Comprehensive Insights on Breach of Trust Employee Agreement and Confidentiality Clauses

Hi All,

Kindly help me out. I have recently joined a pharmaceutical company as an HR Manager and have to create an agreement titled "Breach of Trust" for employees. Could you please suggest what points I can include in this agreement? Your input would be greatly appreciated.

Kavita Bhadoria,

The responsibilities vested with a major chunk of employees in a firm are mostly the same in the context of their access to the firm's vulnerable resources. That is why every working entity asks its employees to sign a Contract of Employment with clauses regarding the actions that will be taken against the candidates/employees if they engage in any unauthorized tampering with confidential information and tangible resources of the firm, or if they align with competitors in any way.

I don't understand why you are being asked to formulate the 'Breach of Trust' concept. And yes, it is not referred to as an agreement!

Ensure that the Contract of Employment includes clauses to mitigate vulnerabilities. Suggest amending the contract if necessary, as introducing a new set of Breach of Trust rules would entail more legalities and could deter new hires. If this cannot be avoided, I recommend making it applicable only to specific designations and not to all employees.

I am confident that my knowledgeable colleagues on this forum will be able to shed more light on this issue.

Hi Sajal,

There is no agreement like this, and now they have asked to formulate the same. You are right; this will not be for all the employees but exclusively for a few key positions in the company.

I wanted to know more information, like what all contents should be there. What I understand is:
1. If the candidate has joined another competitor without serving the notice period, without informing, or providing any fake reason.
2. If they have passed any confidential information to another competitor or anyone who can cause harm.

Please suggest what all points I can add in this.

Thanks

Kavita Bhadoria,

The words and clauses in such agreement are neatly subjected to the arena in which the firm vests its resources and interests. However, the agreement should encompass nearly all of these.

Covenant of Nondisclosure: Employee shall not, at any time during or after the term of this Agreement, in any manner, either directly or indirectly, divulge, disclose, or communicate to any person, firm, corporation, or other entity, or use for his/her benefit or for the benefit of any other person, firm, corporation, or other entity, and not for the benefit of the Company, any information acquired from the Company or its affiliates, without the express prior written consent of an authorized executive/officer of the Company, as more fully set forth in a certain Non-disclosure Agreement between the Company and Employee dated <date of joining>.

Legal Relief: In the event Employee breaches or threatens to breach any of the covenants expressed herein, the damages to the Company will be quantified by the Company, which shall be final. The company may apply to a court of competent jurisdiction for injunctive or other equitable relief to restrain such breach or threat of breach, without disentitling the Company from any other relief in either law or equity.

Adherence to Laws: Employee agrees that in carrying out his/her duties and responsibilities under this Agreement, he/she will neither undertake nor cause, nor permit to be undertaken, any activity which either (i) is illegal under any laws, decrees, rules, or regulations in effect in either India or any other country in which the Company has a business interest; or (ii) would have the effect of causing the Company to be in violation of any laws, decrees, rules, or regulations in effect in either India or any other country in which the Company has a business interest.

Employee agrees to notify the Company immediately of any extortionate solicitation, demand, or other request for anything of value, by or on behalf of any entity or individual, relating to the subject matter of this Agreement.

A clause for waiver should be listed too.

Waiver of Breach: The waiver by either party hereto of any breach of the terms and conditions hereof will not be considered a modification of any provision, nor shall such a waiver act to bar the enforcement of any subsequent breach.

I hope this helps. Accept my apologies for the late reply.

Hello Kavita Ji,

'Breach of trust' is generally used in the social context. However, in organizations, a breach of agreement between parties exists. There will be some misconduct which should not take place in the employees; it leads to indiscipline, non-productivity, low performance, etc.

In my next reply, I will post some misconduct to be listed in standing order shape. First, you should try to prepare a manual for the organization to build trust in the employees towards the company and to foster loyal employees.

"Hi all,
Kindly help me out.
I have recently joined a pharma company as an HR manager and have to create an agreement called 'breach of trust' for employees. What points can I add to this? Please suggest."

