Garden leave (also called gardening leave or a garden leave period) is when an employer requires an employee who has resigned or been given notice to remain away from the workplace for the notice period while continuing to pay salary and benefits. During garden leave the employee typically cannot perform work for the employer, access company systems or confidential information, contact clients or colleagues, or begin new employment. The practice is common in financial and professional services in the U.K., Australia and New Zealand and has begun appearing in the U.S. market. (Source: Investopedia — Yurle Villegas)
Key takeaways
– Garden leave removes an employee from the workplace during their notice period while they remain on payroll.
– The goal is to protect confidential information, customer relationships and the company’s business continuity.
– Employers must generally keep paying salary/benefits during garden leave; other entitlements (bonuses, commissions, vacation accrual) depend on contract language and law.
– Garden leave is most effective and enforceable when included in the employment contract; imposing it without contractual authority risks breach-of-contract disputes.
– In the U.S., garden leave exists primarily by contract and via a limited state law (Massachusetts enacted a garden-leave law in 2018); enforceability varies by jurisdiction. (Source: Investopedia)
Why employers use garden leave
– Prevent the departing employee from taking clients, confidential information or staff to a competitor.
– Minimize risk of sabotage, disclosure or poaching during the transition.
– Remove potential workplace disruption or bad behavior while preserving ability to call the employee back if needed.
– Keep the employee “off the market” for a time so competitive harm is reduced.
When garden leave is appropriate (assessing suitability)
Consider garden leave when:
– The employee has significant client contact, access to highly sensitive or time‑sensitive information, or influence over employees.
– The departure poses a real risk to customer relationships or competitive position.
– The cost of continuing pay without work is justified by the protection gained (senior executives are expensive to place on leave).
Avoid garden leave when:
– The employee’s role is low risk, or the cost outweighs benefit.
– Employment contracts lack a garden‑leave clause and the employer cannot justify the remedy without risking litigation.
– Local law or public policy limits enforceability of the restrictions.
Employee rights and obligations during garden leave
Typical employer-imposed restrictions (subject to contract and law):
– No performance of duties for the employer; no access to company systems, files or premises (except to comply with reasonable requests).
– No solicitation or contact with customers, suppliers or colleagues.
– Requirement to return company property (laptop, phone, cards, vehicles).
– Obligation to remain available for reasonable enquiries and potentially to prepare handovers.
Employee rights:
–salary and benefits during the garden‑leave period unless contract states otherwise.
– The right to be informed of the period, the restrictions that apply, and any expectations (e.g., availability for queries).
– Depending on contract and jurisdiction, they may still accrue vacation and other service‑based benefits—check contract and state law.
Practical advice for employees:
– Get the garden‑leave terms in writing (duration, pay, benefits, restrictions, whether bonuses/commissions accrue).
– Seek legal advice if restrictions seem overly broad or unclear.
– Do not start a new job or consulting arrangement unless you have explicit written permission—doing so may breach contract and forfeit pay.
– Keep records of communications and any requests from the employer during the period.
Understanding garden leave clauses in employment contracts
A robust garden-leave clause should set out:
– Who it applies to (roles, seniority).
– Triggering events (resignation, dismissal with notice, employer-initiated placement).
– Duration and how notice interacts with the clause.
– Pay and benefits during the leave (salary, pension, bonuses, commission accrual).
– Specific restrictions (no new employment, no client contact, limited premises access).
– Return of property and confidentiality obligations.
– Employer’s right to recall the employee if needed.
– Remedies for breach (injunctions, damages).
Practical steps to draft and negotiate a garden-leave clause
For employers:
1. Determine risk profile (client exposure, confidentiality, competitive risk).
2. Draft a narrowly tailored clause: define roles, duration (reasonable length), and scope of restrictions so it’s more likely to be enforceable.
3. Specify pay and benefits during leave (clarify bonus/commission treatment).
4. Include recall rights and obligations for availability.
5. Consult employment counsel on jurisdiction‑specific enforceability and statutory limits.
6. Communicate the clause at hiring for high‑risk roles and negotiate clearly with candidates.
7. If implementing without a clause, consider pay in lieu of notice or negotiated separation agreements to avoid breach claims.
For employees:
1. Read the contract carefully before signing—note garden-leave and non‑compete/non‑solicit clauses.
2. Negotiate limits: shorter duration, narrower client lists, explicit bonus/commission entitlement, permission to travel.
