Confidentiality agreementsare legally binding contracts, which state that two parties signing the contracts cannot share or make profits from the confidential information. Here we discuss the consequences that you may face if you do not use any confidentiality agreement in Australia.
Why Are The Confidentiality Agreements Given To An Employee?
A business’s confidentiality agreement is generally issued to a contractor or an employer to ensure the privacy and security of its proprietary information or trade secrets. There are different other names for a confidentiality agreement or CA: a confidentiality statement, a non-disclosure agreement or NDA, a confidentiality clause, a non-disclosure form, a secrecy agreement or SA, and a proprietary information agreement or PIA.
What information is protected by a confidentiality agreement?
A confidentiality agreement covers most of the information that is not displayed on public records. This information includes the following.
- Intellectual Property And Proprietary Information
Different pieces of information included under this category are trade secrets, secret formulas, recipes, computer technology, proprietary software, copyrights, scientific data, unpublished patent applications, engineering drawings and designs, specifications for developing and existing products, prototypes, samples, and important ideas for future services, products, and practices.
- Manufacturing Procedures And Production Methods
A confidentiality agreement will also protect crucial information related to production methods as well as manufacturing processes.
- Information On Sales And Marketing
Information includes various sales plans, marketing campaigns, and marketing projects.
- Customer And Client Details
Different information on clients and customers is kept private. In addition, client lists, business relationships, and contractual information are also included.
- Business Information
This information includes operational methods and different strategies, including management and employees’ data.
- Product And Service Information
This information includes details on procedures and packaging of products, tools, equipment, and techniques used for making the product.
- Information On Tests
Data and results of tests received from the employer are included in this category.
- Financial Information
The information listed here includes transaction details, internal cost, accounting reports, accounting procedures, accounting software, and payroll management data. In a confidentiality agreements, the protected information list should be mentioned.
What Will Be The Consequences If You Do Not Use A Confidentiality Agreement?
Not using a confidentiality agreement will result in various adverse consequences. The worst possible case that can happen is that your company may face substantial financial loss. It can lose its brand reputation and name. If any other company has any future business opportunity, it may also get ruined by not maintaining a confidentiality agreement. And, all these losses can lead to significant mental depression.
But there are several benefits of using a confidentiality agreement. According to rules, one party cannot profit from your original ideas or information kept private according to a confidentiality agreement. But, if something like this occurs in reality, you will get legal compensation.
If you have a confidentiality agreement, other business persons will not usually profit from the protected information. They know that they will have to face legal consequences like fines and a legal order to stop the business operations from the data. The entity that exposed the private information may also lose its reputation.
You can take steps against a party that has disclosed your confidential information, but your legal battle will be more expensive and longer without the support of a confidentiality agreement.
If any employee breaches the confidentiality statement, then the company or employer may readily fire the employee, as per the agreement.
Why Do Confidentiality Breaches Take Place?
The main four reasons behind data breaches of companies include the following.
- Removal of identifiers from electronic files or questionnaires.
- Unlocking of cabinets, where the information was kept private.
- No encryption for the electronic files that included the identifiers.
- Exchange of conversations with unauthorized persons on personal data.
Because of these potential violations, any private or government agency that deals with data collecting must give proper training to its employees. It will prevent any data breach from occurring.
In other cases, the breach may result from unlawful acts. For example, in the past, employees had been caught breaching highly confidential information like maiden names of any close relative of the employees. The employees then used those names to open credit cards.
Incidents of identity theft are continuously happening now, and unfortunately, they are happening more frequently. The primary sources of these breaches include banking data and credit cards. There are no specific statistics about the exact number of people harmed by confidential data violations.
To stop any further data breaches, you should take sufficient security measures, additional maintenance, and proper guidelines. You may consult with any commercial lawyers Perth business to set these measures.
Ending Note
For any business, keeping the information confidential is necessary. It helps a company to sustain its customer base and financial stability. So, preventing data breaches is a must. For professional guidance, you should get help from the best commercial lawyers in Perth, WA.