Garden Leave Explained: Understanding the Process and Benefits

What is Garden Leave?

Garden leave is a practice of employers instruct their employees to stay away from work and the workplace after resignation or termination of employment. The employee continues to be employed and be on payroll. This is called gardening leave.

During garden leave, the employee

• cannot join a competitor
• cannot start a competing business
• is asked not to report to work but receives full pay.

This guide on Garden Leave explains:

• What is garden leave?

• Pros and Cons of garden leave for the employer
• Is garden leave enforceable? Is garden leave legal in the US?
• Is garden leave same as severance
• Free garden leave letter template download

When should Garden Leave be Used?

Garden leave is used when employers want the employee to stop performing their duties immediately, but also want to restrict them from taking up another job with a competitor company. 

What does it mean when you are on garden leave?

During the period of garden leave, the employee does not need to report to work or fulfil their work duties. The employee receives full remuneration for this period. However, they may not take up employment with anyone else and cannot engage in a competing business.  

Advantages of Garden Leave for Employer

So why should employers grant employees gardening leave, given the additional cost of continuing to pay salary to the employee?

Here are the 5 advantages of garden leave:

1. Prevent Poaching

Garden leave restricts an employee from joining another workplace for a defined period of time. During garden leave, employees can consolidate relations with colleagues to ensure they do not get poached by the employee on garden leave when that employee starts their next job. Similarly, employers can consolidate relations with customers, to ensure they retain their business and are not taken by the employee on garden leave.

2. Protect confidential information / sensitive information

As stated, during garden leave, an employee is not to report to work. This allows employers to ensure that the employee does not have access to any new sensitive, confidential, and/or proprietary information produced by the company during the garden leave period.

Furthermore, during garden leave, the employment agreement continues to take effect. The employee, therefore, owes the same duties to the employer as they did during regular employment. One of the most important ones is to maintain confidentiality. The enforcement of this duty ensures that sensitive, confidential, and proprietary information is not disclosed by the employee during the period of garden leave.

Ultimately, the employer’s intention in granting garden leave is to ensure that the employee is kept out of the job market for long enough such that any information they obtained during their employment is outdated. This ensures that competing businesses do not obtain an unfair competitive advantage.

3. Retention tool

By delaying an employee’s start at another company, garden leave serves as a subtle retention tactic—particularly for top performers and specialised roles.

Is garden leave legal in the US?

Laws relating to gardening leave vary by state in the U.S. For instance, As per the the Massachusetts Noncompetition Agreement Act, requires noncompete agreements to include garden leave with 50% pay or other agreed consideration.

The FTC bans non-compete clauses even if it is for senior executives. However the garden leave agreements are valid if :

• they apply when the worker is still employed by the employer; and
• receives their regular pay and benefits.

Is garden leave legal in Hong Kong?

Yes, it is legal in Hong Kong. The garden leave must serve to protect a legitimate interest and should be for a reasonable period only.

Is garden leave legal in UK?

Yes, garden leave legal in the UK. Gardening leave provisions in employment contract are very popular in the UK. It important for employer to be aware of best practices that will ensure your garden leave clause in the employment contract is enforceable,

Is garden leave legal in India?

The general rule for non-compete clauses is that such clauses are unenforceable if it extends beyond the term of employment as they restrict gainful employment. However, garden leave restrictions can be valid if reasonable, time bound, compensated and necessary for protecting business interests such trade crests of the company

Yes, garden leaves are legal in India if the stipulations are reasonable; (ii) the employee receives monetary compensation for the duration of garden leave; and (iii) the employee remains on the rolls of the employer until the expiry of the garden leave period.

When can you enforce Garden Leave?

1. If the employment agreement has a garden leave clause 

The easiest way for an employer to implement gardening leave is by relying on an express contractual provision within the employment contract with the employee in question.

A sample gardening leave clause language is as follows: 

"The Company reserves the right to require the Executive not to attend at work and/or not to undertake all or any of their duties of employment during any period of notice of termination, whether given by the Executive or the Company, provided always that the Company shall continue to pay the Executive’s salary and provide employee benefits (apart from the Company car) in such circumstances."

The gardening leave clause essential elements are: (a) pay and benefits; (b) restrictions; and (c) access to workplace

2. If No express garden leave clause in the employment agreement

If an employer puts an employee on gardening leave without an express contractual right, the court will have to consider whether the employee has a contractual right to work. If the employee does have a right to work, and the employer put the employee on garden leave anyway, this will amount to a breach of contract.

Generally, case law suggests that there exists no ‘general’ right to work. A right to work may exist for certain specialised jobs, however, especially those for which working regularly is essential for an employee to maintain the necessary skills for that job.

In determining whether a right to work exists, the courts will consider many factors including the following:

•  The extent to which the employee will be deprived of remuneration

Often, where an employee’s remuneration is heavily dependent upon their work, such as where commission or bonus arrangements make up the bulk of their remuneration, a right to work is readily implied.

