Garden Leave

What Is Garden Leave?

Garden leave (sometimes referred to as “gardening leave”) is a period of time after an employee leaves a company due to resignation or termination, during which that employee is instructed not to perform any work.

During this period, the employee is still considered employed with the organization and continues to receive a regular wage or salary even though they’re not working.

The term “garden leave” originated in the British military with the practice of sending officers away but keeping them on the books. By not allowing these officers to work elsewhere, the assumption was that all they could do during this period was sit or work in their gardens.

Garden leave works the same way today. Employees on garden leave are not typically permitted to work elsewhere, either remotely or in person, unless that work is unrelated to and doesn’t conflict with their current position. In some cases, this includes self-employment.

Because garden leave is usually implemented with members of senior management, other companies may not want to hire someone who’s still employed by another company.

How Long Does Garden Leave Last?

Employee garden leave can last anywhere from a few weeks to up to a year or more. How long garden leave lasts depends on a number of factors:

• The terms of the employer-employee agreement
• The level of the employee’s experience and seniority
• The level of risk to the company when the employee seeks other employment

Typically, junior employees have the shortest garden leave periods, while those in the C-suite may have to stay away from work for more than a year.

Because senior and more experienced employees have more industry knowledge and may possess more trade secrets, they’re typically obligated to longer garden leave periods to reduce the risk of them taking that knowledge to a competitor.

Benefits of Garden Leave

Garden leave has several benefits for employers:

• Stops employees from taking sensitive information to competitors
• Helps companies ease the transition to working with a new employee by ensuring the previous employee is available for questions and consultation
• Stops employees from taking key clients or customers from the company
• Limits the potential for dissatisfied employees to negatively impact work culture by limiting their contact with other employees

Some employees also view garden leave as beneficial because they are able to receive pay and benefits without having to take on much work. In some cases, employees can even still be entitled to bonuses and commissions during their garden leave period. This compensation can provide them with some relief as they consider their next move.

Drawbacks to Garden Leave

Although garden leave is designed to benefit a company in various ways, the practice is not without its drawbacks:

• Continuing to pay an executive who isn’t actively working can be expensive for a company, especially if they’re simultaneously paying a replacement.
• It can impact the employer brand if potential candidates don’t like the idea of garden leave restrictions.
• If the garden leave isn’t carried out according to law, it leaves room for employees to challenge the practice in court.

Additionally, maintaining garden leave policies can be cumbersome. This is because they require HR professionals to keep up with constantly changing legal requirements, some of which differ from state to state.

What to Include in Garden Leave Clauses

What’s the benefit of garden leave if it isn’t enforceable in court? To make garden leave clauses effective, it’s crucial for employers to be as detailed as possible when drafting them.

First, it’s important to ensure that you specify the length of the garden leave time period for each employee. This phrasing should include specific dates rather than just generic time frames. For example, you may want to specify that the garden period is from July 1 to July 31, 2024, instead of just writing “for a period of 30 days.”

Additionally, you should include specific terms of the garden period. These may consist of whether the employee is allowed to access documents or applications, whether they can contact vendors, customers, or co-workers, and how to handle company property that’s currently in their possession.

Finally, garden leave clauses should include expectations for employment during the garden leave period. These terms might include information such as whether and how the employee should be available to answer questions and provide consultation and what other type of employment (if any) the employee is allowed to obtain.

Example of a Garden Leave Clause

Here's what a clause for garden leave might look like:

Your separation from employment at [Company Name] shall be effective July 31, 2024, and you shall be relieved of all duties and obligations and, therefore, no longer considered an employee of the company after that date.

Effective as of July 1, 2024 (the resignation date) through and including December 31, 2024 (the separation date), you shall not maintain access to company facilities or electronic systems or assets.

Your duties shall be limited to providing assistance or consultation to company officers, members of senior management, and junior managers as needed, with no other contact allowed with employees, vendors, suppliers, or customers of the company.

You shall not be permitted to obtain permanent employment with any other employer during the period between July 1 and December 31, 2024.

How Does Garden Leave Work in Different Countries?

Australia

In Australia, employees cannot be forced into garden leave. It must be entered into on a contractual basis. Employers also cannot ask an employee to be on leave indefinitely or for an extended period.

During garden leave, Australian employees must be able to be contacted for questions, cannot work for other employers, continue to receive pay, and must abide by the rules of any contract they sign.

Singapore

Garden leave in Singapore must also be part of a contractual agreement. Employee rights must also be respected. Under employment law in Singapore, some employees have a right to work, depending on the type of compensation they receive, whether their employment has a fixed term, and the employee’s position in the company.

United Kingdom (UK)

In the UK, employers are not allowed to ask employees on garden leave to come to work, work in another location, or even work remotely.

Garden leave is typically defined by a “notice period,” which is the period of time between resignation or termination and official separation from the company (when the individual is no longer considered employed). UK employees on garden leave are entitled to the same pay and benefits as during their employment.

United States (US)

Garden leave is less common in the United States than in other countries. However, in 2018, Massachusetts passed a law regarding non-compete agreements that mentioned the term.

The law states that for a non-compete agreement to be enforceable, employers must offer garden leave as an alternative to the agreement. Garden leave, in this case, is considered to be 50% of the employee’s highest annualized base salary for the two years before separation and must be paid for the entire garden leave period.

Is Garden Leave Different Than a Non-Compete Agreement?

Though garden leave and non-compete agreements are similar, they’re not the same thing. On garden leave, individuals remain employed with the company and are paid a salary. Typically, employees are required to avoid all work during this period.

Non-compete agreements are contractual. During their time of enforcement, individuals don’t typically remain employed by the company, which means they usually lose access to pay and benefits as well.

Also, non-compete agreements don’t usually stop employees from working altogether. Still, they typically state that the former employee cannot work for similar companies in the same industry or within a certain distance.

There are no specific laws prohibiting garden leave in most jurisdictions within the US However, there are a growing number of laws banning non-compete agreements or rendering them unenforceable. The FTC recently issued a final rule prohibiting the practice nationwide.