If your employer has told you that you will be placed on garden leave, or you are negotiating a settlement agreement that includes a garden leave period, it is important to understand what this means for you: what you are entitled to, what you are and are not allowed to do, and how it affects your position. This guide covers the key considerations for employees, as well as the pros and cons of garden leave from both sides.
What Is Garden Leave?
Garden leave (sometimes written as gardening leave) is when an employee remains on full pay and benefits during their notice period but is not required — and usually not permitted — to come into work. The employee remains employed throughout, with all the rights and obligations that come with that status, but is effectively suspended from their duties.
For employers, it is typically used when a departing employee is a key decision-maker, has close relationships with important clients, or has access to sensitive commercial information. Rather than allow that employee to work their notice in the business, the employer pays them to stay away.
The term is a throwback to the idea that the employee, with nothing to do and nowhere to go, has time to tend their garden. It sounds dated — and for employees without a garden, even more so — but it remains the standard term used in employment law and contracts.
How Long Is Garden Leave?
The length of garden leave will depend in part on what is written in the employment contract. Generally speaking, garden leave can cover part or all of the notice period, but it cannot usually extend beyond it. An employer may place an employee on garden leave at the start of the notice period, or may decide to do so if problems arise during the notice period.
Where garden leave is imposed by the employer under the contract, it should still be for no longer than is reasonably necessary. An employer seeking to enforce more than six months of garden leave, for example, would risk a court finding the period excessive and unreasonable — a prolonged absence from work can damage career prospects and may amount to an unlawful restraint of trade. That said, it would be rare for an employee who had agreed to a longer notice period to challenge a garden leave period, provided they continue to be paid and to receive their contractual benefits throughout.
What Are the Pros and Cons of Garden Leave for Employees?
Advantages
The main advantage for employees is straightforward: you receive full pay and benefits and have an opportunity to rest and prepare before starting a new role. For many people, this is a welcome breathing space.
Disadvantages
The main disadvantage is the restriction on your freedom. During garden leave you are generally expected to remain available and contactable during normal working hours. It is not a paid holiday — you cannot simply travel abroad for the duration. You also cannot begin working for a new employer or set up in business during this period.
If you are leaving to start your own business, be aware that garden leave may give you time to plan — but you cannot take any active steps to compete with your employer while still employed.
You can accrue annual leave during garden leave, but the rules around when and whether you can take it will depend on your contract and whether your employer requires you to use accrued holiday during the garden leave period.
What Are the Pros and Cons of Garden Leave for Employers?
Advantages
The major advantage for employers is protection. Garden leave removes the departing employee from the competitive market, prevents them from accessing commercially sensitive information, and gives the business time to manage the transition — securing key client relationships and making recruitment decisions before the employee starts their new position.
Disadvantages
The primary disadvantage is cost. The employer is paying full salary and maintaining benefits for an employee who is doing no work. There is also a risk that if the employee is leaving to set up their own business, garden leave inadvertently provides them with funded time to think and plan, even if they cannot act on those plans until the notice period ends.
What Are Your Rights During Garden Leave?
Because you remain employed during garden leave, all of your employment rights and obligations continue. You are entitled to full pay and your normal contractual benefits — including employer pension contributions and any other benefits specified in your contract. You continue to accrue holiday entitlement.
Crucially, your employer must continue to treat you in accordance with your contract and the implied terms of your employment. If, for example, your employer contacted you during garden leave and behaved in a bullying or harassing manner, you would be entitled to raise a grievance in the usual way.
What you do not have during garden leave is a right to contact colleagues, clients, or customers, or to work for anyone else.
Does an Employee Have a Right to Work?
In most cases, no. However, some employees in specialised roles may have an implied right to work — particularly where their income is heavily commission-dependent, or where their skills require regular practice to maintain. The leading case on this point is William Hill Organisation Ltd v Tucker [1998] IRLR 313 (Court of Appeal), in which it was held that a specialist employee could not simply be sidelined during their notice period. However, where an employer has an express contractual right to impose garden leave, this will generally override any implied right to work.
Can an Employee Refuse Garden Leave?
