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What is garden leave and when should I use it?

Garden or gardening leave is the practice of continuing to pay an employee who is leaving a company (and has handed in their notice or had their employment terminated) but instructing them to stay away from work during their notice period.

The employee on garden leave is usually forbidden to contact fellow employees, clients or suppliers. Access to company documents or emails is also off limits.

Garden leave is most commonly enacted when an employer wants to immediately stop an employee from performing their regular duties or retain the employee for the notice period. Typically, the employee is required to stay at home – in the garden, hence the name – to keep them away from a competitor for as long as possible.

The aim of garden leave is to keep the employee out of the marketplace for long enough to ensure that any information they have will go out of date, or for the employee's successor to establish themselves, particularly with customers, so to protect goodwill.

When can it be used?

First, you need to check whether you have an express garden leave clause in your employee’s contract allowing their duties to be varied, or withdrawn altogether, during the notice period.

If an employee is placed on garden leave without an express right to do so, the employee may ask a court to decide whether this was right or not. A court will consider whether the employee has a contractual right to be provided with work and if the employer has breached the contract.

It used to be very difficult to establish a right to work; however, this position has changed with time and case law, meaning there might be a contractual right to work in some cases. For example, to allow employees to hone their skills or avoid atrophy – this situation could apply to artists and singers who depend on publicity, but also to skilled workmen and even chartered accountants.

What happens if an employee breaches their garden leave?

Garden leave clauses are enforced by means of an injunction and, consequently, there is always a risk that the court will not grant an injunction but will find that damages could adequately compensate the employer for breach of contract.

Therefore, it is likely that a court will only grant a garden leave injunction if it is necessary to protect the employer's legitimate interests. This means the employee must be proposing to work for a competitor or potentially damage the employer's business.

It is worth remembering that the longer the period of proposed garden leave, the less likely a court is to enforce it in full. There have only been two recent reported cases in which the court has ordered a 12-month garden leave injunction. This also needs to be kept in mind when drafting garden leave clauses.

Key advice

To avoid the above problems, employers should have an express contractual right to put an employee on garden leave, because an implied right to work can be easily overridden.

Employers will need to weigh up the risk against the damage that may be done if the employee continues to work during their notice period, as opposed to the potential litigation if garden leave is breached.

Jayne Harrison is a director and head of the employment department at Cleggs Solicitors

Added: 24-08-2017

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