I hope this helps. Let me know if you need further assistance.

Hi Kavitha,

Please Google it and get "Code of Conduct" which covers most of the things in it. It also includes policies as well. Policies are not detail-oriented; instead, they would give you a heads up. If you need more clarification, please let me know.

Confidentiality and Other Employment

1. Confidential Information

1.1 You shall not either during your employment (other than in the proper course of your duties and for the benefit of the Company) or after your employment has ended for any reason whatsoever:

a) use, disclose or communicate to any person any Confidential Information which you have come to know or have received or obtained at any time (before or after the date of this Agreement) by reason of or in connection with your service with the Company; or

b) copy or reproduce in any form or by or on any media or device or allow others access to or to copy or reproduce recorded information whether or not in documentary form ("Documents") containing or referring to Confidential Information.

1.2 All Documents containing or referring to Confidential Information at any time in your control or possession are and shall at all times remain the absolute property of the Company and it is your responsibility to undertake, both during employment and afterwards:

a) To exercise due care and diligence to avoid any unauthorised publication, disclosure or use of Confidential Information and any Documents containing or referring to it;

b) To acquaint yourself with specific confidentiality undertakings entered into by the Company with third parties that relate to your work, and honour these undertakings;

c) To deliver up any Confidential Information (including all copies of all Documents whether or not lawfully made or obtained) or to delete Confidential Information from any re-usable medium; and

d) To do such things and sign such documents at the expense of the Company as shall be reasonably necessary to give effect to this clause and/or to provide evidence that it has been complied with.

1.3 The restrictions in Clause 1:

a) Will not restrict you from disclosing (but only to the proper recipient) any Confidential Information which you are required to disclose by law or any order of the court or any relevant regulatory body provided that you shall (unless required by law) have given prior written notice to the Company of the requirement and of the information to be disclosed and allowed the Company an opportunity to comment on the requirement before making the disclosure; and

b) Will not apply to Confidential Information which is or which comes into the public domain otherwise than as a result of an unauthorised disclosure by you or any other person who owes the Company an obligation of confidentiality in relation to the information disclosed.

1.4 The restrictions set out in this Clause 1 are without prejudice to any other duties of confidentiality owed to the Company whether express or implied and survive the termination of employment.

1.5 For the purposes of this Clause, Confidential Information means and includes any information which may be imparted in confidence or be of a confidential nature relating to the business or prospective business or internal affairs of the Company, any Group Company, Fund Entity (as defined below) or any Investee Company and/or its clients and in particular all information relating to the marketing or sales or any products or services of the Company (including lists of customers' and suppliers' names, addresses and contacts, sales targets and statistics, market share and pricing statistics, marketing surveys, research and reports, current and future promotions, new product ranges, service and product information, contractual arrangements with customers and advertising and promotional material), know-how, trade secrets, unpublished information relating to the intellectual property of the Company, any Group Company, Fund Entity or any Investee Company and any other commercial, financial or technical information relating to the business of the Company, any Group Company, Fund Entity or any Investee Company. Such information shall not be disclosed to any person, including any member or person interested in the share capital of the Company, any Group Company, Fund Entity or any Investee Company.

1.6 For the purposes of this Appendix any reference to Investee Company means any body corporate, association, partnership or other collective investment scheme or other entity or person whether established, incorporated or resident in or in respect of which the Company, any Group Company or fund managed or advised by the Company [(“Fund Entity”)], holds investments (either directly or indirectly) including but not limited to shares, debentures, convertible loan stock, options, warrants or other securities of any loans (whether secured or unsecured).

2. Other Employment

2.1 During your employment you shall not either on your own behalf or on behalf of any person, firm or company:

a) solicit or endeavour to entice away from the Company or any Investee Company an actual employee, or discourage from being employed by the Company or any Investee Company any person who, to your knowledge, is an employee or a prospective employee of the Company or any Investee Company; or

b) employ or procure another person to employ any such person; or

c) engage in any other activity during or outside your working hours with the Company which is of such a nature as to conflict with the commercial interests of the Company.

