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Things that Cover in Non-Disclosure Agreement NDA for Employees

NDA for Employees

A non-disclosure agreement (also known as an NDA or confidentiality agreement) is an agreement between two parties promising to keep certain information confidential. Confidential information is often of a sensitive, technical, commercial, or valuable nature (eg trade secrets or proprietary information).

Both parties sign a confidentiality agreement, creating a binding agreement to keep the information confidential. Make sure you understand how to write an NDA before drafting your own, or learn more about NDAs with our NDA guide.

Types of Non Disclosure Agreements

The following are the types of Non disclosure Agreements:

  • Basic/Standard Non-Disclosure Agreement

Use standard NDAs to protect confidential information in the course of business (eg partnerships or sales), creative endeavors (eg filmmaking or web design), product development (eg software development or inventions), or even personal matters.

  • Mutual Non-Disclosure Agreement

Use a mutual NDA if you and another party want to share confidential information. For example, to form a partnership, both companies may need to disclose sensitive financial information that would be damaging if leaked.

  • Employee Non Disclosure Agreement

Have employees, interns, consultants or partners sign an employee NDA to agree to keep business information confidential. This document may be going to apply for general employment, agency partnerships, or third-party services.

  • Interview Non-Disclosure Agreement

Use an interview NDA to ensure that your recruiting efforts don't accidentally leak proprietary information. When interviewees are required to disclose sensitive business information, have them sign an interview non-disclosure agreement first.

Purpose of Non Disclosure Agreement

The purpose of a non-disclosure agreement is to prevent confidential information from being publicly disclosed or used by any parties with whom you share the information. Documents of NDA which are signed are going to set the legal framework to protect intellectual property and information from being stolen, sold, or shared with third parties.

NDAs are usually habitual:

  • To protect sensitive information – If you or your company needs to protect sensitive data, you can use an NDA, so participants cannot legally disclose or release that information to other parties.
  • Protect patent rights - If you want to share trade secrets, you must take reasonable steps to protect their confidentiality. NDA is the right step.
  • Outline what information is confidential – To avoid confusion, the NDA categorizes information as unique and personal.

Some examples of a company’s situations when a uses an NDA:

  • In-depth business discussions
  • Hiring employees, freelancers, or contractors
  • Working with potential investors
  • Supplementary to other contracts (such as manufacturing contracts)

General Clauses of Non Disclosure Agreement

You may want to fill out or write your Non-Disclosure Agreement. Here are the standard clauses you include and what they mean:

Step 1 - Disclosing and Receiving Parties

Begin your NDA by establishing the "parties" to the agreement. "Disclosing Party" is the person or entity sharing the information. At the same time, the "receiving party" is the person or entity receiving the information. Confidential information is shared in a mutual NDA (bilateral NDA).

Step 2 - Confidential Information

After the parties are established, specify what non-disclosure agreement protects confidential information.

Step 3 - Exclusion of Confidential Information

An "exclusion" clause defines what information the NDA does not protect. Information that a non-disclosure agreement may not protect includes:

  • Already the information is in the public domain
  • Information already available to the other party before the NDA
  • independently Information discovered by the recipient
  • Information that the disclosing party is authorized to share with the receiving party with the prior written consent

Oral information may be considered confidential if confirmed in writing within a specified period after disclosure.

Step 4 - Non-Disclosure Obligations

The bulk of your NDA will contain Non-Disclosure Obligations, which outline the receiving party's responsibilities for the disclosing party's information. Rather than being a single clause, this section will likely have multiple clauses detailing various responsibilities.

1. Non-Disclosure of Transaction

 The party of receiving undertakes not to disclose to others:

  • The Party of Disclosing has shared Confidential Information.
  • The transaction is going to be negotiated or discussed.
  • A transaction has been made with the details of the relationship.

2. Non-solicitation

Either party may prevent the other party from soliciting or employing employees or diverting business from the other party.

3. Non-competition

The parties agree not to engage in business activities that directly compete with the other party. Partners and employees of many companies sign NDAs and non-compete agreements separately.

4. Non-circumvention

 If the disclosing party shares business contacts, the non-circumvention clause prevents the receiving party from bypassing the contract and directly conducting business or engaging with those contacts.

5. Step 5 - Time Frame / Termination

The NDA should clearly state how long it will remain in force. This includes when the promise to keep confidential information confidential begins (the "Effective Date") and the period during which the protected information must not be shared with others (the "Disclosure Period").

Usually, the parties agree on when the contract will end (known as a "termination" provision). For example, a non-disclosure agreement may terminate when:

  • The contract expires
  • Transaction completed
  • A certain period has passed.

Step 6 - Jurisdiction

The jurisdiction establishes which state's laws govern the confidentiality agreement. Suppose confidential information is leaked or improperly used by one party, and a lawsuit ensues. In that case, the laws of the agreeing state will apply and any trials or hearings will take place there.

Step 7 - Signature

And finally, the NDA needs to include all party's signatures and their representatives. Representative means other people (ie, directors, officers, employees, agents, or consultants) who may share, receive, or protect information according to the transaction specified in the NDA.

Step 8 - Additional Clauses

It will look different depending on the nature of the transaction of NDA, the relationship, and the information specified. Additional clauses you may choose to include in your confidentiality agreement include:

  • Remedy: States the consequences of breaking the NDA
  • No License: Provides that the NDA does not grant any patent, copyright, or ownership of the information provided to any party.
  • Severability: It states that if a part of the NDA is declared invalid in court, that part will be struck down and the rest of the agreement will remain valid.
  • Amendments: The NDA may be amended at any time.


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