Garden Leave

Garden leave must be expressly permitted by the employment contract; an employer cannot place an employee on garden leave without contractual authority to do so. During garden leave, the employee continues to receive their full salary and contractual benefits and must be available to return to work if requested. Any post-termination restrictive covenants (such as non-compete or non-solicitation clauses) typically run concurrently with the garden leave period, effectively reducing their practical impact. Courts have the power to grant injunctions to enforce garden leave where the employer has a legitimate business interest to protect. The duration of enforceable garden leave is limited — very long periods (over six months) may be challenged as a restraint of trade.

In practice, garden leave is what happens when you resign to join a competitor and your employer decides it would rather pay you to stay away from clients, systems and colleagues than have you working out your notice at your desk. You are still employed, so you still owe the duty of good faith: you must not work for anyone else, poach staff or clients, or take confidential material with you.

Worked example: Daniel is a sales manager on three months' notice with a six-month non-compete clause. He resigns on 1 March to join a rival. His employer places him on garden leave for the full three months, removes his system access, and asks him to remain contactable. He keeps his salary, car allowance, pension contributions and continues to accrue holiday. Because his contract says the non-compete runs from the termination date but gives credit for any garden leave served, his practical exclusion from the market is six months in total rather than nine.

The pitfalls run both ways. Employers who have no garden leave clause and simply stop giving work risk a claim for breach of contract, particularly where the employee needs to work to earn commission or maintain a professional skill. Employees often assume garden leave ends their obligations early — it does not; the contract continues, and taking a new job during it is a repudiatory breach that can trigger an injunction. Another frequent misconception is that garden leave and pay in lieu of notice are the same thing: pay in lieu ends the contract immediately, which can accidentally release you from covenants if the clause is drafted badly.

Garden leave interacts closely with your notice period, any restrictive covenants, and — if the exit is negotiated — a settlement agreement. Before you resign, check what your contract actually says about all three together, and read our guide to garden leave so you know what your employer can and cannot require of you during the period.