Last month we wrote about how employers can prepare for employees leaving their workforce during the period of high staff turnover often experienced in January. One of the topics we touched upon in this article was garden leave: a protective measure for employers looking to minimise damage to their business in the event of a key employee’s departure.
Our employment law specialist Mark Rothman explains how garden leave works, what the benefits are, and when it is safe to put an employee on garden leave. He also looks at alternative options in cases where garden leave would not be the best approach.
What is garden leave?
An employee on garden leave receives their usual pay and benefits during their notice period but is prevented from coming into work or performing their duties. The term ‘garden leave’ comes from the idea of having free time to take care of the garden whilst at home unable to work.
Why is it a good idea?
It may seem uneconomical to pay an employee not to do any work, but there are scenarios when choosing to put a key employee on garden leave could be beneficial. In particular, it may be wise if the employee’s contract does not restrict what they can do after leaving the company, or they have indicated that they do not think any restrictions are enforceable.
Putting an employee on garden leave buys the employer time, during which the employee cannot start work for a competitor. During the notice period, the employee’s knowledge of commercially sensitive information may become out of date, thereby limiting its value to any competitor. As a result, the risk of the employee poaching customers and colleagues is reduced, as is the scope for misusing any confidential information.
In a situation where there has been a breakdown in working relations, garden leave can also be useful to help restore harmony to the workplace.
When can you use garden leave?
An employee can only be put on garden leave if there are appropriately worded clauses in their contract entitling the employer to exercise this right. Regardless of whether the employee resigns, or the employer gives notice, garden leave clauses should operate.
What should be included in a contract?
When putting an employee on garden leave, it’s important to make sure the contractual right to do so is in place. For employees in senior or specialist roles in particular, there may be a right for them to be provided with work. In this instance, the employer could be considered in breach of contract if they put the employee on garden leave without the contractual right.
The clause needs to be clearly worded and state, among other things, that the employee cannot carry on other business activities. The garden leave period should not be excessively long, or the employee may be able to challenge it in court.
What if the employee breaches the terms of their garden leave?
Employers should ask the High Court to issue an injunction against any employee found to have ignored the garden leave clause by contacting customers and so on. The High Court will assess whether an injunction is needed to protect the legitimate interests of the employer, such as connections with customers.
Are there any alternatives?
There are less serious alternatives to garden leave which may be more appropriate depending on the individual’s role. Instead, an employer can restrict the activities an employee performs during their notice period, or have the employee perform suitable, alternative duties. Again, this entitlement should be set out in the contractual agreement.
Restrictive covenants included in the employee’s contract of employment aim to protect a business after the employee has left. This allows the employer to prevent an employee from working for a competitor or for contacting customers for a specific period of time. However, the clauses of the contract must be carefully drafted to ensure they are enforceable.
At Jefferies, our team of Employment Law specialists can ensure that key employees’ contracts of employment are appropriately drafted. We can also advise employers who may have concerns regarding the departure of a key employee.
Contact us today by emailing employment@jefferieslaw.co.uk or calling 01702 332 311.