Non-Disclosure Agreement for Employees in UAE

16Nov, 23

Non-Disclosure Agreement for Employees in UAE

According to Article (127) of the Labour Law, "Where a worker's job requires him to become acquainted with the employer's clients or gain access to his business secrets, the employer can enable him to agree not to compete with him or engage in any enterprise that competes with his own until his contract is terminated."

The preceding Article should be read in conjunction with Articles 909 and 910 of the UAE Civil Code, which specifically define the scope to which the same can be applied. If the employee has access to sensitive information, the employer may require the employee to sign a non-disclosure and confidentiality agreement.

What is Non-Disclosure Agreement?

A Non-Disclosure agreement is a legally binding arrangement between an employer and an employee. The contract contains legally binding terms and conditions prohibiting the employee from revealing sensitive or proprietary information about the business. In order for the contract to be legally binding, the employee must obtain something in exchange for signing it–in this case employment.

Non-Disclosure agreements are often referred to as Non-Disclosure agreements (NDA), confidential disclosure agreements (CDA), secrecy agreements (SI), proprietary knowledge agreements (PIA), and confidentiality agreements.

An NDA is in place for the length of an employee's employment as well as for a period of time after termination of employment. A non-disclosure agreement must protect both sensitive and valuable information in order to be enforceable.

Why should Employer sign an NDA with the employees?

In every partnership, trust is a necessary component. However, as an employer, you must take appropriate steps to protect your business, even if this means imagining the worst in people at times. A non-disclosure agreement (NDA) is a document that protects the confidential details of entrepreneurs, CEOs, and company owners. You can use a non-disclosure agreement (NDA) for your employees to secure your company's confidential information.

When it came to workers in the past, most employers used to rely on an implicit ethical obligation of confidentiality. If an employee was found to have leaked sensitive information, the normal response was to punish the employee and possibly fire them.

The Reasons to Sign an NDA with Employees are as follows-

_Reasons to Sign an NDA with Employees_

Possible loss of important confidential information

In the highly competitive world of technology, there's also a real possibility that talented workers will leave to start their own company.

If you're an employer trying to protect your confidential information, this is a concern.Even if it's just in their minds, any time an employee leaves, they're taking details with them. You run the risk of losing sensitive information if you don't sign an NDA.

The NDA binds the employee to keep your confidential information secret and not abuse it for a set period of time, which may include even after they leave your company.You might be allowed to include non-competition and non-solicitation provisions in your NDA, depending on local legislation, to prohibit your employees from starting a rival company or poaching your other employees.

Psychological deterrent effect

Even if you never plan to sue your employee for breaching an NDA, there's a big advantage to using one anyway: it provides a psychological barrier for those who sign it.

If an employee is aware that they may be prosecuted, they are less likely to steal the sensitive information. Also, the psychological deterrent effect can be very powerful in keeping the secrets secure.

Clarify intellectual property ownership rights (IP)

When someone develops a new invention or innovation, such as software code, a design, or a technological method, that person is usually the legal owner of that invention or innovation by default.

The employer maintains the IP rights if an employee is employed with a special position to produce new technologies and developments.

To prevent any misunderstandings or ambiguity, have the employee sign an NDA that includes proprietary rights clauses, ensuring that any IP ownership that exists is immediately transferred to you.

As a result, the exclusive rights provisions should contain the following:

  1. The transition to you, as the employer, of employee-developed technologies, innovations, and related IP privileges.
  2. An employee's duty to assist you in perfecting your rights, if possible

Clarify to employees what needs to be kept confidential

What information inside the organization is considered confidential may seem obvious to you as an employer, but it is sometimes not so clear to employees. They don't have the same bird's eye view and vision as you do as the company's CEO.

An NDA clarifies for the employee what they need to handle with extra caution and care.

For example, a software company may want to keep the following details private:

Algorithms that are only available to a limited number of people

These may provide a significant competitive advantage to the person who has them. Consider Google's algorithms and how crucial they are to the company's current performance.

Customer details and leads

When it comes to growth, earnings, and sales, leads and customer information are one of your most valuable tools. Marketers spend a lot of money to discover who is interested in the product or service, who will spend money to purchase it, and how much they will spend.

Companies are frequently willing to invest money in order to obtain such useful knowledge from others, so you can safeguard yours.

New technologies or developments on the horizon.

Being first to market has a significant competitive advantage. Consider how damaging it would be to your company if a rival learned about your new product or innovation and attempted to undercut you by copying it and introducing it before you.

How can a Non-Disclosure Agreement be beneficial for the Employer?

Employers profit from nondisclosure agreements because they prevent employees from exchanging proprietary information, trade secrets, client or product information, business plans, or other sensitive and proprietary information with rivals.

Nondisclosure agreements stipulate that the signer is prohibited from disclosing or profiting from confidential company information provided to them.

If something made, written, created, or invented during or as a result of jobs, contracts, services, or interviewing is in some way relevant to the scope of the company's business, nondisclosure agreements often claim company control of it.

A provision in a nondisclosure agreement should allow an employer to sign off on or provide permission for a signer to use company confidential information. It gives workers the freedom to do things like start a company or become a supplier to their previous employer.