A Guide to Garden Leave

‘Garden leave’ is the term used to describe the situation in which an employee who has resigned or been dismissed is required to serve out their notice period at home, rather than reporting for work.

Normally, garden leave is used as a protective measure to prevent the departing employee from having access to sensitive data or information that could be useful to a competitor or which would assist them in setting up in competition with their former employer, and from poaching staff.

Whether or not an employer can lawfully instruct an employee to stay away from the office on garden leave during their notice period will depend on whether or not their contract of employment contains a specific clause to this effect and whether the employer’s application of its terms is reasonable. The garden leave clause may be in addition to a ‘non-compete’ or restrictive covenant clause in the same contract.

As restrictive covenants are sometimes difficult to enforce, ensuring that a departing employee is denied immediate access to sensitive data is often sensible. Also, the period of garden leave is not counted as part of the restrictive covenant period.

Where there is no express garden leave clause in the employee’s contract of employment, they could argue that its imposition is a repudiatory breach of contract and claim constructive dismissal.

For the duration of the garden leave, the employee must remain available to work for the employer during normal working hours. They continue to receive their usual salary and benefits, which will normally include bonuses, and can rely on their contractual and statutory rights. As the employee is still bound by their contractual duties, they continue to owe the employer a duty of confidentiality and must continue to act in good faith.

An employee subject to garden leave is obliged to carry out any contractual duties requested by the employer, which may include being asked to return to work. The employer may also place restrictions on contact with clients or other business contacts and impose a ban on making any statements about the employer to the media.

The period of garden leave cannot exceed the employee’s notice period and must not be excessive. In the event of a dispute, the courts will consider whether or not the employee’s skills will suffer as a result of the period out of the workplace.