Introduction to garden leave in employment contracts
A garden leave clause should be included in every contract of employment and amongst other things it will strengthen the effectiveness of restrictive covenants. A garden leave clause requires an employee to stay away from the workplace and stop working even though their contract of employment continues. Strictly speaking, garden leave can be imposed at any point during the course of employment, but it is usually introduced for all or part of an employee’s notice period.
A garden leave clause is intended to keep the employee away from the business to protect its confidential information and goodwill. This is achieved because the value of the confidential information the employee may have memorised will decrease with the passage of time. A period of garden leave also allows the employee’s successor to build a relationship with customers, clients and suppliers without interference from the employee.
A garden leave clause can also require that during the employee’s notice period they must:
- Return all company property including their laptop mobile phone and company papers.
- Have no contact with customers, clients or suppliers.
- Have no contact with other employees.
- Be available on the employer’s instruction to deal with specific queries or to effect a handover.
- Resign any office, such as a directorship.
An alternative form of garden leave can enable the employer to allocate work on a specific project to the employee or require them to work in a different location to their usual one.
When can an employer place an employee on garden leave?
An employer should first ensure there is an express garden leave clause in the employee’s contract. They should not try to place an employee on garden leave without such a clause unless there is clear evidence of serious wrongdoing by the employee. It is also important to note that the mere existence of a garden leave clause does not necessarily mean a court will allow the employer to enforce the clause if it is unreasonable.
Expert advice on garden leave clauses
Read our Garden Leave Briefing Note for more information on garden leave clauses or contact Employment Law Services Partner Paul Maynard for specific, expert advice, on including garden leave clauses in your contracts or on enforcing such clauses.
See Paul’s answers to the most commonly asked questions on restrictive covenants in our FAQ videos.
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