Garden leave: Is it a good idea for employers?

1. What is garden leave?
2. How long is gardening leave?
3. Who can be placed on garden leave?
4. When can employers use garden leave?
5. When should employers avoid garden leave?
6. What happens when an employee is on gardening leave?
7. The law around gardening leave
8. Is garden leave a bad thing?
9. Looking for an HR solution to support compliance with employment legislation?

Garden leave is a practice where an employee who’s leaving a company is instructed to stay away from work during their notice period, while still receiving their normal pay and benefits. It can be used in cases of both termination and resignation and is typically done to prevent the employee from accessing sensitive information, contacting clients, or joining a competitor.

The term gardening leave comes from the idea that the employee is essentially being paid to stay at home and ‘tend their garden’ instead of going into the office. It’s not a termination; the individual remains contractually employed, just without active duties. It’s commonly used in roles where access to confidential or commercially sensitive information could be damaging to the business if misused.

The length of this leave is usually tied to the employee’s contractual notice period. There’s no statutory minimum or maximum but, in practice, it often ranges from one to six months depending on their role and level of seniority. The applicable scenarios and duration of this type of leave  should be clearly set out in the employment contract to avoid disputes.

This shouldn’t be used as the default approach when someone resigns or is dismissed. Employers typically reserve it for roles where an employee has access to sensitive data, commercial secrets or key business relationships. This includes, but isn’t limited to:

• Sales executives and account managers
• C-suite or senior leadership roles
• Product managers or engineers with confidential technical knowledge
• HR professionals or payroll staff

For these employees, gardening leave can reduce the risk of them sharing information with competitors, poaching clients or disrupting internal operations.

Employers can place staff on this type of leave when there’s a legitimate business interest for them to protect. However, timing and context matter. Here are a few common scenarios where it might be appropriate.

When an employee resigns

If a key team member hands in their notice, putting them on this type of leave can help to prevent disruption and protect intellectual property. This is particularly useful if they’ve accepted a role with a competitor. It can also give the business time to manage the transition, reassign responsibilities and prepare for their replacement.

When an employee is dismissed

In situations where someone is let go but there’s no immediate cause for summary dismissal, it allows the business to remove them from active duties while still honouring their contractual notice period. This may follow a breakdown in trust or disciplinary action, such as cases of insubordination at work, and may help to prevent a claim being made for unfair dismissal.

To protect confidential information

Sometimes gardening leave is used solely as a protective measure. If an employee has been involved in sensitive projects or has relationships with high-value clients, this time away from work can act as a cooling-off period to reduce any competitive risks such as client poaching or the sharing of intellectual property.

Despite its advantages, this type of leave isn’t always the best option, so employers should consider the specific circumstances of each case. Here are some examples of when it might be more trouble than it’s worth.

If it’s not necessary for legitimate business interests

If an employee isn’t in a strategic role or doesn’t have access to sensitive data, gardening leave could be excessive and unjustified. In such cases, it may not hold up as a reasonable or proportionate action, especially if challenged.

If the costs outweigh the benefits

Keeping an employee on full pay while they’re not working can be expensive, particularly if there’s no tangible benefit to the business, or you also need to pay for a replacement during the notice period. If this leave is used without a clear rationale, it can be a costly HR misstep.

If the employee’s notice period is particularly long

While four weeks is a common notice period, they can stretch to 12 months for senior leadership or founders. In these cases, it may not be practical or cost effective. Instead, it may be better to negotiate a shorter notice period or mutually agree on early termination.

If there’s no clause in the employee’s contract

Without a clear contractual clause, placing someone on this type of leave can be risky, as the employee might argue that it constitutes a breach of contract. To prevent this, it’s important to outline clear terms in your HR policies and employment contracts.

While on gardening leave, the employee remains bound by the terms of their contract. They’ll typically continue to receive their salary, pension contributions and benefits until their notice ends. However, they’re usually not permitted to start a new job or engage with competing businesses during this time.

It provides the employer with a buffer period to manage risks and protect relationships. In most cases, the employee must refrain from attending the workplace, accessing business documents, or contacting clients and colleagues. They’re is still required to uphold their confidentiality obligations, and failure to do so could result in legal consequences.

There’s no specific legislation in the UK defining garden leave, but it’s widely enforced through contract and employment law. Understanding the garden leave meaning and its legal context is essential for employers to make sure they act lawfully.

Garden leave clause in the employment contract

To enforce this with confidence, there should be a clear clause in the employee’s contract. This clause should state that the employer has the right to exclude the employee from work duties during the notice period while still paying their salary. Without this clause, enforcing this may be seen as a breach of contract, which can expose the business to legal action.

Employee rights and entitlements

Employees on this type of leave are still entitled to all the benefits outlined in their contract. This includes salary, bonuses (if applicable), pension, and annual leave accrual. However, they’re still subject to any non-compete and confidentiality clauses where enforced. Employers must be careful not to treat an employee unfairly during this time, as it could give rise to unfair dismissal claims.

Legal risks of misuse

Using this type of leave without a valid reason or in situations where it’s not contractually supported can lead to disputes. Employees may challenge it on the basis that it limits their ability to earn or damages their professional reputation. Employers need to ensure that their use of the leave is proportionate, justified and legally sound.

Depending on how it’s applied, it can be a useful HR tool or a source of tension. Let’s explore the main concerns regarding placing an employee on this type of leave.

Risks for employers

Employers face financial and legal risks if it is misused. Costs can mount quickly, especially if a long notice period is involved. There’s also the risk of appearing unfair or overly controlling, which can affect the organisation’s reputation with both current and potential employees.

How it affects employees

From an employee’s perspective, it can have both positive and negative implications. On the plus side, they’re paid to stay home, with no work-related stress. However, they may feel professionally sidelined, and the restrictions can delay their transition to a new role. It can also leave them feeling cut off from their team and career momentum.

Impact on company culture

Prolonged or poorly communicated this type of leave can create suspicion or fear within the remaining workforce. Other employees may worry that they’ll be sidelined without warning, which can erode trust, undermine morale and contribute to a bad company culture.

Garden leave can be a smart move for employers looking to protect business interests, but only when used correctly. From ensuring that contracts are watertight to understanding employee entitlements and the wider cultural effects of the practice, it’s important to weigh up the pros and cons before making it part of your offboarding strategy.

Our HR software helps businesses to stay compliant, manage contracts, and handle offboarding with clarity and confidence. If you’d like to see how it can work for your business, watch our 4 minute demo or get in touch with our team today.

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If you enjoyed this article, you may be interested in reading:

• Guide to Payment In Lieu of Notice (PILON)
• What is a notice period? A guide for employers
• What is insubordination at work?