Understanding Garden Leave: A Guide for UK Employers

When an employee hands in their notice, they’re usually expected to work their full notice period unless agreed otherwise with their line manager. But in some cases, they may be put on garden leave.

Garden leave or gardening leave, is when an employee who is leaving an organisation is asked not to come to work or carry out any duties, but remains a fully-paid employee for the duration of the leave. 

Using garden leave can have its pros and cons for businesses. It can protect business interests and limit immediate competition, but it also has risks if there’s no contractual provision entitling you to put someone on garden leave. And while many employees will be happy with the paid time off, others feel like it’s an unfair restriction.

In this guide, we’ll go through what garden leave in the UK is, what you need to consider when putting someone on garden leave and how to reduce the risks that can come with it.

Garden leave definition and purpose

Garden leave is when an employee who intends to leave or has been asked to leave a company ceases to work, but still gets full pay. It’s often used when an employee leaves to go to work for a competitor. 

The purpose of garden leave is to prevent the exiting employee from accessing strategic or sensitive information that they could use and take with them to a competitor, such as customer information or technical knowledge.

It’s important to include a garden leave clause in all employee contracts to prevent a breach of contract claim. You should also bear in mind that employees are entitled to all contractual benefits whilst on garden leave, and they’re still bound by the terms and conditions of their contract. 

There are a few scenarios where garden leave is used:

• When an employee leaves to work for a competitor and you want to immediately restrict their access to company information
• When an employee is dismissed with notice, usually due to redundancy 
• When an employee resigns and you don’t want them to come to work during their notice period, but you don’t want them to start a new job during it either

Garden leave is often looked at negatively among employees. However, it’s important not to use it as a punishment but simply as a strategic way to protect your business and keep your employee available if you need them to hand over to their successor.

Key rules around garden leave

So, when you put someone on gardening leave, what does that actually mean? The key things to remember are:

• The employee will not attend your workplace and carry out little to no duties
• They will have restricted access to clients, colleagues and any workplace systems
• They remain on the payroll and will still be paid for a set period
• They retain all statutory and contractual benefits
• They are still bound by the terms and conditions of their contract, so in most cases cannot start new employment

Essentially, an employee on garden leave will do no work for your company, but will remain on the payroll and retain their benefits for the duration of the leave.

The legal basis of garden leave in the UK

Garden leave should only be used if the employee has a garden leave clause in their contract. The clause should:

• Clearly define the terms under which garden leave can be imposed
• Specify the duration of the garden leave
• Include any restrictions on the employee’s activities during garden leave

If your employee doesn’t have a garden leave clause in their contract, it’s technically possible to negotiate with them and agree on a period of garden leave. But this is risky – you open your business up to potential breach of contract claims on the grounds of the employee being excluded from work. 

In employment law, it used to be considered that while there is a right to be paid, there isn’t an implied right to work, so employers didn’t need to include a gardening leave clause in contracts. 

However, recent cases in the last few decades have turned this on its head – in William Hill v Tucker, the Court of Appeal found that the employee did have a right to work because they needed continued experience in their sector to preserve their skills for future employment.

How long can you put an employee on garden leave?

The duration of garden leave is determined by the terms of your employee’s contract. Usually, it can last as long as an employee’s notice period.

More senior employees tend to have longer notice periods – some director-level roles can have notice periods of up to 12 months – but in practice, garden leave tends not to last longer than 6 months. 

It’s important to set a reasonable period of garden leave. If you try to enforce an excessive length of garden leave, it can impact the employee’s future career prospects. As seen in William Hill v Tucker, courts may rule in favour of the employee if their garden leave may affect their future employment. 

If your employee has an exceptionally long notice period, it’s unlikely that you will be able to enforce the garden leave for the whole period. You should only use garden leave for as long as it legitimately protects your business interests, as a court would usually rule this way if you were taken to an employment tribunal. 

Risks involved with garden leave

While garden leave is a good option to protect crucial business information, it can be complicated to handle. There are a few risks to be aware of when considering putting an employee on gardening leave:

The employee refuses garden leave or breaches terms

In some cases, employees may see being placed on garden leave as an unfair restriction on their right to work. For example, if they want to leave your company immediately because they have a new job with a competitor or their new employer is pressing for a start date, they may refuse to go on garden leave or breach the terms of their leave.

If this happens, you can choose to do one of two things: let it go, or pursue your employee through the courts. Not challenging the employee could show the rest of your colleagues that they could do the same, but court proceedings can be long and expensive. 

If you do decide to take legal action, you can apply for an interim injunction. You will need to be able to show that your business has legitimate interests that need protecting, such as confidential information. 

The court will decide whether there will be a detriment to your business if your employee is not put on garden leave, and they will balance this with the impact that garden leave will have on your employee’s future career prospects. 

