What is garden leave and when can it be used? Do you have to pay the employee full pay throughout?

Peninsula Team

April 16 2015

The concept of ‘garden leave’ traditionally originated from the idea that, when an employer did not want an employee on notice working within the company, they were sent home to spend their notice period tending to their garden.

Garden leave is used when an employee is on notice, either notice given by the employer or notice resulting from the employee’s resignation, and they are sent home or away from the office for the duration of the notice period.

It is used to prevent employees who are leaving the company being in the office and having access to information, clients and fellow employees, whilst also preventing them from starting a new role.

To this end, it is commonly used for senior employees who have higher access to restricted, confidential information or who have secured a new role with a competitor.

Garden leave can also be used if post-termination restrictions, restrictive covenants, are not included in the contract or may be unenforceable. The right to place an employee on garden leave is a contractual one or can be agreed, in writing, in advance with the employee.

If there is no contractual clause, or it is not agreed, then placing the employee on leave can constitute a breach of contract and will also remove the right to enforce post-termination restrictions.

An employee on garden leave can have their actions restricted. For example, their contractual duties, such as duty of confidentiality, will still apply, they are still subject to their contractual terms, they can be prohibited from contacting any clients, customers, suppliers and they are prohibited from working in another company during the period.

Also, if requested by the employer, the employee has to return to work during the garden leave period because they are still under their contract of employment.

During the duration of garden leave, normally, the employee is entitled to their full pay and any benefits that they would have received during this time, such as bonuses, right to company car and right to company phone, unless their contract of employment states differently.

For further clarification on the issue please contact Peninsula on 0844 892 2772. 

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