data collection

Why Having a Confidentiality Agreement is Important

Let’s face it. Confidentiality agreements are tedious to pore through. Especially if you are the employee going through the agreement. You have to read each line, including the fine print, and sign each page. It can sometimes leave you wondering if it is really necessary. Even worse, it may lead you to think if your employer distrusts you.

As an employee, you will find that most, if not all, clauses of the confidentiality agreement lean toward the interests of your employer. Impersonal as it may sound, your employer is just making sure that her business is protected. It is necessary and acts as a guardian, if you will, of the business.

If you’re an employer, here are some reasons why you would need an airtight confidentiality agreement with your employees:

  1. It will prevent your trade secrets from being copied by your competitors.

Your trade secret is what makes your business unique. It is your competitive advantage and the reason why your customers patronize your brand. Having a confidentiality agreement will protect your business from getting copied by others.

Imagine this. As the creator and founder of the business, you have done your research and development. You were thorough and diligent in coming up with your flagship product and have perfected your methods. Then imagine another company doing the exact same thing, using the same methods you came up with. This happens incidentally following the resignation or termination of one of your employees.

Having a confidentiality agreement with your employee will make her less prone to divulging your company’s trade secrets as soon as her contract with your company ends. Unless that former employee is hell-bent on disclosing your secrets at the risk of litigation, it is likely that your trade secrets are kept safe under lock-and-key.

  1. It will protect sensitive data about your company.

company files

Important company data such as customer and employee information are protected from falling into the wrong hands through confidentiality agreements.

With data privacy concerns becoming a hot topic globally, breach of confidentiality may be prevented by having an airtight confidentiality agreement. It is best to seek legal advice from corporate law practitioners on how to craft one, and what particular pieces of information should be included in the agreement.

  1. It will protect your company’s reputation.

You will thank your future self in the event that a terminated employee is not so happy with your decision to end her contract. Having a confidentiality agreement that states that your employees are not allowed to malign or divulge negative information about your company can keep you from having to deal with a PR nightmare in the future.

With practically everyone having more than one social media account, all it takes to cast doubt on the reputation you have worked so hard for are a few clicks on the keyboard. Beyond protecting data privacy and intellectual property rights, however, confidentiality agreements are about giving appropriate valuation to one’s hard work. It is about monetizing and making tangible original ideas and protecting them for what they are worth.

Scroll to Top