Garden leave is one of the many tools employers have at their disposal to help protect their business interests.
If you place someone on garden leave (often known as ‘gardening leave’), it means that you require the employee to be away from the workplace during their notice period.
The employer is under no obligation to provide work or assign any duties to the employee for the whole or part of the employee’s notice period. It often involves asking the employee:
• not to perform any service for the company,
• not to attend the premises,
• not to use company equipment,
• to refrain from business contact with customers, suppliers and other employees.
Despite this, they still remain an employee and they will continue to receive salary and contractual benefits in the usual way.
They will also be bound by the express and implied terms of their contract of employment, most especially confidentiality clauses and restrictive covenants. This typically means that they will not be allowed to:
• work for another employer,
• act in a self-employed capacity,
• do anything that is contrary to the employer’s business interests.
They must be available for the employer, for example, if a manager has some queries or needs help with the handover.
Why do employers use garden leave?
Typically you will find a garden leave clause in the contracts of senior employees to:
• stop an employee working for a competitor until their notice period has come to a close (so even though they are not in the office, you retain control over them),
• keep them away from confidential or sensitive company data and prevent them from misusing this data,
• stop the employee from poaching customers or colleagues,
• enable the successor to the role to start work without worrying that the other employee will get in the way,
• they may also be used if the employer is concerned that the post-termination restrictive clauses applicable to the employee are not enforceable.
When can you put someone on garden leave?
It will occur when someone resigns from their post or is dismissed with notice.
What are the risks for employers?
If you do not have a clear and well-drafted garden leave clause in the employee’s contract of employment and you decide to place them on garden leave (and it has not been agreed to by the employee in writing), you expose yourself to the risk of claims of breach of contract. This could entitle the employee to argue that it amounts to a fundamental breach of the contract. They could resign and claim constructive dismissal. It could also mean you lose your rights to enforce post-termination restrictive covenants.
If the employee has a notice period which exceeds six months, the employer may not be permitted to enforce garden leave for the full period. This is because it’s likely a court would think it’s longer than necessary to protect the employer’s business interests.
To check that your business is protected with garden leave provisions and post-termination restrictive covenants please email me at email@example.com