Garden leave and settlement agreements

Garden leave – or gardening leave – means not coming in to work, but still getting paid. It can only be enforced on you once you have resigned with notice or been dismissed with notice.

In this short guide, we consider what exactly it is, what practical implications it may have for you, any settlement agreement you may negotiate and what your rights are if you are placed on it.

See also the example/template we provide of a settlement agreement with garden leave.

What exactly is garden leave?

The term ‘garden leave’ describes the idea that an employer may want an employee out of the way, and ‘out of the house’ and therefore ‘in the garden’.  It is also associated with the idea that an employee being forced to stay at home might as well do the gardening!

During garden leave, you are still contracted to the employer, but there are certain conditions that you need to meet, the main ones normally being that you do not attend the workplace, you cannot contact customers or employees, and that you have an obligation to remain loyal to the employer during the period.

Technically, garden leave can only be enforced on you once you have resigned with notice or have been dismissed with notice. If your employer says that you must stay away from work at any other point in their employment then this will be a type of suspension, not garden leave.

 

Restrictions on employees during garden leave

Some restrictions commonly imposed on you if you are on garden leave include:

• Contacting suppliers, clients and customers
• Contacting colleagues
• Attending the workplace
• Accessing work emails or computer systems
• Accessing work databases
• Downloading confidential information
• Contacting or working for competitors
• Retaining use of company car, laptop, smartphone, etc where these are for work purposes only and not considered benefits – you remain entitled to receive all benefits during garden leave.

However, you will be expected to be available to provide assistance to your employer in the event that they require information or support within the given notice period. Clear rules should be found in your contract under the garden leave clause.

Why does garden leave exist?

Garden leave is commonly used by employers as a way of protecting themselves and their resources from you when you are leaving employment.

They may be worried that you will use your notice period to acquire information to take with you when you finally leave. Most jobs require a certain amount of confidentiality and will involve you being privy to protected information and business plans.

One motivation behind your employer putting you on garden leave when you leave the company is to prevent you from immediately acquiring a new role working for a competitor, and using recent knowledge that you have gained in your previous position to put your new employer at an advantage.

Garden leave also gives your employer the opportunity to build new relationships with your clients, during a period in which you cannot contact them.

Common situations where you could be put on garden leave:

• If there is a good chance that you will join a competitor, the employer may want to introduce a new employee to clients and have time for them to settle them in before you are free to start a new role as you may try to take your old clients with you as soon as you are able.

• If the employer is concerned about the enforceability of post-termination restrictions or restrictive covenants in your contract, and so want to protect themselves, at least for the duration of your notice period.

Reasons an employer might put you on garden leave, but where pay in lieu of notice would be more usual

• If there are concerns that you will have a negative impact on your fellow employees if you stay at work while completing your notice period.
• If your employer is worried that you will either share negative views about the company with customers or clients.
• If there is a chance that you will download confidential information about clients to take with you.

More on pay in lieu of notice

Always read your contract!

As always, it is worth checking your employment contract when you know you will be leaving your job to understand exactly where you stand with your employer.

Most employment contracts now specify that the employer has the right to put an employee on garden leave if they resign or are dismissed.

In some circumstances where there is not a garden leave provision in an employment contract, an employer may be in breach of contract if they send you home with no work, even if you are still on full pay.

This is because the courts have increasingly been willing to imply that employees have a “right to work”, and so this is why garden leave needs to be specifically mentioned in an employment contract to be enforceable.

This is a relatively recent development in the world of employment law.

It used to be more widely assumed that employees did not have the right to work. In those circumstances, employers believed that provided their employees continued to receive their pay and benefits, they could be required to stay away from work at any time during their employment without the employer breaching contract. This is not now the case.

Garden leave: Is it good or bad?

Whether or not you view garden leave positively or negatively depends on your individual circumstances.

Some employees see it as a paid holiday, while others feel as if they are heavily restricted in their actions, are desperate to get on with finding a new job, and believe it could be detrimental to their ongoing career.

It’s important to note that many garden leave clauses will include restrictions on not just employment with a competitor, but also on competitive activities. This could include setting up your own business in competition with your previous employer.

Do you have grounds for termination of garden leave?

If you are put on garden leave you are still contracted by your old employer so you are not allowed to “rejoin” the job market until your notice period is over.

If you want to be released from a garden leave clause in your contract, it is worth first taking the initial step of simply asking your employer.

If you explain your situation they may be sympathetic and receptive to releasing you from garden leave, especially if you were a good employee and are planning to move to a non-competitor, or a new industry sector.

Some employees choose to take a risk and refuse to be put on garden leave, instead of starting work with a new employer during the time immediately after leaving.

If you do this your employer is totally within their rights to sue for damages, although in most cases it would be a very hard claim for them to win as they have to prove a loss resulting from the breach of contract (the breach of contract being you starting work with another employer when the garden leave clause in your contract forbids you from doing so).

In such circumstances, it is more likely that your employer would apply for an injunction to prevent you from working elsewhere during the remainder of your notice period.

If your employer has a contractual right to put you on garden leave, and you are going to a competitor, an injunction will be relatively straightforward for your employer to obtain.

An important aspect of leaving any employment which should not be forgotten is also making sure that you leave a role with a good employment reference, and refusing to abide by garden leave restrictions can put this in jeopardy.

At Monaco Solicitors we have often negotiated with employers so that employees who may have left their employment during a dispute can leave with a positive reference – this can be a condition written into your settlement agreement.

Read more about this in our guide on obtaining references in settlement agreements.

Garden leave as grounds for a constructive dismissal claim

If you do not have an express garden leave provision in your contract you could claim that your employer is in breach of their contract with you. In reaction to this breach of contract, you may have grounds to claim that you have been constructively dismissed.

It can be easier to argue this claim if you can show that you need to work to preserve your skills, so being excluded from the business has had a detrimental effect on your ongoing work life and on your ability to earn an income.  A valid claim of constructive dismissal can cause your notice period and restrictive covenants in your contract to become void.  See our detailed article on constructive dismissal for more.

Next steps

In addition to reading around the subject and having a look at some of the guides highlighted above, the following two items on our website may be of particular interest:

• Example of a letter requesting release from a restrictive covenant
• Example of a settlement agreement for an employee placed on extended garden leave

If you are unhappy about the way you have been treated in relation to garden leave, then please don’t hesitate to get in touch with us at Monaco Solicitors.

We are an established firm of specialist employment solicitors who only handle cases for employees. ( We do not work for employers.) So we can advise you on the strength of your legal case and ways in which we might be able to help you resolve it.

Contact us:

• Via this website link
• By phone on 020 7717 5259
• By email: communications@monacosolicitors.co.uk.