Garden Leave: Meaning, Reasons, Rights and Obligations and FAQs

In the world of employment, when a key person decides to leave the job or is terminated, it becomes a little tricky for the company. That’s where the provision for garden leave comes in. Garden leave helps both the employee and the employer in many ways. Garden leave means the employee will be provided leave till his notice period, in which he does not have to do any company work and is not allowed to meet other colleagues, but he will be paid his benefits and salary. This is helpful for the company because it helps in the smooth transition of that position, the safety of the company’s information which the employee has, and the employee also gets time to find a new job. In this article, we are going to know in detail about garden leave, what are the reasons garden leave is made when to implement it, its pros and cons, etc.

What is Garden Leave

Garden leave is a situation when an employee who has quit the company or has been fired is asked to stay away from work till his notice period. As it is important for the employee to serve his notice period, he cannot quit and has to accept the garden leave. The employee has to stay away from work, and he is not allowed to meet any colleague or any other person related to the organization. He cannot join any other job during this period. The employee is provided with a paid leave, where he will receive his salary and compensation benefits, but no need to do any work. Let’s take a simple example to easily understand this situation :

Ram is a person who has been terminated from the company due to any reason, but his notice period of 1 week is still left. So, the company imposes garden leave on Ram for a week.

• He cannot do any other job till this garden leaves.
• He will be paid his salary or other allowance for this leave.
• He is restricted access to any company information, data or its colleagues during this period.
• He is not allowed to work for the company. During this period, he should be away from what is going on in the company.

Reasons for Garden Leave

There might be many reasons for assigning garden leave. Some of them are:

1. Protection of Confidential Information: Institutions use garden leave as a way to protect their secret information from being shared. During this period, the employee is paid for leave but is not allowed to come near the company or contact someone from the company. They are also not allowed to join another company. For example, if an employee works for a bank and decides to quit, the bank may put them on garden leave for a few weeks or months. During this time, the employee cannot access the bank’s systems, documents, or clients. They also cannot start working for another bank or financial institution. This way, the bank can protect its confidential information and business interests.

2. Non-Compete clause: Non-Compete clause is an important term in the employment contract, which states that an employee is not allowed to join a similar or competitor company and also cannot start a similar business. Because, if employees have proper information and experience in some company, then they could use that information in a way which could harm the company. To prevent that, this clause is made and Garden leave is a way of enforcing this clause.

3. Strategic planning: Garden leave is a reason for getting time for strategic planning. It may happen that the person leaving is a senior executive in the company. So, the company needs time to maintain work dynamics, think about the future goals, and find a replacement for that employee. This way, the company can decide how they can function smoothly even in the absence of a key person.

4. Protect the employer’s reputation and goodwill: It may happen that the resigning employee is unhappy with the company so he/she may try to damage the company’s image by false claims, false rumours or negative feedback about the employer, which might tarnish the employer’s reputation or credibility among the public, the media, or other stakeholders. But, because he/she is on garden leave and is not resigned till the notice period so employee cannot cause any harm. In this way, garden leave protects the employer’s reputation.

How to decide whether to impose Garden leave?

You can follow some simple steps to decide if garden leave should be imposed:

Step 1: Review Employment Contract and Legal Compliance

The first thing is to check in the employee’s employment contract whether there is any clause or provision for garden leave or not. Because it’s important that employee is told about all clauses at the beginning of joining the organization. If it has provision for garden leave then you can check other things. If there is no clause regarding garden leave then it’s necessary to receive the employee’s consent on it or some incentive or compensation needs to be offered to follow the conditions of garden leave.

Step 2: Calculate the Risk

This step involves calculating the risk or harm, which the employee can cause if they join a competitor or disclose confidential information. You should consider factors like how strong the employee’s relation with the clients, his role and responsibilities, how much data he has access to, how important is that data, his knowledge in the industry, etc. After observing these, if the risk is high, then it’s important to impose garden leave.

Step 3: Evaluate the Cost

The next important thing is the cost, consider the financial impact on the organization if employees are paid salary and benefits without any work done or getting any output. Also, consider the amount spent for the replacement of his position during the garden leave period and the value that the employee is bringing to the organization. If the risk is high but the cost spent is low then garden leave is a good option and vice versa if the risk is low and the cost is very high then not imposing garden leave is better.

Step 4: Proper communication with employee

If the decision is made, then it should be clearly discussed with the employee. During the conversation, try to reach a mutual agreement between the employee and employer to avoid any further problems for both. If the employee disagrees or disputes garden leave, the employer may need to seek legal advice or mediation. Both parties should try to resolve any conflicts by negotiation if occur.

Rights of an Employee during Garden Leave

1. Continuation of Compensation: Payment of salary and other benefit during leave. It is important because the employee is part of the organization during the garden leave, so to maintain financial stability his salary is paid till the notice period.

2. Job search Opportunity: The employee does not have to follow any daily job responsibilities so he is free to search for new employment options which he is going to pursue after the period of garden leave.

3. Preservation of Reputation: Maintaining the corporation’s reputation as an employee is employed( not physically) during this period. Do not engage in any task which will affect the reputation or dignity of the company in any form.

