An employer’s guide to managing Gardening Leave
Gardening Leave can seem like a win-win situation. For employers, it’s a way of protecting the business when an employee hands in their notice. And for employees, it means they are paid without having to work. But it’s not without its complications, from costs to potential claims. So, here’s our guide on how to handle Gardening Leave without any thorny (legal) issues.
What is Gardening Leave?
When an employee hands in their notice, an employer has three main options.
- The employee can simply work out their notice as usual, until their last day.
- An employer may decide it’s better to end the contract immediately and pay the employee in lieu of notice.
- An employer may decide to place the employee on Gardening Leave.
Gardening Leave (also known as Garden Leave) is when an employee is suspended from work, on full pay, while they are on their notice period. Typically, Gardening Leave rules mean that the employee must stop working and have no contact with colleagues, clients, customers, or their usual business relationships. This protects the business as the departing employee is unable to poach any contacts, recruit their colleagues (to join a competitor, for example) or access confidential, commercially sensitive information. Importantly, Gardening Leave pay means an employee is still paid and receives their usual benefits but is not at work (or working from home).
Why is it called Gardening Leave?
Gardening Leave sounds old fashioned – particularly now when many people don’t have a garden. However, the name comes from the idea that you are at home and have lots of time to tend to your garden while you’re not at work. When an employee is placed on Gardening Leave, they can spend time on their hobbies (such as DIY or gardening) because they are not required to work for their current employer or allowed to work for another organisation.
Is Gardening Leave legal?
Yes, an employer can legally put an employee on Gardening Leave. Usually, an employer will include a clause about Gardening Leave in the employment contract, which allows them to put employees on Gardening Leave during the notice period. However, even if there isn’t a clause in the contract, there may still be an implied right to put an employee on Gardening Leave. This is because an employee doesn’t have a right to work but has a right to be paid. And with Gardening Leave, while the employee is suspended from work, they still receive full pay.
How long is Gardening Leave?
The employer may place their employee on Gardening Leave at any time during their notice period. The Gardening Leave lasts for as long as the employer wants, even if that means from start to finish. However, it cannot be longer than the notice period.
Why use Gardening Leave?
Employers typically place employees on Gardening Leave when they have handed in their notice, because they don’t want them to engage with the companies’ affairs anymore. The main reasons are:
- To keep an employee away from customers or clients and colleagues (so they cannot poach business contacts and damage the organisation).
- To stop an employee from accessing sensitive information that an employee usually has access to while at work. This includes business strategy plans, client lists, sensitive pricing information and commercial decisions.
- To stop disruption and animosity in the workplace. The employer may decide their work environment is safer when a certain employee is prevented from working there.
For example, a common reason why employers use Gardening Leave is when an employee has given their notice to join a competitor. The employer may decide it is best for the employee to be kept away during their notice period (and away from commercial information, which they don’t want passed on to their competitor).
Importantly, the employee is still employed and may not work for their new employer while they serve their notice period. So, the employer uses Gardening Leave to protect their business while still adhering to their employee’s right to being paid.
Pros and cons of Gardening Leave
The major pro of Gardening Leave is that an employer can keep an employee away from a competitor (the new employer) and buy the organisation some time for the remaining employees to develop relationships with the key contacts/clients of the departing employee before they join a competitor or set out on their own.
The other advantage is that, when insoluble situations arise, it gives employers more control over the situation as they can remove the employee from the workplace during their notice period.
The obvious downside is the cost of Gardening Leave. It means an employee is being paid and accessing employee benefits (including holidays) and yet not doing any work. As a result, that employee doesn’t contribute to the company.
Another downside is where an employee leaves to set up a business in competition with their employer. In this scenario, there is a risk that putting them on Gardening Leave will only be beneficial for their venture: the employer continues to pay them while they dedicate their time to develop their new business.
When to use Gardening Leave
Gardening Leave is a defensive step. It’s used when an employer decides it’s better to keep someone employed and paid, but not working instead of allowing them to work out their notice. Most of the time employers use Gardening Leave to protect the business from commercial risks, so it tends to be used for senior employees and salespeople, because they are the ones who are most likely to be a threat to the business if they leave to join a competitor.
