Garden leave - Contract of Employment

This refers to the situation when the employer terminates the contract with notice but does not require any performance from the employee during the notice period.

Alternative if the employee gives notice of termination the employer may again send the employee home. The reason for such action is normally to prevent the employee gaining further information about his employer or misusing his employment during the notice period. Often the employee will ask if the notice period can be shortened to allow them to take up alternative employment - again in these circumstance the employer will use garden leave to prevent the employee working during the notice period.

Employers should note that a recent case held that garden leave, fundamentally an irretrievably undermined the employee-employer relationship, and that the employment relationship was terminated as soon as garden leave began. Whilst the contractual relationship continued employers cannot rely upon general good faith behaviour from the employee during garden leave. Employers should then ensure that any garden leave clause in the contract of employment should expressly state what the employee can or cannot do during the garden leave period.

Example Clause

If notice of termination of this contract has been given, the Company may require you not to attend work or make contact with work colleagues, customers or any other commercial connections for the outstanding notice period.

An example standard clause is included in the sample Managers' Contract.