Garden leave clauses are becoming more common in employment agreements, especially in senior roles. These clauses require an employee to stay away from work while still receiving their salary and benefits during their notice period. Employers use garden leave to protect their business interests, but it also affects both parties in significant ways.
Purpose of garden leave
The main purpose of garden leave is to prevent departing employees from accessing sensitive information or competing with the company. Employers want to reduce the risk of losing trade secrets or client relationships. During the garden leave period, employees must remain available if needed but are restricted from taking on a new role or contacting clients.
Benefits for employers
Garden leave clauses give employers time to maintain client relationships and secure valuable information. It also helps prevent a departing employee from immediately joining a competitor. During garden leave, the employee remains on payroll, ensuring that they are contractually bound by their obligations, including confidentiality.
Impact on employees
For employees, garden leave can be a mixed experience. It means being paid without actively working, which some may find appealing. However, it also prevents them from seeking immediate new employment or advancing their career during the notice period. In some industries, this delay may cause challenges, especially if it extends for several months.
Legal considerations
Garden leave clauses must comply with local employment laws. Courts may consider the length of garden leave and its impact on an employee’s ability to find new work. If a garden leave clause is too restrictive, a court might find it unreasonable and unenforceable. Therefore, employers need to draft these clauses carefully to avoid legal challenges.
Both employers and employees should understand the impact of garden leave on their rights and obligations. Employers should ensure that the clause is reasonable, while employees need to consider how a garden leave provision may affect their career transition.