What is Gardening Leave?

An employee on Gardening Leave works remotely or remains away from work throughout the notice period. Despite being on the payroll and in the process of terminating their employment, the person cannot work or start another job during garden leave.

Knowing Gardening Leave

Garden is commonplace in U.K., Australian, and New Zealand finance circles. Massachusetts became the first state to legalize garden leave in 2018.

Garden leave sounds nice, and an employee may spend their notice time at home, but its restrictions and drawbacks might make it less than ideal.

Garden leave is a protective mechanism for terminating or resigning employees. Once in force, it generally inhibits the person from working for their present company, taking on another job, or working for themselves. Employees often use garden leave to pursue hobbies like gardening. Until leave ends, salaries and perks remain.

Garden leave may be a euphemism for suspension and suggest the employee is unfit for anything other than gardening. Garden leave is comparable to a non-compete provision. This provision requires employees to swear not to work for their present employer’s competitor for a set time after their employment tenure ends.

After a resignation or dismissal notice, garden leave protects an employer’s interests.

Motivations for Gardening Leave

After resignation or dismissal, an employer may place an employee on garden leave. This primarily aims to prevent employees’ negative behavior during their notice period.

The employer may worry that the employee may be uncooperative or negatively impact the workplace. Fearing the employee may influence clients to switch employers, the employer may prefer the employee to restrict client interaction.

A garden leave may give the employee access to knowledge that might benefit the employer’s rivals. Garden leave might help relieve a danger by keeping employees out of the loop until they are contractually free.

Some businesses prefer garden leave to terminating employment with a monetary payout instead of notice since it takes the employee off the market for a while.

Gardening Leave Use and Avoidance

Sometimes a garden leaf is appropriate, sometimes not. When a worker’s job term ends, utilize garden leave. When deciding whether to utilize garden leave, evaluate the employee’s departure’s effects. Ask these questions:

• Will the employee’s leaving put the business at risk?
• What will the employee’s departure transition be like?
• Does the law prohibit garden leaves?
• Why should the garden season be so long?

Companies should be cautious when enforcing garden leaves because of the cost of carrying a vital employee who is not working. Companies may be unable to enforce garden leave legally. Thus, a corporation must weigh the financial, legal, and commercial benefits of maintaining an employee on garden leave before doing so.

Rights and Obligations

An employee can get income and benefits on garden leave; however, bonuses and accrual payments may not be applicable according to their work contract.

A garden leave usually prohibits an employee from accessing the employer’s data and computer system or contacting clients, suppliers, or coworkers. This phase frequently requires employees to relinquish laptops, cell phones, and automobiles.

The garden leaver must be available to the employer for information, assistance, or to return to work. Therefore, employees should not travel on garden leave without company approval. The company may also require the employee to use holiday time during garden leave.

You may also hear it called “garden leave period” or “gardening leave.”

Gardening Leave Clauses

New hires should sign a contract with a garden leave clause, but it’s not required. Senior management and executive contracts generally have a well-drafted garden leave clause. A firm that implements leave without one risks a breach of contract claim.

Some contractual clauses are complex to sign. Bonus- and commission-based workers may be able to argue a condition because their incentive is dependent on their work. Both parties may sue in certain circumstances.

Pros and Cons of Garden Leave

Employer

There are several reasons a corporation may employ a gardener. This is a defensive measure to keep an employee available throughout a changeover. As employees leave, it may affect client interactions and goodwill.

During a garden leave, the departing employee may have limited access to the premises, files, or critical corporate information. This safeguards a corporation from unauthorized use of this information once an employee leaves.

The expense is the main drawback. Maintaining an employee on garden leave, especially a C-suite executive, might result in excessive wage expenditures due to low productivity. Legal issues, public impressions, and employee retribution must be considered even when under contract.

Garden Leave—Employers

Pros

• Guarantees an employee’s availability for questions before leaving
• It helps consumers avoid stealing customers before leaving.
• Maintains responsibility transfer
• Prevents departing employees from accessing critical corporate data
• It may keep employees from joining competitors.

Cons

• Costly, especially for executive garden leave.
• Receives income but produces nothing.
• Compliance with complex, shifting legislation may limit garden leave.
• Possible detrimental influence on potential employees’ perception

Employee

Employees see it differently. Work terms provide meaningful, paid work until a specific contract date. The employee’s duties generally diminish during this time. Employees can explore other jobs during garden leave, but beginning a new job is limited. During garden leave, employees frequently receive commissions and bonuses.

On the negative side, employees may be unable to switch jobs or work for a rival. A salaried employee may not be satisfied with not contributing to an organization’s success. If prohibited from associating with colleagues they have built ties with, an employee may leave a firm with a negative taste.

Employees’ Garden Leave

Pros

• Receives fixed-term paychecks
• Working little hours for continual pay is expected.
• May seek (but not start) other jobs on garden leave.
• May receive incentives and commissions on garden leave.

Cons

• Limited in time and ability
• They may not be satisfied with not “earning” their wage.
• Long (90-day) garden leave may stall professional advancement.
• It may be bad if the individual is fired without their choice.

U.S. Garden Leave

According to the Associated Press, Massachusetts became the first state in the U.S. to provide paid leave to workers who leave their jobs after passing the garden clause provision in mid-2018. The new rule requires garden leave recipients to receive at least 50% of their base income.

Illinois enacted the Freedom to Work Act in 2021. Illinois companies cannot bind employees to non-compete and non-solicitation agreements; however, the IFWA never mentions “garden leave.”This legislation would affect garden leave restrictions.

Garden legislation remains illegal in several New York financial businesses. The New York State Bar Association Rules of Professional Conduct prohibit garden leaves. This regulation bans an agreement that bars a former lawyer from practicing law for a specific time.

Example of Garden Leave

The SEC released Exhibit 10.3 from UniQuire, Inc.’s separation agreement with its former COO. It laid off its workers in August 2019. According to the agreement, the separation letter required is:

• A garden leave from Aug. 19 to Aug. 31 (resignation date)
• The COO won’t have access to corporate facilities or electronic systems during the leave.
• The Chief Executive Officer will require appropriate advice and assistance during the garden leave time.
• During garden leave, only corporate executives should transact business.

Do people do what during garden leave?

Most workers must do little or nothing during a garden leave. They will be on the firm payroll for a set duration. They may not be contractually required to complete all past employment duties. Employees on garden leave are regularly told their responsibilities.

Starting a New Job on Garden Leave?

A corporation and employee often contract for garden leave. While on garden leave, employees can look for other employment, but courts have considered it a contract violation if they do.

Does America Have Garden Leave?

Yes, Americans have garden leave. In 2018, Massachusetts legalized the idea, which has now spread to New York and Illinois.

What Are the Garden Leave Rules?

Different jurisdictions have different garden leave laws. Garden leave rules usually demand 30–90 days’ notice of resignation. This period keeps the employee on the payroll but relieves them of their obligations. During garden leave, employees may not be able to return to work and may only be able to interact with certain coworkers.

Bottom Line

A firm may place a departed employee on garden leave to safeguard corporate assets and commercial interests. This paid leave generally lessens the employee’s workload before their anticipated resignation. Employees will also have several constraints on what they can do, access, and interact with before leaving.

Conclusion

• Garden leave keeps terminated staff on the payroll but away from work.
• Employees cannot work for themselves or their competitors on leave.
• Garden leave protects employees from damaging the workplace and stealing sensitive secrets.
• Garden leaves frequently prevent employees from entering business buildings, accessing private data, or conversing with coworkers.
• Massachusetts implemented garden leave in mid-2018, although the U.K., Australia, and New Zealand use it most.