• Behaviour showing they are not ready and willing to perform work for the employer

An employer need not provide any work to an employee, where and if that employee demonstrates evident disinclination to work. In such a case, no right to work will be implied.

• Employee breaches the duty of good faith

If an employee breaches their duty of good faith, which they owe to their employer, the employer is released from any obligation to provide work to the employee. In such a case, no right to work will be implied.

Ultimately, however, whether a right to work is implied or not depends on the case.  

If an employee is found to have an implied right to work, an employee should not immediately put that employee on garden leave. If they do, an employee may be able to claim there has been a repudiatory breach, which they have accepted.

This, in practical terms, would allow that employee to start working for any competing business immediately. Any restrictive covenant intended to protect the company, which was included in the employment contract – such as a covenant not to compete, a non-solicitation clause, etc – will not be able to be relied upon by the employer. They will be void!  

Employers should be well advised to avoid this risk by including a garden leave clause in the employment agreements of relevant employees.

Take away: Always include a garden leave clause to avoid dispute

How does garden leave impact the relationship between employer and employee?  

The employment contract continues to apply - employer must pay salary and benefits and employee is bound by confidentiality

During garden leave, the employment contract between the employer and employee continues to exist. Both the employer and employee remain bound by the terms of the employment agreement during the period of garden leave.

This means employees are still bound and subject to any restrictive covenants included in the employment contract – such as covenants not to compete, non-disclosure agreements, non-solicitation agreements, etc. It also means that duties, which are implied in the employment relationship continue to bind the employee – including that maintaining confidentiality.

For the employer, in practical terms, this means they are still bound to provide all remuneration as normal to the employee throughout the garden leave. It also means that all benefits provided during the normal period of employment – such as pensions, medical insurance, etc – must be provided during the garden leave.

What if the employee refuse to comply with garden leave clause?

To enforce a garden leave clause, an employer must obtain an injunction. An injunction is an order from a court demanding that an employee comply with the terms of the employment agreements or refrain from joining a competing business.

An injunction is an equitable remedy – this means that it is a remedy granted by the courts at their discretion.

A major consideration, for the courts, is whether an injunction is the only effective remedy to counter the harm to the employer, or whether damages would suffice.

Furthermore, an employer must show they have a legitimate interest in obtaining the injunction.

Legitimate interests include protecting trade secrets, confidential information, relationships with customers, and maintaining a stable workforce.

How long should a garden leave period be?

Employers should ensure that any garden leave period is only for the length necessary for the protection of the employer. If a garden leave period is made longer than needed, the employer will put himself at the risk of the garden leave order being deemed unenforceable by the courts.

Generally, the longer the period of garden period the employer proposes, the less likely a court is to enforce it in full. For instance, it is extremely rare for a garden leave period of over a year to be enforced by the courts.

If a garden leave period is deemed longer than necessary, it seems that the courts might alter it to only enforce it only for the period necessary to protect the employer.

Garden Leave and Restrictive Covenants

Provisions for garden leave operate alongside other restrictive covenants, which also intend to protect an employer’s business. Examples of these restrictive covenants include:

1. Covenant not to compete

This is a clause in an employment contract that prevents an employee from seeking employment in the same industry or field after the termination of employment with the employer.

2. Non-Solicitation Agreements

This is a clause in an employment contract whereby an employee agrees not to solicit any of an employer’s clients after the termination of employment with that employer.

DocPro offers numerous non-compete and non-solicitation agreements for employers and employees to use. We offer numerous variations of this agreement differing based on the party – the employer or employee – they are drafted in favour of.

You can find a brief description of each of our agreements and links to them here:

• Non-Compete and Non-Solicitation Agreement for Employment. This agreement is drafted neutrally in favour of both the employer and employee. You can find it here: https://docpro.com/doc1341/non-compete-and-non-solicitation-agreement-for-employment-one-way-unilateral-neutral

• Non-compete and Non-solicitation agreement for employment. This agreement is drafted in favour of the employer. You can find it here: https://docpro.com/doc1342/non-compete-and-non-solicitation-agreement-for-employment-one-way-unilateral-employer

• Non-compete and Non-Solicitation Agreement for Employment. This agreement is drafted in favour of the employee. You can find it here: https://docpro.com/doc1344/non-compete-and-non-solicitation-agreement-for-employment-one-way-unilateral-employee-1

3. Non-Disclosure Agreement

This is a clause in an employment contract whereby an employee agrees not to disclose any confidential information of the employer after termination of employment with that employer.

DocPro offers a unilateral non-disclosure agreement template, reviewed by experienced lawyers. It includes all the terms explained in this article and more. Use our NDA and make sure your confidential information is protected.

Tips for Start-Ups and SMEs

• Add garden leave clauses to all key staff contracts

• Review restrictive covenants regularly

• Use the notice period wisely—handover duties, protect IP, and manage internal comms

You can download it NOW here:  https://docpro.com/doc1666/nda-confidentiality-agreement-for-employment-one-way-unilateral-employer