Placing an employee on garden leave during the notice period is less common than paying in lieu but, in certain circumstances, it can be more advantageous for the company. How can employers ensure the grass isn’t greener on the other side to know when garden leave is the right path to take?  

The term “garden leave” is used to describe the situation when an employee is asked to remain at home during some or all of his notice period, rather than attending his normal place of work. During a period of garden leave, the individual remains employed by the company. He will retain all his rights under the contract of employment, such as to salary and benefits, and will also be bound by his obligations to the employer, such as to keep information confidential and not to work for anyone else. An employee can be placed on garden leave regardless of which party gave notice to terminate the employment.

For this reason employers often use garden leave during an employee's notice period to prevent the employee from having further access to customers, clients and staff and to prevent the employee from working for a competitor.  Employers should have an express contractual right to place an employee on garden leave to avoid breaching the contract, which could potentially give an employee grounds to bring a constructive dismissal claim and, moreover, would mean that any restrictive covenants in the contract are unenforceable.

However, a garden leave clause is in itself a form of restrictive covenant and therefore should only be used to protect the employer’s legitimate business interests.  For example, to keep the employee out of the market place long enough for any confidential information they have to go out of date or to enable a successor to establish themselves, particularly with customers, so as to protect goodwill. Any restrictive covenants in the employee’s contract of employment should also take into account any period of time on garden leave. If a six month restricted period is reasonable, several months’ garden leave prior to that may render the period unreasonable; ideally the period should be reduced by any time spent on garden leave.

If the employee does attempt to take up alternative work during the notice period the employer can apply for an injunction. To enforce garden leave it is helpful to be able to rely on the following express contractual provisions:

• An express right for the employer to withdraw the employee's duties and exclude them from its premises.



• An express restriction on other business activities during employment.  
  It is likely that a court will only uphold a garden leave provision where the employee is proposing to work with a competitor and is therefore likely to damage the employer's business. Even then, it is possible that the court will not grant an injunction to render the employee idle, despite them being paid, but rather leave the employer to pursue damages for breach of contract. An employer is more likely to be able to get an injunction where it has attempted to give the employee alternative work to do during the notice period which the employee has refused.

From a practical point of view employers should also consider:

• If it is reasonable to place the employee on garden leave for the full notice period, especially where the employee has a long period of notice. Where there is a pay in lieu of notice clause it may be better to make a payment in lieu of part of the notice period if this would have the same effect.



• Is it clear to the employee what he is and isn’t allowed to do whilst on garden leave, for instance whether he need to be available for telephone calls, whether he should be available to come into the office, or whether he is forbidden from attending the workplace without permission from management.



• Do you have a contractual right to require the employee to take some or all of his outstanding holiday entitlement during the garden leave period? If so, are you going to enforce this?



• Remember that during garden leave the employee is entitled to their normal terms and conditions and therefore you should continue with any contractual benefits, including a company car etc, but makes sure you have appropriate arrangements in place to terminate all benefits at the end of the notice period and to ensure that all company property is returned. 

If your business needs protecting and you use restrictive covenants it is worth reviewing your approach to garden leave to see if it would maximise their effect.  In the right circumstances, provided the appropriate contractual and practical arrangements in place, asking the employee to go and cut the grass when faced with the chop could be a better way to go.