HR Glossary for HR Professionals
Glossary of the most common HR terms and acronyms to assist professionals navigating the ever-growing and ever-changing world of HR terminology.
What is a Non-Compete Agreement?
When organizations use non-compete agreements, they often refer to written contracts between employees and employers that require a signature. In addition, these contracts state the employee can’t enter into competition with the employer when the employee leaves the company.
Why do employers use non-compete agreements?
When an employee and employer relationship ends, non-compete agreements tend to be a requirement of employers. The goal of the agreement is to prevent competition against them in the employee’s next position, for example:
- Working for a competitor in the same market.
- Starting up another business in the same field.
- Recruiting the company’s employees to leave with them.
Employers may use these agreements to protect themselves from previous employees revealing:
- Company secrets.
- Private company information.
- Company operations.
- Client information.
- Company pricing.
- Company strategies, etc.
How long are non-compete agreements in effect?
Non-compete agreements typically last a specific time frame following the employment relationship termination. These dates are typically set within the agreement.
What’s included in a non-compete agreement?
A non-compete agreement has to include certain information in order for it to be legally binding. This includes:
- Effective dates.
- Reasons for the written agreement.
- Dates for when the employee will be barred from working in a competitive sense.
- Details as to how the non-competing party will receive compensation for agreeing to the terms.
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