Benefits And Disadvantages Of Garden Leave
Garden or gardening leave is a practice used by employers as a way of protecting the organisation. It’s mainly used when key employees leave their jobs, whether by resigning or after their employment is terminated.
When placed on gardening leave, the employee remains on the payroll but is restricted from accessing their workplace.
This practice is meant to ensure that the departure of key employees will have little to no impact on the organisation’s reputation and ongoing success.
What are the Main Conditions of Garden Leave?
When on gardening leave, an employer may require the employee to meet certain conditions. The employer may ask the employee:
- Not to offer any service for the company
- To refrain from using company equipment
- To avoid attending the premises
- Not to contact suppliers, customers, or other employees
Despite all the above, the individual is still considered an employee of the company and will, therefore, continue receiving full remuneration.
While the individual is not allowed to work for a different employer, they should still be available for the employer from whose company they are exiting.
Benefits of a Gardening Leave policy for employers
An employer's main benefit from a garden leave is the ability to protect their businesses.
Placing a key employee on gardening leave prevents them from utilising the up-to-date information that they'll leave with. The employee can, therefore, not start a business of their own out of enmity nor work for a competitor.
A garden leave ensures the employee remains out of the company for a specified period. Once the period is over, the information that was being protected should have become less sensitive or even worthless, allowing the employee to start their own business or work with a competitor.
If a departing employee is causing others in the company distress, then a period of gardening leave can also be beneficial to maintain a happy and healthy workplace.
What is the difference between PILON and garden leave?
Although it often gets confused, there are significant distinctions between the meanings of PILON and garden leave. Both refer to the termination of the employment contract. According to employment law experts, PILON is effective where the employee's contract is immediately terminated. In this case, the employee's usual earnings are paid out for the notice period. In the case of garden leave, the employee is still considered to have an active contract but may not be required to enter the workplace or undertake any work.
Are there any disadvantages to using garden leave as an employer?
There are a few drawbacks that may affect an employer in the event that they have placed an employee on garden leave:
- Though the employee will not be working, they will still be entitled to full remuneration throughout the entire leave period.
- If the employer fails to continue paying the employee during the notice period, an Employment Tribunal may decide to allow the employee to work for a competitor.
- If the notice period exceeds six months, the employer may be prevented from enforcing garden leave for the full period. This is usually because the court determines that the period required to protect the company's business interests is unnecessarily long.
In Summary
Directing an employee to take gardening leave can be a reasonable decision if the benefits of the decision outweigh the associated costs.
However, it’s highly advisable to have a detailed contract clause in place before placing an employee on garden leave.
The contract clause should be tailored to your company or business and its unique requirements. That way, the business owner can avoid a breach of contract claim from the employee placed on gardening leave.
As if that were not enough, contract clauses make it clear to both parties what garden leave means and what each should do in such circumstances.
Bearing in mind that the process of placing employees on garden leave is not straightforward, employers are recommended to seek legal advice in case of uncertainties to avoid legal issues that may arise from not following the right procedures.
