Garden leave and settlement agreements
What exactly is garden leave (also known as gardening leave)?
When you resign, or are dismissed, in certain industries it is common for you to be placed on something called “garden leave”. You might also hear it referred to as “gardening leave”, but this is exactly the same thing.
The origin of the term has two angles – it describes the idea that an employer may want an employee out of the way, and “out of the house” therefore “in the garden”. It is also associated with the idea that as an employee is being forced to stay at home, they might as well do the gardening!
During garden leave, you would still be contracted to the employer, but there are certain conditions which you need to meet, the main ones normally being that you do not attend the workplace, you cannot contact customers or employees, and that you have an obligation to remain loyal to the employer during the period.
Technically, garden leave can only be enforced on you once you have resigned with notice or been dismissed with notice. If your employer says that you must stay away from work at any other point in their employment then this will be a type of suspension, not garden leave.
Common restrictions during garden leave
As an employee you can be restricted from:
- Contacting suppliers, clients and customers
- Contacting colleagues
- Attending the workplace
- Accessing work emails or computer systems
- Accessing work databases
- Downloading confidential information
- Contacting or working for competitors
- Retaining use of company car, laptop, smartphone etc where these are for work purposes only and not considered benefits – you remain entitled to receive all benefits during garden leave.
However, you will be expected to be available to provide assistance to your employer in the event that they require information or support within the given notice period. Clear rules should be found in your contract under the garden leave clause.
Why does garden leave exist?
Garden leave is commonly used by employers as a way of protecting themselves and their resources from you when you are leaving employment. They may be worried that you will use your notice period to acquire information to take with you when you finally leave. Most jobs require a certain amount of confidentiality, and will involve you being privy to protected information and business plans.
One motivation behind your employer putting you on garden leave when you leave the company is to prevent you from immediately acquiring a new role working for a competitor, and using recent knowledge that you have gained in your previous position to put your new employer at an advantage. Garden leave also gives your employer the opportunity to build new relationships with your clients, during a period in which you cannot contact them.
Common situations where you could be put on garden leave:
- If there is a good chance that you will join a competitor, the employer may want to introduce a new employee to clients and have time for them to settle them in before you are free to start a new role as you may try to take your old clients with you as soon as you are able.
- If the employer is concerned about the enforceability of post-termination restrictions or restrictive covenants in your contract, and so want to protect themselves, at least for the duration of your notice period.
Reasons an employer might put you on garden leave, but where pay in lieu of notice would be more common:
- If there are concerns that if you stay at work while completing your notice period, you will have a negative impact on your fellow employees.
- If your employer is worried that you will either share negative views about the company with customers or clients.
- If there is a chance that you will download confidential information about clients to take with you
Top 3 Tips
- Check if your employer has a contractual right to put you on garden leave
- Ensure you continue to receive all your benefits
- If you want to end your garden leave early, seek to agree this with your employer in the first instance
Always read your contract!
As always, it is worth checking your employment contract when you know you will be leaving your job to understand exactly where you stand with your employer. Most employment contracts now specify that the employer has the right to put an employee on garden leave if they resign or are dismissed.
In some circumstances where there is not a garden leave provision in an employment contract, an employer may be in breach of contract if they send you home with no work, even if you are still on full pay. This is because the courts have increasingly been willing to imply that employees have a “right to work”, and so this is why garden leave needs to be specifically mentioned in an employment contract to be enforceable.
This is a relatively recent development in the world of employment law, as it used to be more widely assumed that employees did not have the right to work, and that provided that they continued to receive their pay and benefits, at any time in their employment their employer could require them to stay away from work without the employer breaching contract. This used to be the case even if there was no mention of a garden leave provision in the employee’s contract – which is now not the case.
Garden leave: good or bad?
Whether or not garden (or gardening) leave is viewed positively or not by an employee depends entirely on their individual circumstances. Some employees see it as a paid holiday, while others feel as if they are heavily restricted in their actions, are desperate to get on finding a new job, and believe it could be detrimental to their ongoing career.
It’s important to note that many garden leave clauses will include restriction on not just employment with a competitor, but also on competitive activities. This could include setting up your own business in competition with your previous employer.
Do you have grounds for termination of garden leave?
If you are put on garden leave you are still contracted by your old employer so you are not allowed to “rejoin” the job market until your notice period is over. If you want to be released from a garden leave clause in your contract, it is worth first taking the initial step of simply asking your employer. If you explain your situation they may be sympathetic and receptive to releasing you from garden leave, especially if you were a good employee and are planning to move to a non-competitor, or a new industry sector.
Some employees choose to take a risk and refuse to be put on garden leave, instead starting work with a new employer during the time immediately after leaving. If you do this your employer is totally within their rights to sue for damages, although in most cases it would be a very hard claim for them to win as they have to prove a loss resulting from the breach of contract (the breach of contract being you starting work with another employer when the garden leave clause in your contract forbids you from doing so).
It is more likely that your employer would apply for an injunction to prevent you from working elsewhere during the remainder of your notice period. If your employer has a contractual right to put you on garden leave, and you are going to a competitor, this will be relatively straightforward for your employer to obtain.
An important aspect of leaving any employment which should not be forgotten is also making sure that you leave a role with a good reference, and refusing to abide by garden leave restrictions can put this in jeopardy. At Monaco Solicitors we have often negotiated with employers so that employees who may have left their employment during a dispute can leave with a positive reference – this can be a condition written into your settlement agreement. Read more about obtaining references in our article on this subject.
Garden leave as grounds for a constructive dismissal claim
If you do not have an express garden leave provision in your contract you could claim that your employer is in breach of their contract with you. In reaction to this breach of contract, you may have grounds to claim that you have been constructively dismissed. It can be easier to argue this claim if you can show that you need to work to preserve your skills, so being excluded from the business has had a detrimental effect on your ongoing work life and on your ability to earn an income. A valid claim of constructive dismissal can cause your notice period and restrictive covenants in your contract to become void. Read more about constructive dismissal in our detailed article.
Useful related documents:
If you would like to find out if a constructive dismissal claim could be relevant in your situation, or whether you have a case for being put on pay in lieu of notice rather than garden leave, or if you any other queries about being put on garden leave, get in touch for a free consultation with a senior lawyer by filling in our online case details form.