By: Nicolas Guevara-Mann | Queen’s Business Law Clinic | November 2021

Editor: Mikela Page

In our last blog, we explained that non-disclosure agreements (NDAs) can be used to protect confidential information when it must be shared with a third party. Often, when a company hires a new employee, the employee will gain access to the business’s confidential information, such as its trade secrets, client lists, and intellectual property. Consequently, NDAs are very common in employment relationships, either as a stand-alone agreement or as part of the employment contract.

Terms

These agreements typically include all the same standard clauses as identified last week. Particularly, under “Permitted Purpose,” the employee will only be permitted to use the confidential information in the context of the employment and cannot disclose the information without the consent of the employer. It also will stipulate that the employee must return all confidential information once employment has ended.

Common Law Duties

Despite these agreements, it is important to remember that employees always owe a duty of good faith to their employer. This includes confidentiality obligations, and may, in some circumstances, give an employer the right to terminate an employee for cause if they disclose confidential information. Signing an NDA is useful as it explicitly outlines the intentions of both parties to maintain important information confidential, but it is not required for there to be a confidentiality obligation.

NDAs, NCAs, and NSAs

Occasionally, these agreements are also combined with non-compete and non-solicitation agreements which stipulate that an ex-employee cannot work for competitors nor solicit the business’ clients or employees, depending on the circumstances, for a certain period of time after employment with the business ends.

Conclusion

If you are a business owner with valuable information, consider having your employees sign an NDA to ensure this information does not get leaked to competitors or used in an improper way.

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