Choosing the Right Stamp Paper for Employee NDAs: Is 100 or 500 Better and Why?

I would like to make a Non-Disclosure Agreement with the employees on stamp paper.

Stamp Paper Value: 100 or 500?

What should be the value of the stamp paper - 100 or 500? What is the difference between these two from a legal perspective in terms of acceptability?

Listing Employees on Stamp Paper

Can all employees' names be listed on one stamp paper, or should each employee have a separate stamp paper? Kindly advise if possible.

Regards, SURESH

Value of Stamp Paper

The value of stamp paper varies from state to state and depends on the applicable state rules. You can go to any stamp vendor in the locality, and they will guide you. It is better to have each employee buy the stamp paper themselves, as the name of the buyer, as well as the parties to the agreement and purpose, must be mentioned on the backside of the stamp paper.

Legal Perspective on Agreements

Legally speaking, it does not make any difference whether the agreement is on stamp paper or an ordinary piece of paper (even oral agreements are legal and valid as per the Indian Contract Act 1872). Getting the signature on stamp paper would definitely indicate some importance being attached to the employees' obligations.

Dear Suresh,

You have asked a query about the non-disclosure agreement, specifically regarding the value of the bond you would like to have with the employee. However, please confirm the nature of your industry, the type of work the employees will do, and what kind of sensitive data they will have in their possession, etc.

Why is a paragraph in the appointment letter not sufficient?

Generally, a paragraph is included in the appointment letter on the non-disclosure of information. Why is a paragraph in the appointment letter not sufficient? What is the need to have an exclusive NDA over and above the contents of the appointment letter?

IT Companies and NDAs

Furthermore, many IT companies also obtain NDAs from their employees. However, rather than relying solely on the NDA, they also create an IT infrastructure to avoid data leakage. Have you created a similar IT infrastructure to protect your data?

Anyway, earlier there was a query on the inclusion of the NDA clause in the appointment letter. You may click here to refer to it.

A senior member has given the first reply to the query. I agree with him that an exclusive NDA makes the issue of data security preponderant and also acts as a deterrent against even inadvertent leakage of information. In contrast, though an appointment letter is a legally valid contract under the provisions of the Indian Contract Act, 1872, its contents may not be viewed with due sensitivity.

Thanks,

Dinesh Divekar

As mentioned by seniors, there is no need to have a separate NDA signed on stamp papers, as it will only add to your stationery cost. An NDA signed by the employee on your company's letterhead should be sufficient to initiate any legal action. Just be sure to check that the signature is correct and can be verified through the PAN card.

Non-Disclosure Agreement on Stamp Paper

For the purpose of creating responsibility and obligation for the second party (employee) regarding the confidentiality of information, innovation, design, technology, or any special knowledge of a particular domain, the first party (employer) can enter into a Non-Disclosure Agreement (NDA) on a Rs. 100 value non-judicial stamp paper. This is in addition to mentioning it in the offer of appointment as general terms and conditions of the offer and service.

Are you going to get it registered at the local Sub-Registrar Office and pay the requisite Stamp Duty & Registration Charges for perceived damage with a monetized valuation in order to enforce it in case of violation? If not, then this Agreement on Stamp Paper has no value to consider.

The value of stamp paper differs from state to state. Keeping this in mind, you should first find out the rules applied in your state. To make things easier, you can even seek help from any stamp vendor in your area. Obtaining stamp papers and preparing them is not as difficult as it seems. Today, we are living in an era of automation where technologies such as HR software are simplifying the process of sending and storing such vital documents in the long run. Just have the right information, and you will be good to go.

Hope this helps you.

Dear Suresh, you need to make the separation for all the employees. In my company, we did that on Rs. 100/- stamp paper. But frankly speaking, after a few days, we started taking it on company letterhead along with the company stamp on it.

So, unless we have strong evidence and a system to track, then only it will make sense. We have faced a lot of opposition to getting this signed, and a few of them never signed it.

It is better to have this on letterhead on plain paper with the company stamp and employee signature on all the pages, along with the employer's signature.

From your question, I am assuming that you are in Maharashtra. In Maharashtra, any agreement with an indemnity clause needs a ₹500 stamp paper, while those without need ₹100.

However, if your agreement has a value, the stamp cost will depend on that value. Check with your lawyer.