Garden Leave: What It Is and Why Contracts Include It
Key takeaways
- Garden leave keeps a departing employee on full pay while they stay away from work during their notice period.
- Contracts include it so sensitive information goes stale and clients stay with the business.
- Employees on garden leave usually must still follow confidentiality and non-compete rules.
Garden leave is a period when an employee stays on the payroll after giving notice or being told to leave, but does not go into work or carry out duties. The employee keeps getting paid. The employer keeps the employee away from clients, colleagues, and sensitive information until the employment formally ends.
The name comes from the idea that the employee is at home, with time to tend the garden, while still employed. The practice began in the British civil service and spread to executive contracts. It is now common in high-tech industries and other fields where staff hold valuable contacts or trade secrets.
This article explains garden leave, including what it is, why contracts include it, what happens to pay and benefits, what employees can and cannot do during it, and how long it usually lasts.
What is garden leave?
Garden leave, also called gardening leave, starts after notice of termination has been given by either side. The employer tells the employee not to attend work, or to carry out only limited tasks, for some or all of the notice period. The employment contract stays in force throughout.
The employee remains an employee during this time. That status matters. It means the contract still binds both sides, and the employee still owes the duties set out in it.
It also means the employee cannot simply start a new job the next day.
Garden leave is not the same as being fired on the spot. It is not the same as paid suspension either. Suspension usually follows an allegation that needs investigation.
Garden leave is a planned step that a contract allows when someone is leaving.
Many contracts include an express garden leave clause. That clause gives the employer the right to vary or withdraw duties during the notice period. Without such a clause, placing an employee on garden leave can breach the contract, according to guidance from People Management.
Employees in that position can ask a court to decide whether the move was lawful.
Why do contracts include garden leave?
The main reason is protection. A departing employee often knows pricing, product plans, client lists, and internal strategy. If that person joins a competitor the next morning, that knowledge walks out with them.
Garden leave puts time between the departure and the next job.
Time makes information go stale. A client list from six months ago is worth less than one from yesterday. A product plan may change.
A pricing offer may expire. Legal Island describes the goal as letting confidential information become "sterile" while the employee waits at home.
Garden leave also protects relationships. While the departing employee is away, a successor can build ties with clients and colleagues. When the former employee is free to compete, those clients already know someone else at the firm.
That lowers the chance of clients following the departing employee.
Contracts also include garden leave to support other restrictions. Many employment contracts carry non-compete clauses, non-solicit clauses, and confidentiality duties. Garden leave often overlaps with these clauses or supplements them, according to Wikipedia.
The waiting period gives those clauses real force instead of leaving them as words on paper.
There is a fourth reason that gets less attention. Sometimes a departure follows a breakdown in working relations. Removing the employee from the workplace can restore calm for the remaining team.
It can also prevent careless work, or worse, by someone who has already checked out. Paying the person to stay home can be cheaper than the damage of a bitter final few weeks.
What happens to pay and benefits on garden leave?
The employee continues to receive normal pay during garden leave. Benefits usually continue too. Holiday entitlement keeps accruing.
Pension contributions normally carry on. The exact package depends on the contract, so the wording matters.
This is what makes garden leave different from an unpaid break. The employer pays for the restriction. The employee gives up the freedom to work elsewhere for that period.
The arrangement is a trade, and the pay is the employer's side of it.
Bonuses are the usual gray area. Some contracts pay bonuses only to employees who are actively working or still employed on a set date. Others treat garden leave as active employment for bonus purposes.
Anyone facing a long garden leave should read the bonus clause closely, or ask for advice, before assuming a bonus will arrive.
What can and cannot you do on garden leave?
Most garden leave letters set clear limits. The employee is usually forbidden to contact fellow employees, clients, or suppliers about work. Access to company documents, email, and systems is usually switched off.
The point is a clean break, not a slow fade.
The employee also usually cannot work for anyone else during garden leave. Starting a rival business is normally barred too. The contract still applies, and the duty of confidentiality still applies.
A breach can put the pay at risk and invite legal action.