This is because senior staff and salespeople are more likely to have been given access to clients, customers, and confidential information during their notice period.
For example, a sales director who regularly attends meetings about sensitive pricing information and sales strategies poses a threat to their employer if they work until the last day of their notice period and join their employer’s direct competitor the following week. In that case, putting them on Gardening Leave during their three month notice period gives the employer time to shift their strategy.
The same is true in order to protect a business relationship with a key client. Putting an employee on Gardening Leave can distance them from clients so there is less chance they are able to take them to a competitor business.
When to avoid Gardening Leave
Gardening Leave financially costs employers because they continue to pay a suspended employee which they must also replace. Therefore, before putting anyone on Gardening Leave, employers must consider what they are looking to protect or achieve, and if it is worth the financial cost. Ideally, employers should avoid putting an employee on Gardening Leave when the cost isn’t worth it. Or, when they don’t have an implied or contractual right to do it. Otherwise, they would risk receiving legal claims.
The risks of Gardening Leave for employers
There are some legal and commercial risks of Gardening Leave for employers when it’s not enforced properly. The most common legal risk is that the employee claims being placed on Gardening Leave is a breach of their contract and resigns in response.
The employee may then claim constructive unfair dismissal and/or breach of contract or wrongful dismissal. This means they could bring a claim in the Employment Tribunal. Consequently, they could join the competitor sooner, and even argue that the post-termination restrictions in their contract are no longer enforceable. This would mean they could potentially contact clients/customers and compete against you.
Employer responsibilities during Gardening Leave, including the impact on bonuses
Before putting an employee on Gardening Leave, it is importantly to first check their employment contract. Usually, they will remain an employee while on Gardening Leave, which means the employer is responsible to continue to pay them and allow them access to their employee benefits. However, the contract may entitle them to basic pay only (and not bonuses, for example).
Employee rights during Gardening Leave
An employee has a right for ‘gardening leaving pay’ during their Gardening Leave. Aside from the money, they are still an employee, so all the rights and obligations still exist.
For example, in every employment contract there is a right to trust and confidence. So, if the employer breaches the contract, for example by mistreating the employee, they could potentially raise a grievance or bring a claim for constructive dismissal, despite being on Gardening Leave. All of the usual employee rights are retained, the difference is that the employee is being paid but is not required to work.
However, the employee does not have a right to talk to their colleagues or clients.
What to do when there is no Gardening Leave clause
In the vast majority of cases, employees are content to be put on Gardening Leave and be paid while not having to work during their notice. Unless the employer reaches an agreement with the employee about Gardening Leave, imposing Gardening Leave could be a breach of contract in some circumstances. Due to the seniority or nature of the role the employee has not just a right to be paid but a right to work. Generally speaking, it would be best for an employer to speak to the employee who is leaving and reach an agreement about Gardening Leave.
When should you include the Gardening Leave clause in a contract?
This should be done for senior employees and arguably, even for all levels of employee. This is because reserving a right to (or clearly reserving the right) to put the employee on Gardening Leave can be useful.
The clause simply gives the employer the option to lawfully place the employee on Gardening Leave. Whether you choose to do so is a matter for the employer at any one time, when an employee serves their notice to leave.
However, the more senior an employee is, the more likely they are to have access to commercially sensitive information and a relationship or contact with important clients and customers. So, it’s more likely for an employer to include a Gardening Leave clause in the employment contract so they have the option available should they need it.
Advantages and disadvantages of a Gardening Leave clause
The main advantage of a Gardening Leave clause is to be able to swiftly protect the employer’s confidential information and to prevent the employee from poaching customers, clients, or colleagues during their notice period.
While on Gardening Leave, the employee is obliged not to compete with the employer, as they are still an employee. It stops the employee from competing or getting access to information. The disadvantage is that the employee is being paid but not doing any work.
The impact on post-termination restrictions/restrictive covenants/preventing competition
Another way employers can lessen the risk of ex-employees from competing when they leave, or taking the employer’s customers, is to include what’s called a post-termination restriction in the employment contract. This gives a length of time after their employment ends when a previous employee can’t try and win business from clients and/customers.
These restrictions are sometimes called restrictive covenants and they are only enforceable if they are seen to be a reasonably necessary way to protect the employer’s business. So, for example, a restriction of 12 months for a senior employee may be reasonable, but 18 months or two years would be unreasonable.