In many cases, the courts reduce the period of garden leave that’s stated in your employee’s contract. If they have complied with the terms of their contract for some time, you may want to consider whether it’s worth beginning a costly legal battle. Always get advice from your legal team before going ahead.

Poorly managed garden leave terms or contracts

As we’ve already discussed, it’s not a good idea to place an employee on garden leave if there is no clause in their contract. Even if there is a garden leave clause in their contract, you should still keep the period to the minimum that is necessary to protect your business interests.

When gardening leave is poorly managed or imposed, and employees can prove that they have suffered financial loss, they can take you to a tribunal and be awarded damages. The award could run into the tens of thousands, which could have a significant impact on your business.

Garden leave vs. other types of leave

Garden leave has a specific purpose: to protect your business interests during an employee’s notice period, especially when there is potential for them to engage in activities that could harm the company.

So how does it compare to other types of leave? Let’s explore pay in lieu of notice, suspension and annual leave. 

Pay in lieu of notice (PILON)

Pay in lieu of notice, often referred to as PILON, is not to be confused with garden leave. PILON is when an employee is paid the amount they would have earned during their notice period, but their employment contract is terminated immediately. 

PILON is different from garden leave because the relationship between the employer and employee has ended, so the employee is free to work elsewhere. With garden leave, the employee is still employed and technically could be required to come back to work at any point during the period of leave.

You may use PILON when you have made someone redundant, or you have dismissed someone for gross misconduct, and it could be detrimental to your business to have the employee continue to come to work. You and the employee may also agree to this as part of a negotiated exit. It’s covered in the Employment Rights Act 1996, as employees have a right to a minimum notice period. 

Annual leave

Annual leave is a statutory right for all employees. Employees are entitled to a minimum of 5.6 weeks’ paid holiday per year, which equates to 28 days for full-time employees. It’s pro-rated for part-time employees.

If an employee resigns part-way through your company’s annual leave year, you’ll want to calculate their holiday entitlement based on the part year to determine whether they have any annual leave left to take. If they do, you could suggest that they take some of this holiday during their notice period.

Annual leave is not a substitute for garden leave because you cannot legally restrict the employee’s access to certain systems or business information while they are on holiday. Garden leave is usually the best option if you feel you need to protect your business.

Suspension

Suspension is when an employee is kept away from their workplace and must not carry out any duties to allow for an investigation to be carried out. It’s usually used when there have been allegations of serious misconduct. 

Suspension is similar to garden leave in the sense that the employee is still employed and paid their usual salary. However, it’s different because a suspended employee has not handed in their notice, and they may come back to work once the investigation is complete. 

When an investigation has concluded, a suspended employee may face disciplinary action up to and including dismissal if you find evidence of misconduct or if they fail to follow the terms of their suspension. 

You must only use suspension in line with your company’s disciplinary procedure. If you don’t handle this process correctly, there’s a risk that the employee could take you to an employment tribunal.

Practical considerations for employers

Whether you are just beginning to add garden leave clauses into your employment contracts or you are considering placing an employee on garden leave, you want to do your best to protect your business and your workplace culture. 

Here are our HR specialists’ top tips for dealing with garden leave:

Draft clear, enforceable garden leave clauses

Garden leave clauses are most important for senior employees who may have access to trade secrets or client information. Ensure that you have clear clauses written in all senior employees’ contracts, tailoring them to suit their role and notice period. 

Remember to only include a garden leave period that is sufficient to protect your legitimate business interests and won’t unreasonably restrict your employee’s right to leave. Make sure you make new employees aware of the gardening leave clause during the onboarding process to help improve the likelihood of compliance should you need to enact it. 

Focus on morale and business continuity

When you place an employee on gardening leave, it can affect your entire team. Other employees may feel like you’re punishing their colleague, or worry about what will happen if they decide to leave to work for a competitor.

To help preserve morale, it’s a good idea to have a conversation with your team, particularly the exiting employee’s direct reports. Explain what the purpose of garden leave is, and that many employees see it as a time to relax and enjoy their hobbies before they start a new job.

You can also explain that it helps with business continuity, as by placing the employee on garden leave, they are still available to answer questions or complete a handover if you need them to.

So, garden leave can be an effective way to protect your business during periods of change, particularly when a senior employee is moving on. Used correctly, it allows you to limit access to sensitive information, preserve client relationships and provide a buffer period to organise a smooth transition.

But it’s not without its risks. If you don’t have a clear garden leave clause written in employee contracts, or if it’s used unreasonably, you may find yourself on shaky legal ground. To use garden leave effectively, ensure your contracts are up to date, your decisions are proportionate, and your communication with both the employee and your wider team is handled with care.

How we can help

We’d always recommend speaking to employment lawyers and your HR team before placing someone on garden leave. At Fitzgerald, our specialists can help you with employee relations and everything else that comes with implementing garden leave. Book a free consultation or call us on 0330 223 5253 to see how we can help.