When is it OK to use garden leave? A small business guide

With very little to do with gardens and quite a lot to do with employment contracts, garden leave is something you might use when someone is leaving your small business.

This can protect the company by restricting access to sensitive data and limiting the time they have to set themselves up with a competitor.

So if you employ people – or think you might do in the future – here’s how gardening leave works along with some of the benefits.

What is garden leave?

Garden leave, or gardening leave, is when an employer doesn’t allow an employee to work during some or all of their notice period – but will still pay them as usual.

Whether because they’ve resigned or you’ve terminated their contract, there are times when it might make sense to put someone on gardening leave.

Gardening leave restricts someone from:

• coming to the workplace
• working elsewhere (either from home or another location)
• doing any work for the business (unless asked to)
• contacting clients, colleagues, or other contacts
• using business equipment and tools
• starting another job

You can only use gardening leave if you’ve included this clause in their employment contract.

As with a notice period, gardening leave is usually between one and three months.

Photograph: kerkezz/stock.adobe.com

Why is it called gardening leave?

Some sources say that the name comes from the idea that you’d have more time for hobbies – which might include gardening.

And while the name ‘gardening leave’ might sound like a luxurious concept, it’s one that an employer will want to think carefully about before using.

Essentially you’ll be paying someone but they won’t be doing any work for you. It’s usually something reserved for more senior people in a company, or those with access to sensitive information.

Garden leave vs notice period

Garden leave is an alternative to working through a notice period, which a company might decide to impose to protect its interests.

Let’s imagine you employ a senior sales person who manages important contracts with retailers or customers. If they decide to leave your business (or they’re dismissed) then there could be a risk that they try to set up a competing business and take your contacts you’ve worked hard to build.

Placing them on gardening leave is a way to keep them away from your company for a length of time, so any knowledge and contacts they could take with them would be limited.

The downside of course is that you’re paying someone to do nothing, which could impact your bottom line.

You could also look at other post-termination restrictions you might have in their employment contract. These are extra clauses around confidentiality and non-compete agreements to further protect your business after someone leaves.

Gardening leave employee rights

You can only use gardening leave if it’s included in the person’s employment contract.

They’ll still be paid and get any other benefits covered in their contract.

The employee is still employed while on gardening leave and isn’t allowed to work for you (or another company), or set up another business.

An employee can also ask to be put on garden leave when they resign – but the employer has the right to refuse.

Garden leave constructive dismissal

Putting an employee on gardening leave when it’s not in their employment contract could constitute constructive dismissal.

Breaching a contract like this could lead to an employee taking you to an employment tribunal. That’s why it’s important to have employers’ liability insurance to protect your business (plus it’s a legal requirement if you have staff).

Can I go on holiday during garden leave?

People on gardening leave are usually expected to be contactable by their employer, even if they’re not working. If they want to take a holiday or go abroad during this period then this would need formal approval from you as the employer.

That said, you could ask them to use their holiday as part of their notice period (or pay them for what’s left when their contract ends).

Is garden leave paid?

Garden leave is paid and the departing employee will receive their salary as usual during that period.

Can legal expenses insurance cover an employment dispute?

It’s important to have the right protection for you and your business, just in case you face something like an employment dispute.

If you have legal expenses insurance as part of your Simply Business policy, you have access to a number of useful services through DAS Businesslaw (you’ll just need your voucher code found in your policy documents to register).

DAS has a legal advice helpline, available whether you’re facing a serious legal issue or just want to check something with an adviser. They also offer a range of legal templates and guides to help you with employment.

More guides to help you run your business

• How to develop a recruitment and selection process
• A business guide to HR resources and processes
• What is a staff handbook? Create your template
• What is employers’ liability insurance?

Have you used gardening leave before? Let us know your experience in the comments.

This article is intended as a guide. Make sure you speak to a legal or HR professional if you’re not sure of anything.

Photograph: Liubov Levytska/stock.adobe.com