Garden Leave is a way for employers to protect the business when senior employees decide to leave. However, it comes with costs and risks of potential claims. In this article, we uncover the key considerations for gardening leave, including the pros and cons of gardening leave.
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What is garden leave?
Garden Leave (or gardening leave) is when an employee remains on full pay and benefits while they are on their notice period, but they are not required to work. For employers, it’s a way of managing the exit strategy when a senior employee decides to leave. If that employee is a key decision maker, or works with the top clients and customers, or has access to sensitive information, it can make sense to remove the employee from the workplace instead of them working their notice. This is called garden leave.
The rules of gardening leave means an employee stops work and is not allowed to contact colleagues, clients, and customers. This means they can’t access confidential, commercially sensitive information (and potentially pass it on to a competitor).
How long is gardening leave?
The length of garden leave will partly depend on what’s in the employment contract. However, generally speaking, garden leave can last for either part of the notice period or the whole notice period, but it cannot usually last for longer than the notice period. An employer may choose to put an employee on garden leave at the start of their notice period, or they may decide to remove the employee from the workplace if problems arise during the notice period.
Why is it called garden leave?
Gardening leave sounds outdated, particularly since many people don’t have a garden. But it’s a throwback term for the situation where an employee is required by the employer to stay away from work – and so, has time to tend their garden while they are not able to work for their employer or to start a new role with another employer, or set up in business.
The pros and cons of garden leave for employees
The main advantage of gardening leave for employees is that you receive full pay and benefits and have a chance to relax before moving on to another role. The disadvantage is that you do need to generally stay local and contactable by your employer. During garden leave, you can accrue annual leave but generally speaking, the time off work doesn’t mean you can go travelling around the world.
The pros and cons of garden leave for employers
The major pro of gardening leave is that it takes the employee out of the competitive market, and it protects the business as it means the departing employee is unable to access commercially sensitive information, and deal with clients, customers, and colleagues.
Gardening leave gives employers some breathing space. It allows them time to make recruitment decisions and to secure the relationship with key clients before the departing employee starts their new position.
The main disadvantage of gardening leave is the cost. The employee is not doing any work and yet is still being paid and can access employee benefits.
Another downside to garden leave is if the employee is leaving to set up their own business. While the rules of gardening leave mean they are unable to work, garden leave may well give them time to think and plan their new business, even if they don’t put their plans into action until their notice period is over.
What are the employee rights during garden leave?
An employee has a right to be paid during their gardening leave, and as they remain an employee, all of employee rights and obligations still exist. The difference is that the employee is being paid but is not required to work. This means potentially that an employee could still bring claims against the employer (they could raise a grievance, for example, if the employer phoned the employee during garden leave and behaved in a bullying way). Crucially, however, the employee does not have a right to talk to their colleagues or clients.
Pro tips:
- Check the employment contract documentation to estabish the employer has an express term giving it the right to place the employee on garden leave and any other associated terms.
- Employers should follow up any meeting at which the employee is placed on garden leave in writing, to ensure everyting is crystal clear, including what the employee can and cannot do during garden leave, consisent with the employment contract terms.
- Consider whether an employer is to be required to use accrued holiday leave during garden leave, and serve the correct amount of written notice.
- Remind the employee that the requirements to remain contactable during normal working hours, do not apply to any periods of approved annual leave.
Should you put employees on garden leave?
Gardening leave is a defensive move. So, the decision will depend on the risks associated with the employee staying in their role until they leave. Employers need to weigh up the cost of paying the employee to not work against the potential impact on the business if they stayed in the workplace. Is what you are looking to protect worth the financial cost of putting someone on garden leave?
When should gardening leave be avoided?
The short answer is to avoid gardening leave when the cost isn’t worth it. This is particularly true when an employer doesn’t have an implied or contractual express right to take garden leave, and when they are not accessing sensitive commercial data or likely to poach clients, which could damage the business. In some circumstances, placing an employee on garden leave without an express or implied right to do so, may given rise to a risk of constructive dismissal claims, which might in turn inadvertantly release the employee from any post-termination restrictions.
