All You Need To Know About Garden Leave

“Garden leave” refers to sending your employee home from work for their period of notice of termination.

How does gardening come into it, you ask?

Well, while on such leave, your employees are effectively limited to carrying out personal domestic pursuits unrelated to their job, such as gardening.

They are limited in that way because, even though they are not doing any work for you, they are still your employee. They can’t go off and get employment elsewhere, or do anything else contrary to your interests. They must remain faithful to you for as long as they remain your employee.

You can only send your employee home on garden leave if:

  • either you or they have given notice to terminate the employment relationship; and
  • your employee has agreed you can direct them to remain away from work during that period of notice.

WHY WOULD YOU SEND AN EMPLOYEE ON GARDEN LEAVE?

Sending an employee away from work would usually be considered a suspension. However, it is very different when either you or your employee has given notice to end your employment relationship.

At that point, you may have good reasons for thinking it is inappropriate that the employee continue to work for you during the remainder of the notice period.
For example, you may not want an employee to be at work during their period of notice if they are intending to work for a competing business as soon as their employment ends.

In that scenario, it may seem risky to let them continue to work in a role where they will have access to your confidential information, or could persuade your clients or other employees to also leave and join the competing business.

HOW DO YOU GET THEIR AGREEMENT TO NOT WORK?

You must have your employee’s agreement for them to go on garden leave.
Normally this is not an issue, because most people are quite happy to go home and continue to be paid to do their gardening (or whatever domestic activities they enjoy).

However, some employees may be concerned about how their reputation will be affected if they leave their employment abruptly. Others may genuinely want to finish off a piece of work as good professional practice.

Ideally, if the employee does not agree to go home for their period of notice, you will have a clause in their employment agreement that gives their prior agreement to let you direct them to go home.

Then there can be no argument that the employee has not agreed, because the employment agreement itself records their consent.
However, if their employment agreement does not have a garden leave clause, and the employee does not want to stay away from work during their notice period, you cannot force them to go home. To do so would be unjustifiable and could lead to a personal grievance.

WHAT CAN YOU ASK THE EMPLOYEE TO DO/NOT TO DO?

Provided you and the employee agree, there is no limit to what you can ask them (not) to do. You just have to be clear about it.

For example, you could agree any of the following:

  • that they do nothing at all;
  • that they don’t come into the workplace but continue to work from home; or
  • that they don’t come into the workplace and don’t do any work from home, but remain available to take calls, respond to emails as required, or complete certain limited pieces of work that have value to the business, while limiting their involvement with other staff or clients.

AN EXAMPLE CLAUSE

Here is an example garden leave clause that you could insert into your employment agreements. It gives you a wide scope for what you may direct the employee to do or not to do:

The Employer may place the Employee on “garden leave” for all or part of the Employee’s period of notice of termination. During a period of “garden leave” the Employee will remain a paid employee of the Employer, but the Employer may require the Employee not to attend the workplace, contact any customers or other employees, or undertake any duties whatsoever.

WHY NOT JUST PAY IN LIEU OF NOTICE?

A common alternative to garden leave is to pay the employee for their period of notice. Again, you must have the employee’s agreement (either verbally or in their written employment agreement) to do this.

The effect of paying in lieu of the notice period is different to garden leave. A payment in lieu means that no notice is given at all. The employee is compensated for the fact that they did not have the opportunity to work out their notice period, but the employment comes to an end as soon as they leave the workplace.

That means that as soon as the employee goes home and is told they will be paid in lieu in the next pay run, they are free agents. They are no longer employed by you and can start working for a competing business straight away.

That may be a concern to you if you know they are going to work for a competitor, which is why “garden leave” is preferred in those cases. While it puts the employee out of your business, it also puts the employee out of anyone else’s business until the period of leave, and their employment, comes to an end.

However, if you have no concerns about what the employee may do next, but for any reason you consider it would be best if they left the workplace sooner rather than later, a payment in lieu of notice may suit better.

GARDEN LEAVE AND RESTRAINTS OF TRADE

You may think there is benefit to you putting someone on garden leave if they have a restraint of trade in their employment agreement that prevents them from, say, working for your competitors for a period after their employment ends.

That is because they will remain your employee until the period of garden leave ends and the restraint of trade only commences once the employment has finished.

So if the period of garden leave lasts one month and the restraint is for three months, you would effectively get an extra month of restraint, since you keep them away from the competition or your confidential information while they still remain employed by you for their period of notice.
However, the Employment Court has indicated it will take into account any period of garden leave when deciding whether, and for how long, a restraint of trade should be enforced.

In other words, it is likely that any period of garden leave served by an employee will be deducted from the period of post-employment restraint specified in the employment agreement.

Accordingly, there may be little point putting your employee on garden leave if your hope is to delay the commencement of the post-employment restraint by that period of leave.

CONCLUSION

Garden leave is a useful tool for employers to be aware of. You may never require that an employee go on garden leave, but having a garden leave clause in your agreements may be useful for that one time when you do need to ask that an employee remain away from the workplace during their period of leave, for fear that they could damage your business if left in their usual role.