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Topic: Contractual clauses

garden leave clause
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Garden leave clause

Garden leave clause

A garden leave clause enables you to place an employee on leave during the notice period following either their resignation or dismissal with notice. It is used as an alternative to the employee working out their notice period or paying them in lieu of notice.

What is garden leave?

Essentially, garden leave enables you to require an employee not to attend work and instead to stay at home “in the garden” for the whole or a part of their notice period whilst at the same time receiving their normal pay and contractual benefits. Garden Leave clauses are more common in the contracts of senior employees or sales staff, where you need to sever their links with your important clients or customers or indeed fellow employees, or where there is a threat to your confidential information. It’s unlikely you will need a garden leave clause for a junior non-sales employee. As the employee is still employed by you whilst on garden leave, they are still bound by their duties of loyalty, fidelity and confidentiality. One of the consequences is that they cannot work for another employer and neither can they work for themselves, for example by setting up a rival business, until the notice period has expired. Thereafter, they might still find themselves subject to restrictive covenants if these have also been inserted into their contract of employment.

Garden leave or PILON?

In most cases, an express garden leave clause will be needed if you wish to have the power to require the employee to stay away from work (or to carry out lesser duties, for example at home) during their notice period. Employment tribunals are extremely reluctant to imply garden leave clauses into the contract, particularly if the employee needs to perform work in order to be paid, for example where pay consists in part of commission or bonus which depends on work actually done. If you are concerned about the damage an employee could do to your business if they were either to work out their notice period or to be released early from their notice period (by payment in lieu of notice) to immediately go and work for a rival employer, consider using our garden leave clause as a third option.

Our clause also includes a number of steps that you might wish to take at your discretion during the garden leave period, such as requiring the employee to: stay away from the workplace; resign from any directorship or other office; return any company property and delete or destroy any company information; perform alternative job duties; abstain from contacting fellow employees and clients, and take any accrued but untaken annual leave entitlement.

 

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