Understanding the Concept of Garden Leave

When staff leave, it’s mostly unavoidable - and could be reasons beyond your control. For example, they might resign to join a competitor company.

In this instance, you may decide you want to place them on garden leave. Also known as gardening leave, it is typically used to protect an employer’s business interests.

But, failure to manage it correctly could mean you're breaching an employment contract, potentially leading to employment tribunal claims.

In this guide, we'll discuss what garden leave is, employee rights during this type of leave, and the benefits it can bring.

Peninsula also offer a HR documentation service, meaning we'll create bespoke contract and documentation - ensuring compliance at all times.

What is the garden leave definition?

Garden leave is a type of leave used when an employee is leaving a company - usually, to start a new role with a competitor of their current employer.

During their absence from the company, both the employer and the employee remain bound by the terms of their employment contract.

Can any employee be put on garden leave?

Yes, any employee can be put on garden leave. As long as their contract of employment is being brought to an end - and they are required to fulfil their notice period. Remember, to put an employee on garden leave, it must be a contractual right.

Most commonly, employers will apply garden leave to senior leaders within business, as they likely have a longer notice period than the statutory minimum – and they could potentially cause damage to the business.

What happens when an employee is put on garden leave?

When an employee is put on garden leave, they still receive full pay - but they are required not to attend the workplace. However, they likely have terms they must comply with set out in their employment contract. For example, they must:

• Have minimal to no contact with their fellow staff members or clients.
• Not use any company equipment, such as mobile phones or laptops (unless permitted for personal use).

However, you can ask the employee on garden leave for information and assistance on current projects.

Is garden leave legal?

Yes, garden leave is completely legal under UK employment law.

Employers must act fairly during the whole process. If they don’t, it could lead to future claims being raised at an employment tribunal.

Can an employee start a new job whilst on garden leave?

No, typically, an employee can't start a new job whilst away from the business on garden leave. This is because they remain an employee during this period away from the company - and still have a notice period to fulfil.

So for that reason, they can't start their new role until after their last day of service when their notice period expires. If they do start a new job during this period, it could leave them at risk of breaching their employment contract.

How long is a garden leave period?

The length of someone's garden leave is dependent on the length of the employee's notice period.

For example, if an employee's contractual notice period is six months - the period of garden leave can also be half a year. Alternatively, the employee could work some of their notice and spend the remaining period on garden leave.

Reasons for garden leave

Employers place their staff on garden leave for a variety of reasons. These include:

• Privacy and security: For example, senior leaders likely have access to trade secrets and confidential information - which could threaten the business if they were to leave and share it. So to protect their privacy, employers use garden leave.
• Professional preferences: If an employee leaves or is dismissed, the employer might not want them to come to work during their notice period. Or start a new job within this time either. So, in these instances, garden leave may be the best option.
• Difficulty enforcing post-termination restrictive covenants: Post-termination restrictive covenants are used to protect your legitimate business interests and to stop key employees from being poached to rival businesses, but sometimes they're hard to enforce. So, the employer might use garden leave instead to protect their company.

Employee rights during garden leave

An exiting employee is entitled to their full salary and other contractual benefits whilst on garden leave. However, depending on their employment contracts, they may not be able to receive bonuses or commission payments.

If they want to take a holiday during their garden leave, they must receive formal approval from their employer.

Benefits of gardening leave

A garden leave period can be very beneficial for your business - in both commercial and legal ways. For example, the employee must comply with the terms of their contract until the period is over.

Other benefits include:

• The employee remains available if you need assistance with a handover before they leave the company.
• Prevents the exiting employee from poaching or recruiting other employees and clients to their new company.
• Prevents the exiting employee from stealing client information and sensitive company data to further protect your business interests.
• Prevents the exiting employee from acting in a self-employed capacity until their notice period ends (but this depends on how the clause is drafted).
• Ensures the duties of fidelity and confidentiality remain intact.

How to put an employee on garden leave

How to put an employee on gardening leave is fairly simple, to do so - you must have a garden leave clause within their employment contract.

If you have a gardening leave clause in place, you can inform the employee of your decision to place them on garden leave when they hand their notice in, or after they're given notice of dismissal.

What to include in a garden leave clause

A well-drafted garden leave clause will mean the process of your employee leaving runs smoothly, and you'll avoid a breach of contract claim. If there is any confusion or something is drafted incorrectly, your employee may choose to seek legal advice.

Your garden leave clause should include:

• The length of the garden leave period.
• The rules they must comply with, such as not contacting clients or colleagues.
• A statement saying employees must return any company property they have, such as a phone or laptop (unless permitted for personal use).
• A statement saying the employee must be available to answer questions or to help with the handover for their replacement if applicable.

Can you put an employee on garden leave without a clause?

No - if you place a staff member on garden leave without a garden leave clause in the employee's contract – and they don’t agree to it, you may be at risk of breach of contract. If this is the case, the employee may raise a claim to an employment tribunal.

But, there are some cases where someone can go on garden leave without a pre-empted clause within their contract. For example, if both parties agree on the basis it's the most suitable course of action.

Can an employee request to go on garden leave?

Yes, any employee can request garden leave. This may happen after they've handed their notice in, or been given a notice for dismissal.

However, you don't have to accept their request. Remember, garden leave is usually only needed for more senior employees in your company - or those with access to your business secrets.

Get expert support on garden leave with Peninsula

When running a business, there will be times when your employees leave your company due to resignation or dismissal. When this happens, you may decide to place them on garden leave.

Garden leave helps to protect the best interests of your business. However, it's important you fully understand what this entails to ensure you're managing the situation correctly. Failure to do so could lead to a breach of contract and an employment tribunal claim.

Peninsula offers total support on any HR or Health & Safety issue you have. From unlimited advice to our full documentation and risk assessment services, we'll ensure compliance at all times. We provide advice and support to companies of all sizes - large (200+ employees), medium (51-200 employees), small (1-49 employees), and start-ups.

Want to find out more? Contact us on 0800 028 2420 and book a free consultation with an HR consultant today.