A non-compete agreement is an agreement between the employer and the employee as per which, if and when an employee stops working for an employer, they are not allowed to start working in a competing firm for a stipulated amount of time. For example, a person working as an investment banker may not be allowed to work for another investment banking firm for a certain amount of time. A lawyer working with a corporate firm may not be allowed to work for another similar firm for a certain duration of time.
It is a very common agreement signed between the parties during the hiring process itself. The motivation behind creating non-compete agreements is to prevent a former employee from leaking sensitive company information to a competing firm. Any sort of information that a company deems important to keep hidden from its competitors comes under this. If employees are allowed to join a competing firm immediately, they can intentionally or unintentionally leak out sensitive information. This does not only mean company secrets but could even involve resources that the company uses, methods of doing certain things, and even a client directory.
There are common non-compete agreements that can be found, and companies can easily just go with them. However, to make it more effective, the HR department of the company can choose to customize it to their needs and goals. Every company can have certain specific goals while creating a non-compete agreement. It would be the duty of the HR department to translate those goals into terms of the non-compete agreements. They can pick and choose how strict and what kind of employee liability they want to create if the employee fails to adhere to these terms.