Garden Leave

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A client recently asked what was meant by the term “garden leave”, and clearly was hoping that we would explain it as his right to take a fortnight’s leave in the Spring to scarify the lawn and get the potatoes planted. Unfortunately we had to shatter this hope and, in the process of course, may have lost a good client. So we thought we had better explain what the phrase really means and what its use might be to the employer.

Garden leave is an arrangement that keeps an employee in employment during his or her notice period but does not require him or her to come into work.

The device is not an entitlement of the employee but is something the employer may choose to apply, regardless which party gave notice. The employee has no right to insist on staying at home during notice, and certainly not on full pay, unless he or she is certified as being too sick to attend work or has properly booked holiday for the period. However, although neither party may see each other again during the period of garden leave, employment does not end until the end of the notice period. This is important because, if the employee considers the dismissal to be unfair, he or she needs to lodge a claim in the Employment Tribunal within a three month period starting from the end of garden leave, not from the date work ended. Also all service related benefits such as statutory redundancy payments and length of service are calculated to the end of the garden leave period.

Ordinarily during garden leave nothing changes in the employment relationship except that the employee does not attend work. The contract of employment continues normally unless alternative arrangements are agreed mutually. You should pay full salary in the normal way, allow the employee to retain a car provided for both business and private use or make monetary compensation, maintain full pension, health and life assurance, and allow the employee full access to the grievance procedure, albeit you handle the initial stages by post or phone. If you are concerned that the employee might abuse the car or mobile phone, you could impose conditions such as noting any current damage and insisting that the employee pay for any subsequent damage, and pay for any mileage that exceeds the previous quarter’s average for private use. These conditions should be set out clearly in writing and agreed with the employee. They are likely to be accepted gladly by the employee who, unlike our client, now has time for the garden.

You may choose to put employees onto garden leave because you suspect that they will in some way be a liability during the notice period. You may suspect, for example, that their application to work will diminish or they may do harm by making damaging criticisms about the business to customers, by hiding or destroying vital documents or by interfering with computer systems. If they are moving to another employer they may unwittingly sow seeds of discontent among remaining employees by drawing comparison between the two organisations even though the virtues of the new employer are anticipated rather than real.  However, employers tend to exaggerate the damage that departing employees can or will do, so this alone should not be a reason for putting them onto garden leave automatically.

Of course an employee leaving to join a competitor may during the notice period, perhaps unconsciously, absorb information that would be of value to the new employer. For example if, while working notice, an employee observed a solution to a technical problem that subsequently occurred during his work with the new employer, he or she would instinctively and understandably apply the same solution. This is quite different from secretly photographing new products or copying customer lists and discount details to pass on to the new employer. Nevertheless if the risk exists, garden leave might give you the safeguard you need.

Do not go ballistic if an employee decides to leave you and join a competitor. This probably is not an act of treachery but rather a move for betterment whereby the person can gain promotion or more money sooner than with you. Often employers’ knee-jerk reaction is to dismiss the person immediately with pay in lieu of notice, but the result of this is that the employee receives a substantial sum of money then goes immediately into better paid work with the new employer and, if there really is a risk, can straightaway do damage to the old employer’s business. Using garden leave is a useful device for dealing with this, but not the only one. For example, rather than pay employees for doing nothing on your behalf, why not keep them working albeit with some reasonable restriction such as requiring the engineer not to go into the development section or having another secretary type the new discount list? You should explain that you are not questioning their honesty but do not wish to put them into a difficult position where they could not help but acquire information that you would not want their new employer to know.

A problem with garden leave is of course that the employee is out of sight and thus beyond the close control of the employer. Although the employee may not take up the new employment until the notice period has expired, he or she nevertheless may make contact with the new employer by letter, e-mail or telephone in virtually total confidence. Indeed, the new employer may ask the person to draft out some proposals for a new project, or make contact with potential customers. Also the employee may communicate with the existing employer’s customers or suppliers in order to retain contact with them in the new job.

If you put someone onto garden leave, set the terms out simply and clearly in writing. Emphasise that the employee remains in employment and, if appropriate, must come back into work if required or undertake reasonable work at home. Also make clear any restrictions that you feel are necessary or that need emphasising. If there are serious concerns about what the employee may get up to, then hand the problem to a good employment law solicitor.

Be aware of one legal consideration. Although employees usually jump at the chance of serving their notice period on garden leave, the employer has no right to impose it because the contract of employment requires the employer to provide work and the employee to undertake it. This is particularly important if the garden leave is lengthy, say three months or more. During that period the singer who is not put on the stage may be forgotten by his adoring public, the salesman may lose touch with his contacts and the toolmaker lose his skill through lack of practice. If therefore the employee refuses to take garden leave, do not insist on it but rather apply restrictions such as some of those mentioned above.

You may consider that garden leave is a useful way to end an employment relationship. However before applying it do consider what exactly is the problem if you have the employee work his or her notice period, and then whether garden leave is the best way to deal with it.  If it is, then be sure to make the employee fully aware of his or her obligations.

Tags: garden leave, Recent HR News

This entry was posted on Tuesday, April 12th, 2011 at 17:04 and is filed under employment. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.