2.2 The restrictions set out in this Clause 2 of this Appendix are without prejudice to any other fiduciary duties owed to the Company whether express or implied.

Hi!

Breach of trust (BOT) is quite a relative term, so you should refer to your company's employee handbook where Do's and Don'ts are stated. You can take cues from those guidelines; however, you can consider the following humble inputs from my side:

1. What is negotiable and what is not - There could be a few norms that are a bit stretchable, or the company may be a little lenient, for example, making personal calls using the office phone occasionally, extended lunch hours, or other minor things that companies usually overlook.

2. Business Information, Confidential Papers, Technical Know-how, and Miscellaneous other information that could harm the company's agenda and objectives. These should be treated as serious breaches of trust.

3. Engaging in a parallel or part-time employment/occupation where an employee uses the company's data, technical know-how, tools, and similar resources may also be considered a breach of trust.

4. The information provided by a new employee during onboarding, and if exaggerations are discovered during background verification, it often leads to termination or leniency in cases of minor exaggerations. Make a decision accordingly.

5. Nowadays, Professional Networking Websites and Social Networking Sites are excellent sources and platforms for sharing professional and personal opinions. Establish a policy on what can be shared or expressed as a company representative or personally to avoid directly or indirectly damaging the company's image.

I hope that considering the above, you can create a comprehensive breach of trust document. Additionally, the valuable inputs that others have provided are also quite useful.

Good Luck!

Prof. Abdul Qadir
+91-9891025825
ridaqludba@yahoo.ca

Hi Kavita,

Numerous good responses have been posted. I would recommend that you first clarify the management's intent regarding the meaning of this phrase - is it a Code of Ethics or is it closer to the social context of punctuality, usage of company resources for professional use, not passing on confidential data to outsiders, competitors, etc. You have enough material to show and help the person/team members clarify the exact understanding of the phrase. It is important to clear ambiguities.

All the best,

Suman Singh
Founder Director
Sumantrana Advisory Services - your HR help desk

Kavita,

I am sorry for some confusion in my text. I had meant to say the use of company resources for personal use.

Best wishes,
Suman Singh

Hello members,

'Breach of trust' means the trust between two parties, i.e., employee and employer. Especially in modern industries like IT, highly sensitive industries such as the army and large malls are formulating very modern tactics beyond routine practices. These include organizing tours, giving gifts at weddings, and allowing free movement during specified times. These efforts improve the quality of employees' work life and lead to better performance results.

In my view, trust will develop by creating confidence on both sides.

Dear Kavita,

I agree with my colleagues that the title of the document should not be "breach of," but "code of conduct." This shall include privacy/confidentiality of professional/trade information (pertaining to the company), double employment (whether part-time or otherwise), full diligence, discipline, devotion to duty of the organization, and rules framed by it for the purpose, etc.

skjohri

Dear Ms. Kavita,

Are you going to file a police complaint against an employee for breach of trust under section 406 of IPC? You can refer to the clauses of his/her appointment letter and accordingly draft a letter for Breach of trust. For more details, you can contact me at 9971589511.

Thanks,
Adv. Sanjeev Baliyan

Dear Ms. Kavita,

You can refer to Section 405 of the IPC, and accordingly, you can draft the breach of trust clauses in the appointment letter of the employee. For more details, you can contact me at 9971589511.

Thanks,

Adv. Sanjeev Baliyan

"Breach of Trust" is a section of a "Non-Disclosure Agreement." The essence of Breach of Trust includes understanding what constitutes a breach of trust within a company, identifying activities that are considered breaches of trust, exploring the consequences of breaching trust (such as a memo, inquiry, transfer, suspension, dismissal, forfeiture of gratuity, criminal and civil complaints, etc.), and determining who falls under this category.

Please let me know if you need any further assistance or clarification on this topic.

Dear,

The terminology used varies from company to company. In your company, you are requested to format a BOT agreement. In some other companies, it may be referred to as an NDA (Non-Disclosure Agreement). Materials for this are readily available on the CiteHR platform. Please customize and adjust according to your organizational needs.

Thanks,
R K Nair