Garden Leave

There can be many reasons why an employer may not want an employee to work through his/her notice period. The employee may be demotivated or disgruntled, and the presence of the employee could be disruptive to other staff. The employer may be worried about the employee misusing its confidential information, or simply being unproductive. Alternatively the employer may want to be able to recruit a replacement to start work as soon as possible and feel that the notice period will cause an unnecessary delay in the progress of business. There are a number of options available to the employer:

i. Negotiate an early release from the employee, agreeing to release him/her from the need to work the notice period. In practice it is very unlikely that an employee would agree to this without some financial incentive being offered;

ii. Terminate the employment and make a payment in lieu of notice - the problem is that this may sometimes amount to a wrongful dismissal, and a wrongful dismissal may stop the employer being able to enforce the post-employment restrictions (such as on competitive employment).

iii. Use a Garden Leave Clause in the contract of employment (see PAYG contract of employment). This will allow the employer to require the employee to stay away from work but still be an employee for the whole (or remainder) of his/her notice period.

The employer will have to continue paying the employee’s salary and benefits until the end of the notice period, but it will effectively prohibit the employee from going to a competitor or set up in competition for the notice period – while similarly keeping him/her away from any disruption in the workplace. This is a contractual clause that should always be inserted into the contract of employment of a senior member of staff, such as a manager or director. (see PAYG contract of employment).