Not usually, provided the employer has the contractual right to impose it. If an employee were to refuse and start working for a competitor, the employer could apply to the court for an injunction to prevent them from doing so. Courts will generally grant such relief where the garden leave clause is reasonable in scope and duration and the employer has a legitimate business interest to protect.
Can an Employee Start a New Job While on Garden Leave?
No. During garden leave the employee remains bound by the implied duty of fidelity — the obligation to act honestly and not to damage or compete with their employer’s business. Starting a new role with a competitor, or taking active steps to set up a competing business, would be a breach of this duty and could expose the employee to legal action.
Should a Garden Leave Clause Be Included in an Employment Contract?
Generally, yes — particularly for senior employees, those with access to sensitive commercial information, and those in sales roles with close client relationships. An express garden leave clause gives the employer a clear contractual right to impose it when necessary, and avoids uncertainty about whether an implied right exists.
Can an Employer Impose Garden Leave Without a Clause in the Contract?
If there is no express garden leave clause in the written employment contract, there may be an implied right to impose it, depending on the nature of the role and the circumstances. In practice, however, many employees consent to a period of garden leave whether or not it is expressly provided for in their contract — in which case it becomes a matter of mutual agreement rather than imposition.
Where garden leave is imposed without an express contractual right, and the employee does not consent, there is a risk that it could give rise to a constructive dismissal claim — and could inadvertently release the employee from any post-termination restrictions they were subject to.
Garden Leave and Settlement Agreements
Garden leave and settlement agreements frequently go hand in hand. If an employment contract does not include a garden leave clause, one can be included in a settlement agreement. Settlement agreements are legally binding contracts used to bring employment to an end on agreed terms, waiving the employee’s right to bring claims against the employer. They can cover everything from the financial payment and agreed reference to the termination date and whether the employee will serve a period of garden leave.
Garden Leave FAQs
Is garden leave the same as payment in lieu of notice (PILON)?
No. During garden leave, the employee does not work their notice but remains employed until the notice period ends, receiving pay and benefits throughout. A payment in lieu of notice (PILON) is different: the employer ends the employment immediately and makes a lump sum payment in place of the notice period. The two are distinct both legally and in terms of tax treatment.
Can an employee be required to use accrued holiday during garden leave?
An employer may be able to require an employee to use their accrued holiday entitlement during garden leave, as the employee remains employed. This can save the employer the cost of paying out unused holiday at the end of employment. If the employee has not consented to taking leave at a particular time, the employer will generally need to serve the correct period of written notice under Regulation 15 of the Working Time Regulations 1998.
Is an employee entitled to their normal benefits during garden leave?
Yes, in the usual case. Because the employee remains employed throughout garden leave, they are generally entitled to continue receiving their normal contractual benefits — including employer pension contributions and private health insurance — for the duration.
Is an employee entitled to a bonus that falls due during garden leave?
This depends on the wording of the employment contract and the bonus scheme rules. It is common for bonus schemes to contain provisions stating that an employee will not be entitled to a bonus if notice has been served before the payment date. Where this is the case, the employee may lose a bonus that would otherwise have been payable. This is an important point to address when negotiating a settlement agreement.
What practical steps should employees be aware of?
- Check your employment contract carefully to understand whether your employer has an express right to place you on garden leave and what the associated conditions are
- If you are placed on garden leave, make sure you receive written confirmation of the terms — including what you can and cannot do during the period
- If your employer requires you to take accrued holiday during garden leave, check that the correct written notice has been given
- Your obligation to remain contactable during normal working hours does not apply during any periods of approved annual leave
Need to understand how garden leave fits into your settlement agreement? Read our guide on what a settlement agreement includes and how to negotiate better terms for practical guidance on getting the right outcome.
Legal Disclaimer
The contents of this article are intended to be be for general information purposes only and do not amount to (nor are they intended to be) legal, tax or financial advice or a complete or authoritative statement of the law nor should they be treated as such. No warranty or promise is given, express or implied, as to accuracy of the information on this page and no liability is accepted for any error or omission. You should instruct a specialist employment solicitor to advise you on your particular situation and not act or rely on the information on this page.