What is a confidentiality/non-disclosure agreement?
A confidentiality agreement, also known as a non-disclosure agreement, is a legally binding contract made between two or more parties. Typically, these agreements are used when sharing sensitive information between parties. Confidentiality agreements work to confirm the terms of the agreement and ensure that the information being shared is not misused.
What happens when a breach of confidentiality agreement occurs?
When an individual or business commits a breach of confidentiality, severe consequences can follow. Below, are common outcomes associated with breaching a confidentiality agreement.
Lawsuit
A lawsuit is a common first step, as it prevents the party in breach of the contract from continuing to misuse the information in the agreement. A company can file an injunctive relief, to have the court stop the party responsible for breaching the terms of the agreement.
Employee Termination
Companies often use employee confidentiality agreements, for staff working with valuable company information. Should an employee breach a confidentiality agreement, this almost guarantees the termination of their employment. Confidentiality agreements will always outline that the employer has the right to terminate the employee responsible for committing a breach of sensitive company information.
Depending on the circumstances surrounding the confidentiality breach and how badly it impacted the company, the employer may even have a case for criminal charges against the employee.
Damaged or Lost Business Relationships
Businesses generally enter into confidentiality agreements to protect private information, intellectual property, or business operations. Should a breach of the agreement occur, the party responsible for breaching the contract will not only have to face legal action but other reputational challenges, such as:
- Damaged business reputation;
- Loss of current and future clientele;
- The company becomes blacklisted in their industry, which greatly reduces the chances of the business surviving.
Still have questions on handling a breach of confidentiality agreement?
Properly handling the aftermath of a confidentiality breach, is not the ideal way for a business to invest their time and financial resources. At Peninsula Canada, our expert HR and health and safety advisors can help you avoid these common and costly business mistakes. Call us today: 1(833)247-3652.
