Garden leave clauses – an introduction

We’re going to have a look in today’s post at a specific restrictive covenant that may (or may not) be contained within an employee’s contract of employment: the right to place the employee on garden leave during the period of notice.

1. What is garden leave?
2. Why might an employer want to put an employee on garden leave?
3. Does an employer have the right to put an employee on garden leave?
4. Can the right to put an employee on garden leave be challenged?

What is garden leave?

If your employer is attempting to put you on “garden leave” then this means that your employment is terminating and that your employer is attempting to force you to stay away from the office for the duration of your notice period.

Why might an employer want to put an employee on garden leave?

There are a number of reasons why your employer might want to put you on garden leave. This includes:

1. The power to stop you from performing your regular duties immediately (such as speaking to clients, dealing with contracts and transactions etc.)
2. The ability to keep you away from being employed by potential competitors for the duration of the notice period
3. The hope that any confidential information that you may be privy to may go out of date during your period of notice; and
4. To enable your successor to establish good relations with the customers or clients that you dealt with at your employer, so as to protect existing business relationships and goodwill

Does an employer have the right to put an employee on garden leave?

An employer may have an express or an implied contractual right to put you on garden leave.

Express contractual right

This right will be included in your contract of employment (or ancillary documentation). There should be a clause in your contract which allows the employer to withdraw you from your duties and exclude you from the business premises. There may also be an express contractual provision which restricts your ability to pursue other business interests during your employment (to stop you from doing other work during your garden leave period).

Implied contractual right

If your employer does not have an express contractual right to place you on garden leave then they must rely on any implied contractual right. Generally, the courts have held that an employer can not have an implied contractual right to force an employee to go on garden leave during their period of notice. The courts generally focus instead on whether the employee has the implied right to work during the period of their notice. However, the employee will only generally be found to possess this right if they have specific skills which they need to exercise during the notice period (to prevent deskilling), if they are going to miss out on important remuneration opportunities during the notice period (such as bonuses or commission etc.) or if the employee has already demonstrated bad faith during their period of employment.

Can the right to put an employee on garden leave be challenged?

Put simply, yes. In order for this restrictive covenant to be enforceable your employer must be able to demonstrate that:

• Putting you on garden leave is for a legitimate reason and that it is not a disproportionate action in the circumstances – this will normally apply if the employee is seeking to join a competitor and that such employment is likely to damage the employer’s business; and
• That the period of garden leave is reasonable

Redmans Solicitors are employment law solicitors based in Richmond and the City of London.