3. If placed on garden leave, get written confirmation of the terms and any required availability.
4. Ask whether bonuses/commissions will accrue and whether accrued vacation will be paid or must be taken.
5. Consider legal advice if obligations are unclear or seem excessive.
Evaluating benefits and drawbacks
Employer benefits
– Reduces immediate risk of leakage of confidential data and client poaching.
– Allows smoother transition without sudden knowledge loss.
Employer drawbacks
– Carries full payroll cost for non‑productive time—expensive for senior employees.
– Public relations or morale issues if perceived as punitive.
– Does not eliminate all risks (employee still under contract may retaliate in subtle ways).
Employee benefits
–salary and benefits while between jobs.
Employee drawbacks
– Restricted ability to work, earn additional income or take another job.
– Possible negative stigma—perceived as sidelined.
– Restrictions on travel or personal plans without employer consent if the contract so requires.
Garden leave in the United States
– Garden leave is primarily a contract-based tool in the U.S.; common practice varies by industry and state.
– In 2018 Massachusetts became the first U.S. state to adopt a garden-leave statute—other states have not enacted similar general garden-leave laws; enforceability and scope remain highly dependent on contract language and state case law. (Source: Investopedia)
Example scenario
– Senior banker resigns to join a competitor. Employer invokes 3‑month garden leave: banker is paid full salary and benefits for 3 months, must return company laptop and access, cannot contact clients or work for any other firm during the period, and must be available for reasonable handover queries. At the end of the 3 months the employee is free to start at the new employer.
What do people do during garden leave?
Common activities:
– Rest, personal projects and travel (subject to employer permission).
– Professional development and non‑conflicting training (if permitted).
– Networking—carefully, within contractual restrictions.
– Preparing for the next role—but not commencing paid work unless expressly allowed.
Note: Employees should avoid any activity that would breach the contractual prohibition on new employment or competition.
Can I start a new job while on garden leave?
– Generally no, unless the employment contract or employer gives written permission. Starting paid work for a new employer during garden leave can breach the contract and expose the employee to forfeiture of pay, disciplinary action, or legal claims.
Do garden leave arrangements exist in the U.S.?
– Yes, but mainly by contract. Massachusetts enacted a garden‑leave statute in 2018; elsewhere garden leave must be specifically included in the employment contract and its enforceability depends on state law and the clause’s reasonableness.
Rules and enforceability
– Best practice: have garden‑leave provisions in the employment contract or reach a written separation agreement.
– Reasonableness matters: overly broad restrictions (too long, too broad geographic/scope limits) may be unenforceable in some jurisdictions.
– Employers should continue to pay salary and benefits as contractually required during the garden leave.
– Consult employment counsel before imposing garden leave to avoid breach-of-contract exposure and to ensure compliance with wage and hour, benefit and local employment laws.
Practical checklists
Employer checklist before imposing garden leave
1. Confirm contractual authority to impose garden leave (or negotiate a separation agreement).
2. Assess cost vs. benefit for the role.
3. Define precise restrictions and duration.
4. Arrangepayroll and benefits; clarify bonus/commission treatment.
5. Secure company systems, revoke access and collect property.
6. Document all communications and the business reasons for the leave.
7. Prepare backup staffing and client communications plan.
Employee checklist when served with garden leave
1. Ask for the garden‑leave terms in writing: duration, pay, benefit treatment and restrictions.
2. Confirm whether bonuses/commissions accrue and how vacation will be treated.
3. Seek legal advice if restrictions seem unreasonable.
4. Do not start new work without written consent.
5. Keep records of employer requests and any communications during leave.
6. Use the time productively within permitted limits (CPD, permitted training, planning).
The bottom line
Garden leave is a defensive employment tool used to protect confidential information, client relationships, and business continuity while a departing employee remains on payroll. It can be highly effective when tailored, documented and supported by a contract, but it is costly for employers and restrictive for employees. Because enforceability and legal duties vary by jurisdiction, both employers and employees should negotiate clear written terms and consult employment counsel before drafting or implementing garden‑leave arrangements. (Source: Investopedia — Yurle Villegas
Editor’s note: The following topics are reserved for upcoming updates and will be expanded with detailed examples and datasets.