What is Garden Leave?
Whether you’re an employee or employer, there is no doubt you would have come across the term “garden leave”. But, what does it mean in general and what does it mean for you?
Garden Leave Definition
Garden leave means a period of paid suspension after an employee hands their notice in. Otherwise known as gardening leave, it starts from when their notice period starts to the termination of their contract of employment.
Originally popularised in 1986 through a BBC Sitcom, “Yes, Prime Minister!”, it can be applied regardless of whether it was the employee who handed their notice in or whether it was the employer who gave the notice. During this notice period, if garden leave is applied, the employee must remain available to work in case their services are required during work hours.
Even though employees will not be working fully, paid garden leave means they will still receive their wages until the notice period is finished. Incomplete tasks may need to be finished or competently handed over ready for a new starter. However, a duty of confidentiality applies, so the employee may be told not to enter company premises or communicate with colleagues and/or clients.
Garden leave is not a legal requirement but can only be applied if there is a clause within the employee’s contract of employment. This clause will state each party’s obligations when the employee is on garden leave to identify if any terms are breached.
This is not to be confused with Payment in Lieu of Notice (PILON). PILON is where an employee’s contract is terminated immediately and is paid for the work they would’ve done during their notice period. During garden leave, the employee’s contract is still valid and therefore they are still employed by the company.
Why Do Employers Use Garden Leave?
Employers use garden leave to protect their company and their business interests. If they have just lost a valuable employee, they will use this time to find an adequate replacement and keep the employee on board during their notice period in case they are needed. Once a new replacement has been found, there is no need for a handover and there are no obstacles in the way to get them started as soon as possible.
One of the ways this protects the company is by reducing the risk of a competitor poaching them straight away or even the employee poaching other employees/clients to start a business of their own. These restrictive covenants are common amongst garden leave clauses.
Regarding senior employees who have been in the business for a long time, they would have gained extensive knowledge and insight into the company and operations. This clause prevents them from sharing it with competitors, misusing it in general, or even using it for their own gain.
The rules differ across every company and there is no one set clause that employers use, but the reasons behind including these clauses in employee contracts is very likely to be the same.
How Long is Gardening Leave?
Notice periods are typically between one to twelve weeks and garden leave will last the entirety. When it comes to restrictions on an employee’s activities after termination, it is recommended that length of garden leave should be reduced in accordance to this time period.
In cases where notice periods are longer than this, for example six months or up to a year, these clauses are unlikely to be enforceable. The longer the notice period, the less likely a court would enforce garden leave for an employee for the whole time. This is commonly because the court believes this is longer than necessary to enable company protection.
Can Employees Start a New Job While on Garden Leave?
No, employees cannot start a new job until their notice period ends; they cannot work for other companies and they cannot work for themselves. This is because their employment contract remains valid whilst on garden leave and employees are still bound by its terms. This is especially valid when the contract of employment specifically states that additional employment is prohibited.
Gardening Leave Employee Rights
For employees, it is important to note that garden leave will vary from company to company and will depend on the length of employment time, the industry, and the employer’s decisions regarding the clause. Employee rights should be detailed in their contract of employment, so they are aware what will be enforced.
For employers, this fact remains the same about garden leave differing from business to business, but they have the control over the clause. The employee’s contract, role within the business, level withing the company, and financial resources will all play a play in determining the clause for employees.
There is a massive risk by not clearly stating an employee’s garden leave clause in their contract of employment. By deciding to place them on it without it being agreed to properly in their contract, employers are risking claims of breach of contract. Unfortunately, this leads to resignation, constructive dismissal claims, and eliminating post-termination restrictive covenants.
Employment Law Solicitors for Employers & Employees
No matter whether you are an employer or an employee, Caversham Solicitors offer Employment Law services to both parties.
If you would like to discuss your employment rights, end of employment issues or any other advice regarding garden leave, our team can help you understand and guide you through the best course of action for your individual circumstances.
If you are an employer and you are looking for support when it comes to contracts of employment, we can help you draft them so they are in-line with the law and they are in your company’s best interests. Our employment law solicitors are a team which you can rely on.
Our expertise can help businesses and individuals navigate garden leave and contracts.