When a key or senior employee resigns or their employment is terminated, employers must develop a strategy to prevent the individual from sharing confidential data with competing companies and minimise the time they may have access to sensitive information.
One way of achieving this is to put the employee on what is known as garden leave.
In this article, we explain what garden leave is and how to place an employee on gardening leave without breaching employment law.
What is gardening leave in employment law?
Garden leave (or gardening leave) is a common term to describe the situation when an employee leaves and is ensured that they fulfil their notice period as per their employment contract in a restricted manner.
Garden leave helps to preserve trade secrets, as well as facilitate the onboarding of the new employee by preventing the outgoing worker from coming into contact with clients.
This technique allows the new employee to develop relationships with the company's existing customers.
Can I put an employee on garden leave?
In most cases, there must be an express term in the employment contract allowing you to vary or withdraw the employee’s duties for it to be a viable option.
If you force an employee to go on gardening leave when there are no express terms in the employment contract, the court will look to see if the employee has an express or implied contractual right to work.
If this is the case, you will be breaching their contract if you insist they go on gardening leave. Beware that if you impose garden leave on an employee with an express or implied right to be provided with work, they may use your breach of contract to extract themselves from their notice period by arguing that you have committed a breach and bring the contract to an end.
To minimise the risk of this occurring, seek expert legal advice before making any moves to compel garden leave.
Is garden leave paid?
To keep the employee contract alive, the employee must continue to receive their normal pay. Whether the employee will be entitled to any contractual benefits, such as a bonus or commission, will depend on the wording of the bonus scheme and the garden leave clause in the employment contract.
Can an employer enforce garden leave?
An employee can refuse garden leave. To enforce it, you will need to seek a court injunction compelling your employee to comply with the contractual terms relating to garden leave and/or refrain from working for a competitor.
Of course, there is a risk that the Court will refuse to order an injunction and instead grant payment of damages by the employee to you for breach of contract. However, this is unlikely to happen if the employee signs with a competitor, as quantifying damages in such a situation can be extremely difficult.
How long is a garden leave in the UK?
In England and Wales, the Courts are more flexible when enforcing garden leave clauses as opposed to restrictive covenant clauses in employment contracts which are generally deemed wholly enforceable or unenforceable.
One of the reasons for this is that garden leave only applies to the period the employment contract remains in force. For example, if the employee is required to provide three months’ notice, they can only be placed on garden leave for those three months.
However, the longer the period of the proposed garden leave, the less likely the Courts are to enforce it.
Can an employee request garden leave?
Yes, an employee can request garden leave if their contract provides for such a right. An employee may wish to negotiate a period of garden leave as part of a Settlement Agreement.
Does garden leave have the same effect as employment restrictive covenants?
Although the aims of garden leave are similar to a restrictive covenant, they are different. However, they are often used together to provide an employer and their business with maximum protection.
But be mindful that the Court may only enforce a restrictive covenant in an employment contract if there is a clause relating to gardening leave. Depending on the facts, the Court may feel the combination keeps the employee out of the market for a short time.
Therefore, drafting both clauses by an experienced solicitor is advisable to maximise the chances of being imposed.
Get legal assistance from LawBite
To prevent disputes, it is wise to consult a legal professional to draw up your employment contracts with the correct terms for garden leave. If an issue arises, seek legal advice quickly to secure the best outcome for your business interest.
We have experience helping startups and small businesses achieve their commercial ambitions and comply with relevant legislation. To speak to one of our expert employment contract lawyers about garden leave, book a free 15 minute consultation or call us on 020 3808 8314.