Should you include a garden leave clause in an employee contract?
Generally, it is a good idea; it gives the employer a right to exervise garden leave, when necessary. For senior management and people (such as salespeople) who have close connections with top clients and customers it makes greater sense to have a provision in the contract for the employer to be able to put them on gardening leave.
Can you put someone on garden leave without a clause in the contract?
If there’s no express term in the written employment contract, there may be an implied right to do so. It will depend on the role and circumstances. In practice, most employees are happy to accept (i.e. consent to) a period of gardening leave, whether it is in their contract or not. In those cases, it may well be a its mutually agreed rather than imposed.
Where garden leave is imposed by the employer as per the contract, it should still be for no longer than reasonably necessary. An employer who wants an employee to take more than six months garden leave, for example, would be at risk of a court finding the garden leave period to be excessive and unreasonable – as it can damage someone’s career prospects to be away from work for too long and be deemed an unlawful restraint of trade. But generally speaking, it would be rare for an employee, who had agreed to a longer notice period, to challenge a garden leave, provided they are paid and continue to receive their benefits as per the employment contract.
Is garden leave a good thing?
There are pros and cons to garden leave. It can be an effective way to protect the business when a key employee leaves, but it costs money: you’re paying an employee to do nothing.
Garden leave and settlement agreements
If an employment contract doesn’t include a clause about gardening leave, then you can include one in a settlement agreement. Settlement Agreements are often used when employment is ended to ensure claims are not brought by the employee. In short, a settlement agreement is a legally binding document, which settles any claims that an employee might have against an employee. It can also set out everything from an agreed reference to the date that employment ends, to whether the employee will be given gardening leave.
What happens during garden leave?
During garden leave, the employee is suspended from work but is fully paid. Generally speaking, they are expected to be at home (it’s not a paid holiday where you can jet off around the world). An employee on gardening leave won’t be able to speak to colleagues, clients and customers, or work for any other employer.
Can an employee refuse garden leave?
Not usually, presuming the employer has the right to place them on garden leave. If an employee was to seek to do so, an employer may be able to go to court to prevent them from competing or joining a compeitor, by seeking an injunction, if the employer continued to refuse to comply.
Can an employee start a new job while on gardening leave?
No. The idea of garden leave is that an employee is suspended from their own duties at work and cannot work for anyone else during this period. During gardening leave the employer expects an employee to observe the implied duty of fidelity. This means acting honestly, and not acting in a way that damages their employer’s business or competes with it.
Garden leave FAQs
Some employees in roles and specialised occupations may have an implied right to work. This may because their income is heavily dependent on working or their role is specialised and they need to work to exercise and hone their skills. A leading case on this point of law is William Hill Organisation Ltd -v- Tucker [1989] Court of Appeal. However, if an employer has express right in the employment contract to put an employee on garden leave that will usually override an implied right to work.
Garden leave and payment in lieu are not the same. During garden leave, the employee is not required to work during their notice but crucially they remain employed until their notice period ends. A payment in lieu is different and is made because the employer ends the employee’s employment before their notice period endsand intead pays the notice pay.
An employer may be able to require an employee to use their accrued holiday entitlement in garden leave, as the employee is still employed. The benefit to the employer is a saving the cost of a payment after employment ends for any accrued unused holiday entitlement. If the employee has not consented to taking leave the employer will usually need to serve sufficient notice requiring the employee to take holiday on specified dates pursuant to Regulation 15 of the Working Time Regulations 1998.
Usually an employee is entitled to their normal contractual benefits during garden leave, for example, employer pension contributions, or private health insurance. This is because they are still employed during garden leave.
Whether an employee is entitled to the bonus will be determined by the employment contract terms and bonus scheme rules. It is common for bonus schemes to state the employee will cease to be entitled to a bonus if notice is served before is due to paid.
