Garden leave or Gardening leave is where your employee is not required to attend the workplace but continues to receive their full pay for the duration of their notice period. A garden leave clause is outlined in employment contracts and is enforceable when an employee resigns or is terminated and is required to stay away from the office. The employee does not need to perform their duties during this notice period. It is a protectionary measure that was created to prevent employees from taking proprietary information to competitors. Garden leave is mainly used in Australia, United Kingdom, and New Zealand but it was also introduced in Massachusetts in 2018, thus becoming the first state in U.S to have it.
Understanding garden leave in Australia
Garden leave is when an employee leaves a job and is required to stay away from work during their notice period. They receive their full pay and can work from home or not at all. Employees are physically cut off from work and the office space and communicating with certain colleagues.
It is a precautionary measure taken by employers to protect confidential information. It does not indicate mistrust or that the employee has committed some indiscretion but is a measure to ensure company information is protected. It also allows the employer to recall the employee back to work if urgent / they fall short on staff or need someone to cover shifts.
Why is it called garden/gardening leave?
As the employee cannot take up work elsewhere or work from home, they have time to take up hobbies (such as gardening) while getting paid. It is called garden leave, gardening leave, or gardener’s leave. Initially the term had negative connotations, implying that an employee was suspended and is unfit for anything other than tending to a garden.
Reasons for garden leave
If an employee has resigned or been dismissed, you may consider putting them on garden leave. This will act as a safeguard against future repercussions or any sabotaging behaviour the employee may indulge in. Garden leave allows you to change or remove the employee’s access to confidential information. This can include financial information, account details, credit card access, client details, etc. Similarly, you can add a no-compete clause or restraint of trade clause in the employment contract which prevents employees from leaking or sharing information with competitors.
Benefits of a garden leave clause
Having an employment contract that consists of a garden leave clause can benefit you and your business. If you are hiring an executive or manager who has access to sensitive information, a garden leave clause is essential.
Other benefits include:
- Protects essential client information.
- Allows you to manage and control access to all information and systems.
- Creates a period in which the former employee cannot work for competitors.
- Ensures you part ways on good terms.
- Ensures the employee can work from home or other locations and continue getting paid.
- Prepare for all eventualities.
If the separation is due to a hostile situation, it allows for both parties to separate without creating financial complications.
Things employers need to remember
Not all employees can be put on garden leave. As an employer, you must remember to ask yourself few questions before you put an employee on garden leave:
- Is the employee leaving on bad terms?
- Is the employee going on to work for a competitor?
- Will the departure of the employee expose the business to risk?
- Are there legal restrictions in place preventing garden leave?
- How will the transition period look like?
- What will the duration of the garden leave be?
- Do I have an existing Garden Leave clause in the employment contract?
Employees continue to be paid even when they are on garden leave. So, before you place any employee on garden leave, you must consider this additional expense and its impact. You also need to confirm with your legal team or get legal advice if this employee can be placed on gardening leave.
Things employees need to remember
The employment agreement must set clear terms for employees during their garden leave.
Some things employees need to remember:
- They must abide by the terms of the employment agreement.
- They must be contactable during the notice period.
- They cannot work for another employer during the notice period.
- They continue to receive pay.
- They may receive holiday pay and sick leave if outlined in the contract.
- They cannot be placed on gardening leave indefinitely or for an extended period.
- They cannot be forced to go on garden leave.
Grow with Peninsula
If you require further assistance understanding different types of leave and how they impact your business, you can reach out to Peninsula. Call our 24/7 Advice Line today to get all your tricky questions answered.