HR Advice Hub

What Is Garden Leave And How Does It Work?

If an employee resigns or is leaving your business, you may have heard the term "garden leave" mentioned. But what exactly does it mean, when can employers use it, and why is it called garden leave in the first place?

Garden leave allows employers to keep employees away from the workplace during their notice period while continuing to pay them. It can be a useful way of protecting customers, confidential information and working relationships during a departure.

What Is Garden Leave?

Garden leave is when an employee remains employed and continues to receive their normal pay and benefits, but is instructed not to attend work or carry out their usual duties during some or all of their notice period.

Although they are away from the workplace, they are still employees and remain bound by the terms of their contract. Garden leave is commonly used when:

• Senior employees resign.

• Employees are joining a competitor.

• Employers want to protect confidential information.

• Working relationships have broken down.

• There is a risk of disruption or loss of customers.

Why Is It Called Garden Leave?

The phrase is believed to have originated in the UK and Australia. You may also hear the term "gardening leave" used. Both expressions refer to the same thing, although "garden leave" is the term more commonly used in employment law and HR practice.

The idea was that employees who were leaving the business were paid to stay at home rather than come into work. Instead of being in the office, they could metaphorically spend their time "gardening".

Despite the name, employees are not required to spend time in their gardens. They are simply relieved of their day-to-day duties while remaining employed and paid.

How Does Garden Leave Work?

During garden leave:

• The employee remains employed.

• Their salary continues to be paid.

• Benefits such as pension contributions and private medical cover usually continue.

• They cannot usually start working for another employer.

• Confidentiality obligations still apply.

• Restrictive covenants in their contract remain in force.

In most cases, employees must remain available if the employer needs to contact them or requires assistance with a handover.

Does An Employer Need A Garden Leave Clause?

If your businesses uses it, then ideally yes. Many employment contracts contain a specific garden leave clause giving employers the right to require employees not to attend work during their notice period.

Without a contractual right, placing an employee on garden leave could potentially amount to a breach of contract. This is one reason why well-drafted employment contracts are important.

How Long Can Garden Leave Last?

Garden leave typically lasts for the duration of an employee's notice period. For example:

• One week's notice equals one week of garden leave.

• Three months' notice equals three months of garden leave.

• Six months' notice equals six months of garden leave.

The length should be reasonable and supported by the terms of the contract.

What Is The Difference Between Garden Leave And Payment In Lieu Of Notice?

With garden leave:

• The employee remains employed.

• Salary and benefits continue.

• Restrictive covenants continue to apply.

• The employee cannot usually work elsewhere.

With payment in lieu of notice (PILON):

• Employment ends immediately.

• A lump sum payment is made instead of requiring notice to be worked.

• Benefits may cease immediately.

• Post-termination restrictions begin straight away.

How Is Garden Leave Different From Suspension?

Although both involve employees being away from work, garden leave and suspension are used for very different reasons.

Garden Leave:

• Usually follows a resignation or notice being given.

• The employment relationship is ending.

• Used to protect customers, confidential information or business interests.

• Employees continue to receive their normal pay and benefits.

• There is generally no suggestion of wrongdoing.

• The employee remains employed until the end of their notice period.

Suspension:

• Usually occurs during a disciplinary or investigation process.

• The employee remains in their role while allegations or concerns are investigated.

• Used to allow a fair investigation or protect individuals in the workplace.

• Employees should normally remain on full pay and benefits.

• Suspension may arise because of allegations or concerns, although it is not a disciplinary sanction.

• The employee may return to work once the matter has been resolved.

One important distinction is that garden leave is not a punishment. It is simply a way of managing an employee's departure while protecting the business. Suspension, on the other hand, should only be used where necessary and should not imply that the employee is guilty of any wrongdoing.

Can Employees Refuse Garden Leave?

If there is a contractual garden leave clause, employees will generally be expected to comply. However, disputes can arise if:

• There is no contractual right.

• The period is excessive.

• The employee argues they are being prevented from maintaining professional skills or contacts.

Seeking HR or legal advice is sensible in more complex situations.

What Are The Benefits Of Garden Leave?

Garden leave can help employers:

• Protect customer relationships.

• Safeguard confidential information.

• Reduce disruption within the workplace.

• Prevent employees from immediately joining competitors.

• Allow time for a smooth handover.

For employees, it can also provide a paid break before starting a new role.

Need HR Support?

Garden leave can be a useful way of protecting your business during periods of change, but it's important to ensure your contracts and processes are set up correctly.

At BloomHR, we help small businesses with employment contracts, employee relations and practical HR support that keeps things simple and helps employers stay compliant. Contact us for more information.Contact us for more information.