One of the clauses we always recommend our clients have in their contracts of employment relates to Garden Leave. The name comes, of course, from the concept of being paid to stay at home (& do the gardening), hence the term Garden Leave. The lack of this clause – or even a failure to invoke the clause when it is present in the employment contract – can cause disruption to the other employees and the business. Failing to take proper precautions can put your profitability and – in extreme circumstances your entire business at risk.
So what is it, and why should we use it?
Garden Leave is a clause in a contract wherein an employee can be placed on a leave of absence, out of the business. It is most commonly used during an employee’s notice period – effectively they serve their notice period away from the office but on full pay. Garden Leave, if permitted in the contract, can also be used in other situations, for example when an employee has presented a Grievance, or is involved in a workplace dispute or mediation process where being absent from the workplace for a short period would benefit the employee and/or the business.
During a period of Garden Leave, the employee cannot do any work for the Employer, or anyone else. Employees without a Garden Leave clause have a contractual right to work, and making them stay away from the business without this clause could be a breach of contract.
Garden Leave is most often used for senior or key employees who can access important client contacts, sensitive or strategic information, or technical knowledge and “trade secrets”. It’s often used in conjunction with restrictive covenants or “post-termination activities” clauses to restrict what an employee can do when leaving the business, such as enticing away other key employees, or customers. In short, Garden Leave protects the business’ interests. It also prevents a departing employee from joining a new company as they are still held to their existing contractual obligations until the end of the notice period.
It’s easy to think it won’t happen to you, or that you trust your directors and senior managers, but sadly we know all too well that it can happen, has happened and most likely will, especially if the departure is less than harmonious.
Ok, so I’ll include that clause – what next?
In order to utilise a Garden Leave clause to maximum benefit, there are a few key things to remember:
- Continuing entitlement – the employee is still employed, so they remain entitled to their normal pay and benefits (including profit-related bonuses, health insurance etc), and will also continue to accrue holiday. They may not be entitled to their company car, mobile phone, or laptop but this depends on whether the contract identifies them as a benefit, or a tool used solely for their employment.
- Clarity of Expectations – it is vital that a letter is provided to the employee which clearly sets out what Garden Leave entails, even if you have an appropriate clause in their contract. In this letter you can clarify what you expect of them, which restrictions will be placed on them during this period, the arrangements you are putting in place to return company property, and most importantly, remind them that they are still your employee and have contractual responsibilities and obligations.
- Communication with other employees – what should you say? In most cases, during Garden Leave, you can advise your team that the employee in question has resigned and is taking a period of Garden Leave. However, where the Garden Leave is relating to other more sensitive matters, a degree of caution and confidentiality may be required and we can advise you on what to communicate to your team.
- Handovers – Employers are in a position to require employees on Garden Leave to carry out work duties if needed. They can be requested to prepare a full handover to their team or a replacement, while they are on leave, or even come in and conduct a handover at a designated time.
For more advice on Garden Leave, contact us at email@example.com, and we’ll be happy to help.