What is garden leave?

When a team member announces their departure, it can lead to a range of logistical and strategic challenges for an organization. Questions may arise about how to protect sensitive information, maintain team morale, and ensure business continuity during the transition. These moments require careful planning to minimize disruptions and safeguard company interests.

One approach to managing these concerns is garden leave. This practice prevents departing team members from working while still on payroll, reducing the risk of sharing sensitive information, like client details, pricing strategies, or trade secrets. Research reveals that 90 percent of organizations with a garden leave policy cite confidentiality and non-compete enforcement as key motivations.

In this blog, we’ll define garden leave, explain how it works, and cover its advantages and limitations for employers and their people. 

What is garden leave?

Garden leave, also known as gardening leave, is a practice that occurs after an employee has resigned or been terminated. The individual remains legally under contract and continues to receive their salary and benefits. 

However, they are instructed not to work during this time and are typically restricted from accessing company resources or engaging with colleagues or clients. They are also prohibited from starting employment with another company until the garden leave period ends. 

This approach helps companies protect sensitive business information, implement succession plans, and transition responsibilities smoothly. The idea is that by the end of the garden leave period, any knowledge the team member holds will have diminished relevance or value, reducing the organization’s risk.

Garden leave vs. non-compete agreements

Garden leave and non-compete agreements exist to protect business information by ensuring a team member doesn’t immediately work with competitors after leaving their job. Garden leave periods are typically shorter than non-compete agreements, lasting from a few months to a year, during which the individual remains a paid team member of the organization.  

Non-compete agreements rely on contractual clauses that restrict individuals from working in certain roles, industries, or locations for several years after leaving a company. Unlike garden leave, non-compete agreements don’t include ongoing payment during the restricted period.

Reasons for implementing garden leave

The top reasons organizations implement garden leave include: 

• Limiting access to sensitive information: Garden leave agreements restrict the leaver’s access to new confidential business data and prevent them from sharing existing knowledge with competitors.
• Restricting negative statements: Garden leave agreements often include nondisparagement clauses, preventing people from publicly making negative statements that could portray the employer in a false light.
• Maintaining a positive work environment: Garden leave can reduce disruptions and maintain harmony. Some companies may offer it to support the leaver while they’re looking for a new role. 
• Protecting the organization: After a team member’s termination or resignation, organizations use garden leave to prevent harmful decisions by the person.

Rules for garden leave

Your people’s employment contracts must contain a valid garden leave clause for you to implement garden leave and enforce it in court. The clause typically states details like the duration of the garden leave period, what the person can and cannot do during their leave, and what they receive. 

What can employees do during garden leave?

Employees are allowed to: 

• Receive salary and benefits as outlined in the employment contract
• Look for new employment opportunities, as long as there are no contractual restrictions 

They’re usually not allowed to: 

• Take a job with a competitor or start a competing business
• Use the employer’s data, systems, or confidential materials 
• Initiate contact with clients, suppliers, or coworkers 
• Disclose confidential information about the company 

Who is given garden leave? 

Employers may place departing team members on garden leave if their departure risks exposing sensitive business information to competitors. This practice is most common for senior leaders, executives, or directors with access to high-level data. Garden leave can also be used when continued interaction with colleagues or clients might lead to poaching risks.

Companies can also give garden leave to people who request it when leaving the organization on good terms. A team member can negotiate with the HR team to use part of their notice period as gardening leave.

How long is a garden leave period?

HR teams consider a person’s level of seniority and employment contract when determining their garden leave period. The duration of garden leave can be a few weeks for junior team members and a few months for senior management. For top-level executives such as a chief operating officer (COO), the garden leave period can last up to a year. 

What are an employee’s rights during garden leave?

Team members on garden leave have the right to receive their full salary and contractual benefits, including pension, retirement, accrued allowances, and vacation time. 

People also have the right to challenge their garden leave clause if they’re not receiving payment and if their employer’s restrictions are unfair. For example, overly broad clauses that prevent a person from finding future work or limiting their professional opportunities without justification can be contested.

