Garden Leave 101: A Quick and Easy Guide
By: Alexander Boswell
Tags: Work, Business, HR, Law, Employment

What does Garden Leave mean in UK Employment Law?

Garden Leave (or Gardening Leave) describes a contractual clause upon resignation or otherwise dismissed employee. It typically instructs the employee to remove themselves indefinitely from the work environment, cease responsibilities of their role and to not make contact with other employees, suppliers, advertisers, clients or customers for the remainder of their employment- all whilst remaining on the company payroll.

In not-so legalese terms, the employee serves a ‘notice period’ away from work and off the clock, with full pay.

So, like PILON?

PILON is short for a payment in lieu of notice, ‘In lieu’ here meaning ‘instead of’. So instead of serving their notice period, an employee will get paid a lump sum at an amount equal to what they would have earned throughout their notice period. So if their contract states a notice period of 4 weeks, they will receive immediate compensation of a month’s pay upon termination.

There is a key difference between garden leave and PILON — an employee who receives PILON is free to go straight into other employment. This is because they have been paid off in full and so are no longer technically an employee at that establishment — whereas someone on garden leave continues to be employed until the end of their notice period, and will be paid pro-rata (as a salary or wage stipulated in their contract).

How long does garden leave last?

The duration of garden leave tends to reflect that of the notice period stated in your contract. Thus, garden leave can last anywhere from a week to three months and, in some cases, high-level executives will be expected to give a whole year’s notice.

During this time, the person on leave is still fully employed, meaning they get full pay and contractual benefits such as pension payments or medical plans. On the other hand, they are not permitted to begin new employment during this period, something this stockbroker had to learn the hard way.

What does it look like in a contract?

If you’re not sure where or what to look for in a contract, Law Insider provides some sample clauses for garden leave. These should help you determine if your agreement has one, or, if you’re an employer, aid you in creating your own clause or policy for new employees.

An employer looking to place an employee on a period of garden leave must have an express clause (like the one below) in the employment contract prior to it being signed.

Sample Garden Leave contract clause by Law Insider

Without an express contractual clause, you may find that the employee’s right to work (as well as be paid) is upheld in court.

Post-Termination Restrictions

Employers can use restrictive covenants or non-compete clauses (often abbreviated to ‘non-competes’) for post-termination contractual obligations. The primary purpose of these covenants, similar to garden leave, is to protect inside information such as business contracts, key clients or suppliers, or otherwise confidential information.

What’s different about this type of clause is that they apply after termination. That means they can apply after garden leave to extend the protection of ‘legitimate business interests’ such as trade secrets being shared. The obvious benefit of this additional clause is that it’s at no cost.

One type of restrictive covenant, the non-compete clause, helps ensure that parting employees cannot begin working for a rival company or within a similar profession or trade that is in direct competition with their former place of work.

Garden leave and post-termination restrictions are not mutually exclusive and can be used together for maximum effect. But, in practice, it’s super important that they don’t go beyond what is reasonably necessary to protect ‘legitimate business interests’. Otherwise, you might find the clauses become unenforceable and may even have a breach of contract or employment rights.