The Good Work Plan: defining employment status
Garden leave applies during notice periods – either when an employee has handed their notice in or you’ve given them notice – and is when employees are told not to work.
Typically, garden leave is used when an employer has reason for not wanting an employee to remain in the workplace for the duration of their notice period. This could be for a number of reasons, like:
In some cases, employees can become disruptive during their notice period, because they know they won’t be around for much longer.
You may find they become decreasingly productive in their own role, which may rub off on their co-workers. Worst case, if they’re disgruntled, they might begin spreading negative gossip, and impacting your team – or business’ – morale.
Going to a competitor
If the employee who’s leaving is heading to a competitor and they handle confidential information, you might choose to place them on garden leave to restrict their access to such data.
Sometimes, employees may ask to be put on garden leave themselves. This might be because they don’t feel they have a purpose in the workplace for the duration of their notice period, or to escape any potential hostility, for example.
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Before placing an employee on garden leave, you must:
If you place an employee on garden leave without securing agreement in advance, you could be in breach of contract. The knock-on effect of this is that they may treat themselves as no longer bound by the terms of the contract, and take up a new job before the garden leave period expires.
Employees who are on garden leave have all the same rights as they would during a traditional notice period – the only difference is that they’re not in the workplace.
This means they still have the right to all the terms and conditions as set out in their contract of employment, the same salary and benefits, and should continue to accrue annual leave.
Similarly, the expectations you as an employer place on the employee remain the same. Just because an employee is on garden leave, it doesn’t mean they can breach confidentiality or be disloyal to your business.
If an employee breached these expectations while on garden leave – by disclosing confidential information, for example, you may be within your rights to proceed with disciplinary action, which could lead to dismissal.
Employees should not take up new employment while on garden leave. If they do, it’d be a breach of their contract and you could sue them for it. Before going down this path though, really consider whether it’s worth the time, money and management involved.
For example, for an employee who’s on £20,000 a year and serving a one month notice period, it might not make financial sense to try and sue them. However, for a senior co-worker who’s on a six-figure salary and has access to confidential data, it might warrant the financial cost.
If, for whatever reason, you don’t want to place an employee on garden leave, you could consider giving them pay in lieu of notice.
This is where an employee’s employment immediately comes to an end, and you pay them what they would have earned during their notice period.
However, with pay in lieu of notice, employees are free to start new employment right away.
Because employees are stripped of their terms and conditions, benefits and ability to accrue annual leave with pay in lieu of notice, it’s essential that you have a contractual right to terminate their employment in this way.
If you don’t have an express right, you could run the risk of the employee claiming for financial loss against any and/or all of these areas.
As with garden leave, it’s best that this right is expressed in their contract of employment, and if it’s not, their agreement to the arrangement should be recorded in writing.
If you’re contemplating placing employees on garden leave or giving them pay in lieu of notice, here at Citation, we’d always recommend seeking legal advice first.
Whether it’s help putting watertight contracts together or working out pay entitlements, we’re here to give you peace of mind. Get in touch with our HR & Employment Law experts on 0345 844 1111 or email@example.com to see where we come in.
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