What the employee can do is use the time. Many people treat garden leave as a paid pause. Some rest after an intense role.
Some study, train, or plan a next step that does not breach their restrictions. The term "garden leave" hints at this calmer side, even if the real reason is commercial.
One practical point matters here. The employee should keep the employer's property and return it when asked. Laptops, phones, passes, and documents usually go back at the start of garden leave.
Keeping them can look like a breach of trust.
How long does garden leave usually last?
The length depends on the contract and the notice period. Garden leave normally runs for some or all of the notice period. It ends when the employment ends.
In practice, periods of three to six months are common for senior staff, according to a legal analysis published by the Potchefstroom Electronic Law Journal. Shorter periods are common for junior roles. Very long periods are harder for employers to justify, because courts can weigh the harm to the employee against the employer's need for protection.
Length also depends on how fast information goes stale in that industry. In fast-moving tech markets, a few months can be enough. In industries with long sales cycles, an employer may want a longer buffer.
The contract sets the ceiling, and the employer chooses how much of it to use.
Garden leave vs non-compete clauses
Garden leave and non-compete clauses are related but different. Garden leave applies during the notice period, while the person is still employed and paid. A non-compete clause applies after employment ends, and often without pay.
Employers sometimes use both. The garden leave period can run first, and the non-compete period can follow. In some contracts, time spent on garden leave counts against the non-compete period.
That detail can shorten the total time away from the market, so it is worth checking.
Non-compete clauses are also under pressure in several countries. Some jurisdictions restrict them or ban them for most workers. Garden leave faces less of that pressure, because the employee keeps getting paid.
That is one reason employers keep garden leave clauses even where non-competes are weakening.
What to check before you sign
A garden leave clause deserves a close read before signing any contract. The first thing to check is whether the clause exists at all. Some contracts have no garden leave clause, which changes what the employer can do later.
Next, check the maximum length. A six-month garden leave clause on a junior role is a heavy restriction. A three-month clause may be more reasonable.
Length should match the seniority of the role and the sensitivity of the information involved.
Also check whether garden leave time offsets a non-compete period. Check what happens to bonuses, commission, and share options during garden leave. Check whether the clause lets the employer call the employee back to work, and whether the employee must stay available.
These details decide how the clause feels in real life.
Finally, remember that garden leave rules vary by country. The law in the United Kingdom, where the practice is well established, differs from the law in the United States, where a departing executive may instead stay on as a consultant or special adviser. Local law and the exact contract wording decide what applies.
This article is general information, not legal advice.
Frequently asked questions
Is garden leave the same as being fired?
No. Garden leave follows notice from either side and the employee keeps getting paid. Being fired ends employment, usually with a different set of rights.
Garden leave is a way of serving out a notice period away from the workplace.
Can you start a new job while on garden leave?
Usually not. The employment contract still applies, and most garden leave letters bar work for another employer. Starting a new job early can breach the contract and put pay at risk.
The safe step is to wait until the garden leave ends.
Does garden leave affect references?
Not directly. Garden leave is a neutral arrangement, not a disciplinary step. A future employer will normally care more about the reason for leaving and the dates of employment.
Keeping the departure professional helps with references, just as it does in any job change.
Can an employer put you on garden leave without a clause?
It is risky for the employer. Guidance from People Management notes that without an express clause, an employee may challenge the move, and a court would look at whether the employee had a contractual right to be given work. Employers with a clear clause are on firmer ground.
Do you still accrue holiday on garden leave?
In most arrangements, yes. The employee stays employed, so holiday entitlement keeps building. The employer may ask the employee to take outstanding holiday during the garden leave period.
The contract or company policy will set the details.
The bottom line
Garden leave is paid time away from work at the end of employment. Contracts include it to protect information, clients, and team stability while a departing employee waits out the notice period. Pay and benefits continue, but work for others usually does not.
Anyone signing a contract with a garden leave clause should read the length, the bonus rules, and the link to any non-compete clause before agreeing.
For more on the job search side, see our guides on why companies rescind job offers and how to negotiate remote work at the offer stage.
Tags: garden leave, employment contracts, notice period, career
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