of a confidentiality agreement is one to three years.
What does a Confidentiality Agreement contain?
Confidentiality agreements state that the signed individual cannot disclose or profit from any confidential information that they gain from their employment, no matter how they gained that information, or who supplied it. These agreements frequently include a clause that states an employee cannot seek work at a competitor company after the termination of their employment. The goal is to ensure that no sensitive information about the company is leaked by an individual who works, or has worked, for that company.
The agreement should offer a clause that allows the employer to give permission to the employee to share any relevant company proprietary information, where giving the information to another would be a benefit to the company, and not result in any losses to the company, or any party involved in the agreement.
Considering a Confidentiality Agreement
No matter what business endeavour you’re looking to start, if you believe that you may have sensitive information, a confidentiality agreement would benefit your company greatly. If there’s even a slight chance that you, your employees, or any parties that you meet with might discuss company information, a confidentiality agreement will prevent any information leaks.
However, the agreement should only pertain to certain information, or be used in certain circumstances. When the agreement is overused, it can prevent business from being completed properly, or dampen positive interactions. In reality, a confidentiality agreement only needs to be signed when it’s absolutely necessary.
Consider whether the information you’ll be disclosing is truly confidential, and if it were to be discussed outside of the workplace, or a meeting, how much of an effect it would have on your business or company. This will help you decide whether or not an agreement needs to be signed. In a situation where a confidentially agreement is forced, it can be a show of mistrust, and the costs can outweigh the benefits.Obviously, in the case of particularly sensitive information, a confidentially agreement is pertinent.
When a confidentiality agreement is required, ensure that it is properly drafted and agreed on by both parties involved before it’s signed. An experienced lawyer at a reputable company will be able to draft one for you and point out any potential loopholes. If you decide you do need an agreement written, this is the best solution to avoid any mishaps, and keep all parties involved happy.