The pros and cons of garden leave

Garden leave protects the organization and potentially increases employee satisfaction if handled well.  However, it can also come with some challenges for the organization and the leaver. 

Benefits for employers

• Garden leave prevents departing team members from immediately joining competitors or launching competing businesses, safeguarding sensitive information and business continuity
• It provides a buffer to address any legal matters or disputes related to the resignation or termination
• Restricting contact with clients and colleagues reduces the risk of poaching 

Benefits for your people

• Time to relax, job hunt, or spend time with family while receiving full salary and other benefits
• People can mentally transition from their current role, reflect on their goals, and prepare for their next career step
• Reducing the pressure of immediate work or job hunting, garden leave supports well-being and mental health

Disadvantages for employers

• Organizations must continue paying the leaver during garden leave even though they’re not contributing to the business
• Garden leave doesn’t fully prevent a departing team member from poaching clients or colleagues after the leave ends
• Other team members might perceive garden leave as a lack of trust, which could affect morale or company culture

Disadvantages for your people

• Garden leave can slow a person’s career progression, potentially causing them to miss out on job opportunities during the restricted period
• Being unable to work for the current employer or seek new roles elsewhere may leave team members feeling undervalued

Gardening leave in different countries

Garden leave originated in the United Kingdom and remains a common practice there, governed by specific legal frameworks that require it to be outlined in employment contracts. Other countries have since implemented gardening leave, including: 

United States

Though garden leave is uncommon in the US, about 30 million Americans have signed agreements restricting them from working for competitors after leaving a job. Massachusetts law also requires companies to offer garden leave as an alternative to a non-compete agreement. During the leave, people receive at least 50 percent of their base salary or an agreed-upon amount.  

Australia

Garden leave in Australia is only legal when included in employment contracts and when the garden leave clause complies with applicable employment laws.

Australian organizations usually enforce garden leave after the resignation or termination of team members in high-level or sensitive positions. Like in other countries, people on garden leave in Australia continue to receive pay and are not allowed to work for competitors. Companies also ask people to remain available to answer questions or assist in the transition process.

Singapore

Employment contracts in Singapore must include provisions for garden leave and clearly define the employer’s rights for implementation. Companies may place team members on garden leave as long as they continue providing full salary and entitlements during the leave period.

The garden leave clause requires fairness and reasonableness. For instance, the leave duration should not extend so long that the person’s knowledge or skills become outdated.

Support positive company culture with proper garden leave management

Garden leave can help organizations manage transitions and safeguard sensitive information, but it’s not always the right fit for every business. Consider your organization’s goals and people’s unique circumstances to determine whether garden leave aligns with your needs and values. When handled thoughtfully, it can help organizations maintain stability while allowing departing team members to move on without undue stress.

Garden leave FAQs

Is garden leave legal?

Garden leave remains legal in most countries, provided organizations comply with specific legal requirements. Organizations can only implement garden leave when the person’s employment contract includes a clause permitting it.

Is garden leave a bad thing?

Garden leave is not bad when organizations effectively implement and manage it. When done thoughtfully, with transparency and clear communication, it can protect the company’s interests and allow your people to relax or try out new things while receiving a salary. 

Are you still paid on garden leave?

Yes, organizations pay leavers their full salary during garden leave. The person will also have access to all existing employee benefits, such as health insurance, wellness programs, and pensions. 

Some organizations even allow people to continue using the company car and other amenities during garden leave.

Can you start a new job on garden leave? 

No, you cannot start a new job on garden leave. During the leave period, the team member is still an employee of the company and is not permitted to work for another employer.

Exceptions depend on the garden leave policy. For instance, if the new role holds no direct connection to the current one or if the leave conditions prove unfair, courts may rule the restriction unenforceable.

What is the difference between garden leave and severance? 

Severance involves a one-time payment provided after employment termination, typically as compensation. Organizations opt for garden leave instead of severance if there’s a risk that someone leaving the company may engage in actions or behaviors harmful to the business.