4. Access to Benefits: Access to healthcare services like health insurance and other employment benefits like rent is unaffected during the period of garden leave.

5. Professional Development: Some companies may provide opportunities for training or professional development during garden leave.

Obligations of an Employee during Garden Leave

1. Ensure Confidentiality: Cannot meet, call or engage in any way with the company’s clients, colleagues and their data & information. This is done to protect the company’s sensitive information from being shared with anyone.

2. Non-Compete Agreement: This means an employee cannot join any competitive company during the period, he cannot do anything which would directly or indirectly affect the company’s interest. He also cannot start a business in a similar field.

3. Non-Solicitation: During garden leave employee is not allowed to talk to any of his clients, and he cannot raise any false claims or negative feedback against the employer.

4. Return of Property: The departing employee is obligated to return all company documents, materials, and property before the conclusion of the garden leave.

5. Legal Compliance: Compliance with legal obligations, including fulfilling notice periods and other contractual agreements, is an obligation during garden leave.

Garden Leave Clauses

1. Notice Period: It’s specified in the employment contract, it is defined as the time for which an employee has to serve for the company. After the notice period, any transition could occur. It is a mutually agreed time period by both employee and employer, which is decided at the beginning of work.

2. Salary and Benefits: This clause of the garden leave ensures that the employee will receive salary and all benefits during the garden leave period this is because till this time employee has not resigned from the company, And compensation is necessary for his financial stability.

3. Non-Compete: As we know now, one of the main purposes of garden leave is that employees won’t share any secret information about the company with any competitor company. So, the Non-Compete clause of garden leave ensures that employees will not join any organization during this period.

4. Confidentiality: It means that employees have to keep the confidentiality of the sensitive information related to the company and make sure he should not share that information with anyone during garden leave

5. Non-Solicitation: This clause prevents the employee from soliciting the clients or the customers of the company. It was formed because there were some employees who had direct contact with the clients, so unhappy employees could spread fake information to clients to solicit them.

6. Return of Property: It means that the employee must return all the company’s documents, materials, and property before the end of garden leave because at the end of the garden leave the employee has to resign. So, he must return things, which were provided to him by the company before his resignation.

7. Termination: This clause of garden leave states that, the employee can be terminated during the garden leave. So, the garden leave period can be decreased when the employer wants.

Pros of Garden leave for an Employee

• They still get paid their full salary and benefits.
• They have time to look for a new job without rushing.
• Some companies offer training during this time to help them learn new things.
• It’s a break from the stress of the everyday work routine.
• The transition is smoother for both the person leaving and the team.
• They can stay away from office problems and conflicts.
• It’s a chance to think about what they want in their career.
• Leaving on better terms helps keep a good professional reputation.
• They can make new connections for future job opportunities.
• It gives legal protection, making sure they finish their notice period before starting a new job.

Cons of Garden leave for Employee

• He could not contact the colleagues or share any kind of company’s information
• He could not join any new job during this period
• Pros of Garden leave for employer
• It could protect confidential information about the company, so it cannot be misused.
• It would stop employees from joining any rival company to tell secrets.
• It allows for a smoother transition for both the departing employee and the employer

Pros of Garden leave for Employer

• The company maintains control during the transition.
• It prevents the employee from immediately joining a competitor.
• They get time to find a suitable replacement.
• Projects and tasks can be reassigned smoothly.
• It reduces the risk of conflicts in the workplace.
• The departure is more organized and less abrupt.
• Confidential information is better protected.
• The company has time to adjust to the employee’s absence.
• It allows for a structured handover of responsibilities.
• Legal obligations, like notice periods, are fulfilled.

Cons of Garden leave for Employer

• It would be costly for the employer to provide salary and benefits for doing nothing in return.
• Mismanagement of garden leave can lead to legal disputes if the terms are not properly defined.
• Other than this, the costs of recruitment and training will also increase
• Team dynamics will be affected
• Until the replacement is made, the workloads of existing employees will increase

Frequently Asked Questions

1. Is garden leave a legal practice?

Answer: Yes, its legal practice in employment which is based upon terms and conditions in the employment contract.

2. Can an employee work in a new job during the garden leave period?

Answer: No, typically they are not allowed to work during the garden leave period, but it depends upon the clauses of the employment contract. You can seek and apply for a new job during garden leave but cannot join it.

3. Can employers terminate garden leave prematurely?

Answer: Employers have the option to end garden leave early, but this must be done under the terms specified in the employment contract.

4. For how much time garden leave can last?

Answer: It depends upon the employment contract, but generally maximum time is the notice period.

5. Can I refuse to go on garden leave?

Answer: No, garden leave cannot be refused unless it is not stated in the employment contract or the reason for garden leave is invalid.

Conclusion

Hence, we tried to understand the concept of garden leaves in the simplest way. Now we know, it is an employment provision which benefits both the company and the employees because the company get some time for a smooth transition and the employee gets leave with salary. We also understand how necessary is it to read employment contracts before signing for employees. Understanding the legal and contractual aspects of garden leave is essential for both parties involved, and proper communication and adherence to the terms can help ensure a smooth exit process.