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Why your business needs a professional ‘pre-nup’

Taking on a new employee is like entering into any new relationship. Until you get to know each other, it’s a case of building up mutual trust.

Employment agreements protect both of you, should things not work out. A professional “pre-nup” if you like.While you don’t want to set out fearing the worst, it’s important that you put measures in place to protect you and your business.

An employment agreement not only sets out expectations, it safeguards the trade secrets that make your business unique. Intellectual property and confidential information should always be taken into consideration when drafting employment agreements.

Confidentiality

Always include a confidentiality clause if an employee has access to confidential information as part of their work.

Confidential information is that which is not in the public domain, including commercial agreements, trade secrets, financial affairs, methods and systems, business strategies (merchandising, budgeting, pricing, advertising, products and services), computer software and data, and client, supplier and employee records.

When including a confidentiality clause in an employment agreement:

• Specify what information is considered confidential and private

• Include confidentiality in your Code of Conduct

• Think about what you will do if confidentiality is broken

• Remind employees when they leave that the clause continues

IP and copyright

While it may not be bricks and mortar, Intellectual Property (IP) is a business asset. It can be bought, sold and licensed, so it needs to be protected like you would any other asset.

It covers anything invented, developed or created by an employee as part of their job, or in the employer’s time.

This includes signs, slogans, logos, inventions, new products and processes,

designs and original works, such as writing, drawings, filming and recordings.

As a starting point:

• If IP is the lifeblood of your business, seek
specialist advice.

• Be clear with new employees (and those leaving) that the business owns all IP.

• If you’re working with overseas employees you may need specialist help.

By law, present and former employees cannot disclose trade secrets and highly confidential information, if it would cause significant harm to the employer’s business.

If an employee knowingly takes or copies trade secrets for monetary benefit, or to cause an employer or former employer loss, they can face criminal charges.

Much like a marriage, when a new employee signs on the dotted line you hope that it will be the start of a long and happy relationship. And in most cases, you won’t need to call in those clauses.

But setting clear boundaries from the outset will give you peace of mind and security for you both to set off on the right foot.

Kellie Hamlett
Kellie Hamlett
Director, Recruitment & HR Specialist, Talent ID Recruitment Ltd. She can be contacted on kellie@talentid.co.nz or 027 227 7736

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