- 13 minute read
- Last updated: 8th November 2019
Garden leave, or gardening leave as it is sometimes called, is when an employee is leaving an organisation’s employment but is asked not to attend the workplace or to work their notice. Employees should receive full pay and benefits while on garden leave.
Garden leave is generally used where an employee has been given notice of termination of their contract of employment or after the employee hands in their resignation. Employees being made redundant may also be offered garden leave to serve out their notice period away from the office.
This article covers:
- Why do employers use garden leave?
- Can any employee be placed on gardening leave?
- What rights do you have while on garden leave?
- Restrictive covenants
- What happens if I am put on gardening leave without a clause in my contract?
- How does it differ from payment in lieu of notice?
- Can I start a new job while on garden leave?
Gardening leave is generally used by employers to keep employees out of the competitive market for a period of time. It is a measure generally used for senior employees who have access to sensitive and strategic information such as pricing data, high-level technical knowledge, or important customer contacts.
Essentially, employers want to make sure employees are not able to access or use that information in the market or with a competitor.
Often gardening leave is used in conjunction with restrictive covenants that put agreements in place that prevent the employee from taking customers with them or approaching contacts for a set period of time.
Garden leave may be instigated by the employee, with the employer’s agreement. This would usually form part of a negotiated exit, and documented in writing.
Employers can only place employees on gardening leave if there is a term in the employees’ contract that permits them to do so. This term will permit the employer to withdraw their duties and exclude the employee from the working premises.
Usually the employee will be placed on garden leave for their entire notice period, however, if the employee has a notice period that is exceptional in length the employer may be unable to force the garden leave to last this long. A court ruling would be likely to find that garden leave can only be enforced for a length of time legitimate to protect the interests of the employer.
If your employer chooses to put you on garden leave you are under obligation to observe all the terms of your contract. This includes acting in good faith and maintaining confidentiality.
You will not generally be permitted to take up work with another company or start to undertake work for yourself. If your employer requests it you may need to supply them with information and assistance, support their work or even return to the workplace during your garden leave. If you plan on taking a holiday or leaving the country it is recommended that you inform your employer.
During any period of garden leave it is a requirement for the employer to pay the employee their salary and any other employee benefits contractually outlined. On first reading this may seem like an attractive proposition, however, garden leave of an excessive or unexpected length can cause problems for the employee when it comes to future career options. If a prospective new employer is impatient or has pressing needs, they may be unwilling to wait for a long period of garden leave to end and it may hamper the employee being out of the market for an extended period of time.
Ideally, your employer should only be permitted to put you on garden leave for the duration of your notice period.
Employees who have been given an extended or unexpected length of garden leave should seek legal advice to ensure their rights are protected and enforced.
If you are being placed on gardening leave you may be affected by restrictive covenants as well. Restrictive covenants are terms within your employment contract that prohibit you from undertaking certain activity post-contract termination. For example, restrictive convenants may specify that the employee cannot start work for another competitor following termination of their contract for a set period of time – usually a number of months.
There may also be a restrictive covenant that prevents you from making contact with suppliers, customers and even employees. These covenants legally should only be applied if absolutely necessary and serve to protect the business interests of the employer. Customer data and connections, confidential information and the stability of the workforce would generally be deemed legitimate business interests.
Employers commonly offset the length of gardening leave with the time they expect employees to abide by covenants. If an employee abides by a garden leave period of 3 months for example and also has a 6-month restrictive covenant that stops them approaching former clients, the employer may choose to compromise and reduce the client approach covenant to just 3 months.
There is no legal principle surrounding this, but courts could take into account the existence of gardening leave in determining if a covenant is valid.
Employees may be taken to court if employers suspect them of breaching restrictive covenants so many employees choose to seek legal advice from employment experts when placed on garden leave.
If an employer puts you on gardening leave without the specific entitlement to do so being included in the employees contract the employee may seek legal intervention. When assessing the case, a court will generally base their judgement on whether the employee has a contractual right to work.
In the past it was generally held that while there is a right to be paid, there was no implied contract to work. If this stands an employer is not obliged to provide an employee with work (only to pay them) therefore could place an employee on garden leave without breaching the employment contract – even if no explicit clause was included.
However, in recent cases courts have appeared increasingly to rule that employees do in fact have a right to work if no garden leave clause exists in their contract. For example, the Court of Appeal found in the William Hill v Tucker case that the employee who was a senior dealer had an implied right to work. This was based on the employee needing regular, frequent, and continued experience of the spread betting market to enhance and preserve their skills for future work.
Questions around employee bonuses also need to be taken into account. If an employee is placed on gardening leave and does not continue to accrue a bonus during that time then the enforced leave can be viewed as financially detrimental to the employee. This may render the garden leave clause, or enforced garden leave unenforceable.
Payment in lieu of notice is not to be confused with garden leave which is a separate concept. Where PILON applies, the employee’s employment is terminated immediately, and the employee is paid the amount they would have earned had they worked their notice period. Because the employment has terminated, the relationship between the employer and employee has ended, the employment contract terms are no longer binding and the employee is free, for example, to find work elsewhere.
If an employee is placed on garden leave, their employment contract will remain effective for the duration of the period of leave until the date the contract is terminated. This means they are still employed by their employer for the garden leave period but are not required to go into their place of work. They will continue to be paid and accrue their rights and benefits in the usual way during the garden leave period and technically they could be required by their employer to undertake work.
Whether you already have a new job lined up or are actively looking for your next role, you will need to proceed with care when agreeing to start your new employment. While on gardening leave, your employment contract remains valid and you remain bound by its terms. Although you will not be required to work, you will continue to be paid and accrue benefits and may still be called back into work. As such, you would not usually be allowed to start working with a new employer if your contract prohibits additional employment unless your existing employer specifically agrees.
If you are an employee facing garden leave, it can be helpful to seek legal advice from an employment law specialist. Knowing your rights will put you in the best position to negotiate your exit on optimal terms and allow you to move on to your next employment positively and with a clean break.
DavidsonMorris are experienced employment law specialists, with expertise in advising employees with end of employment issues. Whether you are facing redundancy, or are looking to resign and start a new job, we can help you understand your options and guide you through the best course of action for your circumstances.
If you have a question or need advice on any aspect of garden leave and your employment rights relating to the termination of your employment contract, contact us.