When an employee is sacked, made redundant or simply hands in their notice but is then asked by their employer to accept full pay but stay away from work rather than working out their notice, it is referred to as ‘garden’ or ‘gardening leave’.
Garden leave is commonly used for senior staff or when a member of staff has handed in their notice and you don’t want any employee enticing clients to follow them or taking sensitive business information. So instead you simply pay them for the duration of the notice period to stay away from the office.
Why do employers use gardening leave?
Employers regularly use gardening leave as a way to avoid exiting employees to gain access to up to date client contact details or other confidential information. It is also used to prevent employees from negatively affecting other employees or importantly,contacting customers or clients. It is usually senior members of staff or those with access to sensitive information who are asked to take gardening leave.
Gardening leave is also a way of protecting business interests in the face of competition. For example, if the employee is to join a rival business, they may be asked to take gardening leave so that they cannot access information which could be passed on to a competitor or take any actions which harm the commercial interests of the firm. Ultimately, the individual is still under contract though and can therefore be asked to return to work if the employer so wishes.
Is gardening leave an alternative to a contractual restrictive covenant?
The use of a gardening leave clause in employment contracts is becoming increasingly common – but usually that kind of is in addition to, rather than instead of any other restrictive covenant provision.
Can my employer make me take garden leave?
An employer’s right to send an employee on gardening leave depends on the contract of employment in most cases. Where possible, employers should insert clear and unambiguous clauses relating to gardening leave in written and signed contracts of employment. Employers may also wish to add restrictive covenants which limit an employee’s actions once their term has ended.
Provided that you have got the relevant clause in their contract, the right time to impose garden leave is when notice is given. But don’t forget that even though an employee is on garden leave, they still remain employed by you – so, for example, if an employee passes on confidential information to their next employer whilst on garden leave, this could constitute gross misconduct and you may be able to dismiss them and avoid paying notice money.
What happens if there is no clause in my employment contract permitting garden leave?
This is potentially the big mistake that employers can make. Unless your contract of employment includes a gardening leave clause, your employer will not normally be able to enforce gardening leave – without potentially putting themselves in breach of contract, which could mean, in effect, that you have been dismissed immediately and can start your new job straight away.
Any employer in this position should take specialist legal advice before insisting on garden leave being taken. Getting this wrong can prove very expensive.
Common components of gardening leave
Below are some examples of the limitations which employers regularly look to place on an employee during gardening leave:
• Although no longer at work, the employee is still bound by contractual obligations, including the duty of confidentiality
• The employee must return to work at the request of the employer
• The employee may not contact customers or clients of the business he leaves without permission from the employer
• The employee may be prevented from starting work somewhere else or self-employing during the gardening period
• The employee should still receive their salary as well as any additional bonuses and benefits
Employers are encouraged to seek specialist legal advice when inserting this kind of clause into any employment contract to make sure that it is going to be both legally and practically effective, and that the drafted clause in the employer’s interests. It can also form part of any agreed settlement agreements.
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It’s worth noting that workers actually carry on accruing holiday entitlement even though there away from work on garden leave.
Can I go on holiday during garden leave?
Having a month or two without any work may initially seem like a dream come true. However, most people get bored after a couple of weeks and become eager for something to occupy their time. Booking a holiday can seem like an ideal solution – a chance to visit new places and experience a different culture while waiting for your notice to run out.
However, before you jump onto lastminute.com, remember, you are still technically bound to your employer and seeing out your notice period. Your boss has the right to call you into work at any time or ask you to manage a task from home. Therefore, you should not book any holidays far from home without obtaining your employer’s consent.
As you will be accruing leave and holiday pay during garden leave, your employer may choose to exercise their rights under reg.15 of the Working Time Regulations 1998 and demand you take annual leave during your garden leave. Your employer must give you notice of the compulsory annual leave they wish you to take. The length of this notice is a minimum of twice the number of days’ holiday you are being asked to take.
Can I start a new job while on garden leave?
The main point of garden leave is to keep a valuable employee out of the market long enough that any information they have which may be of value to a competitor becomes either out of date or protected. Therefore, it would seem odd that an employee could start a new job while on garden leave.
But, as with the point above regarding an employer’s right to make an employee take garden leave, much depends on your employment contract. The Court of Appeal in Hutchings v Coinseed  IRLR 190 ruled that if there is no express term in the agreement regarding taking another position or becoming self-employed during garden leave, none would be implied by the courts. Furthermore, in the absence of an express provision barring the right to start a new position, taking another job during the notice period, even with a competitor, was not a repudiatory breach of an employment contract. A repudiatory breach is a breach that effectively leaves the entire agreement between the parties useless.
However, the Court of Appeal in Hutchings did not discuss the implied duty of good faith which includes the duty not to compete. Therefore, this area of law is not clear and you should seek legal advice if you are thinking of starting a new job while on garden leave.
Looking for advice on gardening leave? Our employment lawyers can help you
The expert employment lawyers here at Bonallack & Bishop can help employers and employees alike with issues regarding gardening leave.
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