What Is Garden Leave in Employment Contracts?

Garden leave is an employment law concept used in England and Wales where an employee remains under contract and continues to receive pay during their notice period but is instructed not to attend work or perform their usual duties. It is commonly used when employment is ending through resignation, dismissal, redundancy, or settlement agreements, particularly in roles involving client relationships, confidential information, or competitive business activity.

Although widely used in practice, garden leave is not defined in legislation. It is a contractual arrangement developed through employment contracts and supported by case law principles. Its legal effect depends heavily on the wording of the employment contract and the employer's ability to lawfully restrict the employee's duties during the notice period.

Meaning of Garden Leave

Garden leave (sometimes referred to as “gardening leave”) refers to a period where:

• The employment relationship continues in full force
• The employee remains on payroll and receives normal pay and contractual benefits
• The employee is instructed not to attend the workplace or perform work duties
• The employee is usually restricted from contacting clients, customers, or colleagues for business purposes

The employee is still employed until the notice period ends and is bound by the terms of their contract throughout this time.

In practical terms, the individual is effectively removed from active duties while remaining employed and financially compensated.

When Garden Leave Is Used

Employers typically apply garden leave in situations where there is a need to protect business interests during the employee's notice period. Common scenarios include:

• Employee resignation to join a competitor
• Senior staff leaving with access to confidential or strategic information
• Risk of client or customer solicitation
• Redundancy processes where handover is not required
• Settlement agreements resolving employment disputes

Garden leave is especially common in sectors such as finance, technology, professional services, and sales-driven industries.

Legal Basis and Contractual Requirements

Garden leave is not automatically implied into employment relationships. It must generally be supported by an express clause in the employment contract.

Where a contract contains a valid garden leave clause, the employer may:

• Require the employee to stay away from work
• Restrict access to systems, clients, and colleagues
• Prevent the employee from carrying out their usual duties during notice

Without such a clause, removing an employee from work may risk breaching the implied contractual duty to provide work, particularly where work is part of the employee's role or status. UK case law has considered this issue in the context of employer obligations during notice periods.

Courts generally assess garden leave clauses alongside post-termination restrictions (such as non-compete clauses) to determine whether overall restrictions are reasonable.

Employee Rights During Garden Leave

Employees placed on garden leave remain fully employed and retain core contractual rights. These typically include:

Pay and benefits

Employees continue to receive full salary and contractual benefits, including pension contributions, holiday entitlement, and other agreed perks.

Employment status

The employment contract remains active. The employee is still legally employed until the notice period expires.

Duty of fidelity

Employees must continue to comply with contractual duties, including:

• Confidentiality obligations
• Restrictions on competing activities
• Duties of good faith and loyalty
• Limits on contacting clients or staff for business purposes

Ability to be recalled

In some contracts, employers may retain the right to require the employee to return to work during garden leave, although this depends on contractual wording.

Restrictions During Garden Leave

During garden leave, employees are commonly subject to restrictions that may include:

• Prohibition on working for another employer
• Ban on starting a competing business
• Restrictions on client or customer contact
• Removal of access to company systems and premises
• Requirement to remain available if needed by the employer

These restrictions operate because the employment contract remains active.

Interaction With Notice Periods and Restrictive Covenants

Garden leave is often used alongside notice periods and post-termination restrictive covenants.

Notice periods

Garden leave usually runs during the contractual notice period. The employee is still serving notice but does not perform duties.

Restrictive covenants

Employers may rely on restrictive covenants after employment ends, such as:

• Non-compete clauses
• Non-solicitation clauses
• Non-dealing clauses
• Confidentiality clauses

Garden leave can reduce the need for lengthy post-termination restrictions because the employee is already out of the business for a period before joining a competitor.

Courts may assess whether the combined effect of garden leave and restrictive covenants is excessive or unreasonable.

Payment During Garden Leave

Employees remain entitled to their normal salary and contractual benefits during garden leave. This is a key legal feature distinguishing garden leave from suspension or termination without pay.

If an employer attempted to impose unpaid garden leave without contractual justification, this would likely create legal issues, as the employee remains under contract and entitled to remuneration.

Employer Risks and Legal Limits

Employers must act within contractual and implied legal limits when imposing garden leave.

Key constraints include:

• A valid contractual clause is usually required
• Restrictions must be reasonable in scope and duration
• Employers cannot impose measures that amount to unlawful restraint of trade
• Any breach of contract may give rise to claims for damages

Courts may also consider whether garden leave is being used excessively to prevent an employee from working without legitimate business justification.

Employee Options and Practical Considerations

Where garden leave is imposed, employees typically consider:

• Reviewing the employment contract to confirm the clause
• Checking notice period terms and pay entitlements
• Clarifying restrictions on new employment during the period
• Ensuring continued accrual of holiday pay and benefits
• Reviewing post-employment restrictions that will apply after garden leave ends

Disputes may arise where the scope of restrictions or pay is unclear, in which case employment tribunal claims or negotiation through solicitors may be relevant depending on the circumstances.

Common Questions from our Readers

Can an employer force garden leave?

Only where the employment contract includes a valid garden leave clause or allows sufficient discretion during the notice period.

Can an employee work elsewhere during garden leave?

Usually not, as the employee remains under contract and is typically restricted from other employment or competitive activity.

Does garden leave count as employment?

Yes. The employee remains fully employed until the notice period ends.

Can garden leave be refused?

Refusal may amount to breach of contract if the employer is acting within contractual rights.

Key Takeaways

Garden leave is a contractual employment arrangement where an employee remains employed and paid during their notice period but is instructed not to work. It is primarily used to protect confidential information, client relationships, and business continuity. Its enforceability depends on the employment contract, particularly the presence of a garden leave clause. Employees retain pay and employment status but are usually restricted from working elsewhere or engaging with clients. Employers must ensure the arrangement is reasonable and contractually supported to avoid legal disputes.