What Is Garden Leave In Employment Contracts?

Emily Gordon BrownLegal Assessment Specialist @ Lawhive

Updated on 20th May 2024

Garden leave, sometimes called gardening leave, is a provision commonly found in employment contracts that allows an employer to instruct an employee to stay away from the workplace or to refrain from performing their duties during their notice period.

Sounds too good to be true, right? Well, maybe. Or maybe not!

In this article, we’ll explain what garden leave is , when it may be appropriate to put an employee on garden leave, what rights employees have while on gardening leaves, as well as the pros and cons of this type of leave. 

What is garden leave?

Garden leave refers to a contractual provision in employment contracts where an employer requires an employee to serve their notice period away from the workplace.

During garden leave, the employee is still employed by the company and continues to receive their salary and benefits, but they are typically prohibited from attending work or performing their duties.

The term "garden leave" is metaphorical, suggesting the employee is sent home to tend to their garden while still employed, but there is no obligation for them to actually do gardening when on this type of leave obviously!

What is the purpose of gardening leave?

For employers, garden leave serves a strategic purpose. It is used to: 

• Prevent employees from accessing sensitive information, such as trade secrets, client lists, or proprietary technology, which could be misused.

• Stop departing employees from soliciting clients or customers to move with them to a new employer, thus safeguarding valuable business relationships.

• Provide a structured transition period during which the employer can transfer the employee's responsibilities to others within the organisation. 

• Ensures that the employee fulfills their contractual obligation to serve out their notice period.

For employee’s, garden leave offers a period of paid leave during their notice period, allowing them to prepare for their departure from the company while still receiving their salary and benefits.

When should companies consider garden leave?

Companies should consider offering garden leave in situations where it may benefit them and the departing employee. It may be appropriate when: 

1. An employee holds sensitive information they could potentially misuse during their notice period. 

2. An employee has significant client relationships or contacts they may try to move with them to a new employer or venture.

3. There is a risk of an employee causing harm to the company, like joining a competitor or poaching other employees for a competing venture. 

4. There is tension or conflict between the departing employee and their colleagues or management. 

5. There is a risk of the departing employee seeking legal recourse due to a grievance. 

Essentially, companies should consider garden leave in situations where removing the employee from the workplace can help protect their interests, minimise disruption, and preserve business relationships, providing it is legal for them to do so.

Are there restrictions on when an employee can be put on garden leave? 

Garden leave must be specified in the employee’s contract or agreed upon between the employer and employee. If the contract does not include a garden leave clause, the employer may not have the right to impose garden leave unilaterally. 

If garden leave is not specified in the employment contract and the employee doesn’t consent to it, the employer may need to negotiate alternative arrangements, like a settlement agreement.

Further, garden leave should not be used as a punitive measure to restrict an employee’s ability to work elsewhere. 

What rights do employees have while they’re on garden leave?

During garden leave, employees remain entitled to certain rights and benefits outlined in their employment contract and statutory regulations. This includes salary, bonuses, commissions, and non-monetary benefits like pension contributions and healthcare. 

Employees also continue to accrue other benefits and entitlements like holiday pay. Employers must ensure that these benefits are calculated and provided by statutory regulations and terms of the employment contract. 

Finally, employees retain their legal rights during garden leave, including the right to seek legal advice and challenge any decisions by the employer that they believe to be unfair or in breach of their employment contract. 

Is it a good idea to put an employee on garden leave?

Garden leave can be a useful tool for protecting confidential information and preserving client relationships from an employer’s perspective. It’s also an effective way of mitigating the risk of high-stake departures, providing a cooling-off period for the employee. 

However, employers should carefully consider the potential impact of garden leave on the morale and motivation of other employees. If the decision to put an employee on garden leave is seen as unjustified, it could cause problems for the company. 

Employers should also consider whether garden leave is permitted under the terms of the contract. If not, there’s a risk that the employee could consider themselves dismissed, leaving them free to move straight to a competitor or even make a claim for unfair dismissal. 

Is garden leave the same as suspension? 

Gardening leave and suspension both involve employees being relieved of their duties, but they serve different purposes and are used in different circumstances.

Gardening leave is typically used during the notice period of employment contracts, while suspension is used during investigations into allegations of misconduct or other serious issues. Two very different situations.

Can garden leave be refused? 

If garden leave is explicitly included as a provision in the employee's contract, then the employee generally has to comply. Refusing to comply with a contractual obligation, such as garden leave, could be considered a breach of contract, and the employer may take appropriate action.

However, if garden leave is not specified in the employment contract or if the terms of garden leave are unclear or unreasonable, the employee may have grounds to challenge the request for garden leave. Employees may seek legal advice from an employment lawyer to determine their rights and options in such situations and may negotiate alternative arrangements with their employer.

Additionally, if the employer tries to impose garden leave without justification, the employee may have grounds to challenge the decision through formal grievance procedures or legal action.

Can an employee start a new job while on garden leave? 

Often, employment contracts include clauses that stop employees from starting new employment or engaging in competitive activities during garden leave.

If a contract includes such clauses, the employee may not be able to start a new job or engage in activities that could be considered competitive with the employer's business during garden leave. Violating these restrictions could lead to legal consequences, including breach of contract claims and potential damages.

However, if the employment contract does not include restrictive clauses related to starting a new job during garden leave, and if there are no legal restrictions, the employee may be free to pursue new employment opportunities while on garden leave.

It's important for employees to carefully review their employment contracts and seek legal advice if they have any questions or concerns about their rights and obligations during garden leave.

Can an employee be asked to work during garden leave?

Typically, an employee on garden leave is not expected to work or perform their duties for the employer. 

If an employer wishes to request that an employee work during garden leave, they would typically need to negotiate and mutually agree on the terms of such work arrangements. 

Is PILON better than garden leave?

PILON involves terminating the employee's employment immediately and paying them a lump sum equivalent to the salary and benefits they would have received during the notice period. 

From the employer's perspective, PILON may be preferable to quickly sever ties with the employee and avoid the potential risks and complications associated with keeping the employee on the payroll during the notice period. From the employee's perspective, PILON provides immediate financial compensation but may not give them the same level of job security or continuity as garden leave.

However, garden leave may be preferable if employers want to maintain control over the employee during the notice period and ensure that they do not pose a risk to the business.

From the employee's perspective, garden leave provides job security and continuity of income during the notice period but may restrict their ability to start a new job immediately.

Get expert help with garden leave from Lawhive 

Garden leave can be a useful tool for employers to protect their interests and provide a structured transition period for departing employees. However, its appropriateness depends on the circumstances and objectives of both parties. 

At Lawhive, our network of experienced employment law solicitors can provide expert advice and guidance on garden leave, helping employers navigate the complexities of employment law and contractual obligations. 

Schedule a call with our Legal Assessment Specialists today for a free case evaluation and quote for the services of an expert solicitor.