Garden leave (also known as “gardening leave”) refers to a period when an employee is relieved of active work duties during their notice period following resignation or termination, yet continues to remain on the payroll and under contract with the employer.

Although not required to perform work, the employee is still officially employed and typically receives their regular salary and benefits. The primary purpose of garden leave is to protect the company’s business interests, especially when the employee holds a senior or sensitive role.

Why Do Employers Use Garden Leave?

Employers often use garden leave as a strategic measure to:

• Prevent departing employees from immediately joining a competitor.
• Limit the employee’s access to sensitive data, clients, or ongoing projects.
• Ensure a smooth transition, while allowing the company time to onboard a replacement.
• Maintain employee obligations to the company (e.g., availability for consultation or handovers).

How Long Does Garden Leave Last?

The length of garden leave typically depends on the employee’s:

• Contractual terms
• Seniority
• Access to proprietary information
• Risk of competitive exposure

It may range from a few weeks to several months or more, particularly in executive or highly specialized roles.

Benefits and Drawbacks of Garden Leave

Benefits for Employers:

• Reduces risk of knowledge transfer to competitors.
• Limits internal disruption during a leadership transition.
• Ensures availability of the outgoing employee for assistance, if needed.

Potential Drawbacks:

• Financially costly, as employers pay salary and benefits without receiving active work.
• May create legal risks if not properly documented or applied inconsistently.
• Can impact employee morale or external brand perception if seen as punitive.

Key Elements of a Garden Leave Clause

To be enforceable and practical, garden leave terms should be clearly outlined in the employment contract or exit agreement. Important elements include:

• Duration: Defined start and end dates.
• Duties during leave: Whether the employee is expected to remain available for consultation.
• Restrictions: Prohibition on working for competitors, accessing systems, or contacting clients or colleagues.
• Compensation: Continuation of salary, benefits, commissions, or bonuses where applicable.
• Use of company property: Clear return procedures for devices, documents, or assets.

Garden Leave by Country

• United States: Garden leave is not widely used in the U.S. and is often confused with non-compete agreements. However, it has gained some legal recognition, such as in Massachusetts, where garden leave may be offered as an alternative to non-compete clauses.
• United Kingdom: In the UK, garden leave is common and generally tied to the notice period. Employers must continue paying full wages and benefits, and employees may be restricted from working or accessing systems, even remotely.
• Australia: Garden leave clauses must be contractually agreed upon and cannot be enforced indefinitely. Employees must remain available for contact and cannot work elsewhere during this period.
• Singapore: Similar to Australia, garden leave in Singapore must be supported by a written agreement. Employment law considerations, such as compensation and access to employment, must be observed.

Garden Leave vs. Non-Compete Agreements

Although both tools aim to protect the employer’s interests, garden leave and non-compete clauses differ significantly:

Recent regulatory trends in the U.S., such as the FTC’s nationwide ban on non-compete agreements, may further increase the relevance and use of garden leave clauses as a more enforceable alternative.

Garden leave is a valuable HR and legal tool for managing transitions and safeguarding business interests, especially when dealing with senior leadership or roles involving proprietary information. However, its use must be clearly defined, contractually supported, and compliant with local labor laws to avoid legal risk.

Employers should consult legal counsel when implementing garden leave clauses to ensure clarity, enforceability, and alignment with evolving employment laws.