However, when there is a Gardening Leave clause in place, the restrictions potentially go on for too long. For example, if the employee was on Gardening Leave for six months, and then, had restrictive covenants for another year, that amounts to 18 months – which may not be enforceable (by law).
As a result, most employment contracts say that Gardening Leave counts towards to post-termination restrictions. In the example above, the Gardening Leave would prevent the employee from winning a business over for six months. Once their employment has ended, the restrictions are down to six months.
When the employee breaches Gardening Leave
A breach of Gardening Leave happens when an employee does something they are not allowed to do in the terms of the Gardening Leave.
That might mean something like contacting a customer to talk about doing business with them in the future. Even worse, it could include doing work that is in competition with the business while still on Gardening leave.
Both of these examples are a breach of contract.
An employer should swiftly act to protect the business. Steps might include writing to the employee, requiring them to stop and asking them to report what they have done (to get the commercial information). It may mean the employee has to reassure the employer that it will not happen again.
Finally, in some cases, an employer will need to contact an employment lawyer for advice on what to do. This could even include court action to prevent the employee from breaching the contract again (known as an injunction), and/or paying damages for the loss the employer has suffered.
Gardening Leave and settlement agreements
A settlement agreement can be a great way to add in a clause about Gardening Leave if the employment contract doesn’t have one.
A Settlement Agreement is often used when employment has ended. It’s a legally binding document, which settles any claims that an employee might have against an employer. It can also set out everything from an agreed reference to the date that employment ends, to a financial payment in return for leaving. The idea is that it helps with a swift, amicable exit.
When negotiating a settlement agreement, the employer has a chance to decide whether the employee will work their notice or take Gardening Leave.
A settlement agreement comes in handy if it would be risky to try and impose Gardening Leave (e.g. if there’s no Gardening Leave clause in the contract). It’s worth considering, as it’s an opportunity to add in a clause, which then gives the employer the right to put an employee on Gardening Leave.
How does Gardening Leave affect company culture?
Gardening Leave can help with a happier, healthier company culture because it removes an employee – who may be disgruntled and looking to cause trouble – and keeps them away from the workplace. In some cases, having an unmotivated employee in the office makes everyone feel low or unsettled and it causes problems. An employer may worry that the employee who is working their notice will even encourage others to leave. Gardening Leave provides space between colleagues and can swiftly provide a more positive atmosphere.
Gardening Leave FAQs
Does Gardening Leave affect employees?
Yes, it can affect employees when they have handed in their notice, as it may impact on how soon they can leave, how they will be paid during their notice period, and what they are required to do.
What happens during Gardening Leave?
Potentially, the garden looks great! During Gardening Leave, an employee is expected to be at home rather than in the workplace. It can be a good way for an employee to have time and space before they begin their new role. They are not able to work or have contact with customers/clients or colleagues.
During Gardening Leave, an employer needs to:
- Write to the employee making clear what the Gardening Leave arrangements are.
- Arrangements include removing access to computer systems, agreeing what an employee should say if they are contacted by a customer/client, so there are no potential issues, and letting the employee know if they want to take annual leave or are off sick, they need to follow the usual company procedures.
- Continue to pay the employee; and maintain their benefits (as per their contract).
- Give the employee a key point of contact in the organisation – usually someone in HR or their line manager – so they can be in touch should they need to, and vice versa.
- During the normal working hours, the employee should be contactable by the employer. They are not on holiday they are on Gardening Leave. So, the employer would be wise to ensure they have contact details for the employee.
Can an employee request Gardening Leave?
Absolutely! There is nothing to stop an employee asking whether they really do need to serve their full notice. But usually, the employee wants to still be paid, either in lieu or by being placed on Gardening Leave. Depending on the circumstances, if you don’t want the employee to join a competitor ending the employment early won’t be the best option – which is where Gardening Leave comes in.
Can an employee refuse Gardening Leave?
No. Usually if the employer has the right to put an employee on Gardening Leave – in accordance with the contract – it is the employers’ decision and refusing it would be a breach of contract by the employee, which is why it’s important to make sure the contracts properly express the terms of both parties.