A business may have many reasons for placing an employee on garden leave. For instance, it can stop an employee from exploiting confidential information. Read onto discover what garden leave is, its advantages and disadvantages and whether it is really any different from a restraint on trade clause.
What is Garden Leave?
Gardening leave is a type of leave given to employees. It refers to an employee taking paid leave without having to attend or perform any work duties at their workplace, or from home (if the employee works from home). In other words, the employee is paid their normal remuneration to just stay home and ‘tend to the garden‘. Click the link for extra information on gardening leave.
Now, you’re probably thinking – why would I want one of my employers to stay home while I continue to pay them? It’s good question. Below, we will discuss the different reasons and advantages to this type of leave, as well as its disadvantages.
Advantages for Employers
There are many advantages and reasons to having a gardening leave clause in each of your business’ employment contracts, with the main reason being protection. The type of clause can protect your business’ interests in a variety of ways. Typically, employees may be placed on garden clause because they have given notice of their resignation. It is especially common when the employer is aware that the employee is going to work for a competitor. Garden leave clauses work as a type of ‘restraint of trade’ clause and can protect your business by:
- Restraining the employee from exploiting confidential information, such as trade secrets,
- Stopping the employee from soliciting clients or other workers,
- Refraining the employee from working for a competitor business during their resignation notice period.
All in all, a garden leave clause has the intention of keeping the employee at home, in an attempt to stop the resigning employee from obtaining any confidential information. If an employee contravenes the clause, for instance by working for a competitor during this period, they may be in breach of their employment contract.
Disadvantages for Employers
The main disadvantage of placing an employee on garden leave is the requirement to pay the employee their full remuneration and full entitlements whilst they are not attending their employment.
It is important that the employer does not reduce the employees remuneration or entitlements during this leave period, as this can led to a possible claim against the employer for breaching the employment contract.
Does my Employment Contract need a Garden Leave Clause?
It is extremely important that the employer has the right to place the employee on garden leave before doing so. This right does not necessarily arise in every single employment situation. Therefore, it does not form part of the mandatory leave entitlements stated by Fair Work. As a result, there must be either an:
- Express clause in the employment contract or,
- Implied right to place an employee on garden leave.
If the employment contract has a garden leave clause – great, it is likely the employer has this right. However, if this express clause is absent, determining whether an implied right exists can be a tricky and lengthy process. It is always best to write up your employment contract with a provision relating directly to garden leave. The best thing you can do is review your employment contracts and consider speaking to one of our lawyers.
Is there a difference between Garden Leave and Restraint on Trade Clauses?
In short – yes.
A garden leave clause aims to protect the employers interests, especially in the last few weeks of the employees employment. Alternatively, a restraint on trade clause or non-compete agreement aims to protect the employers interest post-employment. In this way, both clauses work hand-in-hand. You should consider including both clauses in your employment contracts for greater protection.
Key Takeaways
Garden leave can be a great way to protect your business. It is a type of leave that requires a resigning employee to stay home during their notice period, whilst they are being paid their normal salary or wage. For employers, it can restrain their resigning employee from obtaining confidential information or working for a competitor before their employment has officially ended.
