Garden Leave: A Complete Guide for UK Employers and Employees

Garden leave is a common tool in senior employment contracts: the employee serves out their notice period at home — paid but excluded from the workplace, clients, and systems. Used correctly it protects the employer's legitimate business interests. Used incorrectly it can expose the employer to constructive dismissal claims or be struck down by a court.

1. What is Garden Leave?

Garden leave (or 'gardening leave') is the practice of requiring an employee who has given or received notice to remain away from work during the notice period, whilst remaining employed and paid. The employee is 'at home, tending the garden' — hence the colloquial name.

During garden leave the employment contract continues in full. The employee:

• Remains an employee of the employer
• Continues to receive full pay and contractual benefits
• Continues to owe duties of fidelity and confidentiality
• Is typically required not to work for anyone else (particularly competitors)
• May be required to remain available to assist with handover queries

Garden leave differs from suspension (which is typically a short-term precautionary measure pending investigation and which does not require a contractual basis in the same way) and from pay in lieu of notice (PILON), which terminates the contract immediately — see Section 8.

2. Why Employers Use It

Senior employees — particularly those in sales, finance, technology, or professional services — often have access to confidential information, client relationships, and strategic knowledge that competitors would find valuable. Garden leave serves several purposes:

• Protecting client relationships: the employee cannot approach or service clients during the garden leave period, giving the employer time to transfer relationships to other team members
• Preventing competitor intelligence: the employee loses live access to pricing, pipelines, product roadmaps, and strategic plans before joining a rival
• Cooling-off period: the employee's market knowledge becomes stale during an extended garden leave, reducing the competitive advantage they take with them
• Concurrent restrictive covenant running: the garden leave period runs alongside any post-termination restrictions, effectively extending the total period the employee is out of the competitive market

3. Legal Basis

An employer has no automatic right to place an employee on garden leave. The right must arise from the employment contract:

• Express garden leave clause: the most reliable approach — a clause that explicitly states the employer may require the employee to remain away from the workplace and not to perform their duties during the notice period, while continuing to receive pay and benefits
• Implied right: in rare cases, a court may imply a right to require garden leave from the terms of the contract as a whole — for example, where the contract contains a broad discretion over working arrangements. This is unreliable and should not be depended upon.

Without a contractual basis, placing a senior employee on garden leave may amount to a breach of the duty to provide work. Certain employees — particularly those whose professional development depends on continued practice (barristers, surgeons, broadcasters, some senior executives with a specific right to work) — can require the employer to allow them to work and may seek damages or injunctive relief if prevented from doing so.

4. Pay and Benefits During Garden Leave

Because the employment contract continues, the employer must continue to provide everything contractually owed:

• Full salaryat the contractual rate (not a reduced 'garden leave rate')
• Pension contributions at the contractual rate
• Company car or car allowance — though the employer can require the return of a company car if it is provided solely for business use, and can provide the cash equivalent instead
• Health and life insurance and other contractual benefits
• Bonus accrual: if a bonus is payable for the period (e.g. a bonus based on time served in the financial year), it accrues during garden leave. Employers sometimes include provisions in bonus schemes limiting accrual for employees 'under notice' — these must be clearly drafted to be effective.
• Annual leave continues to accrue and can be directed to be taken during garden leave if the contract permits

Any attempt to reduce pay or benefits during garden leave without contractual authority is a breach of contract that may entitle the employee to resign and claim constructive dismissal.

5. Restrictive Covenants

Post-termination restrictive covenants (PTRs) — non-compete, non-solicitation, and non-dealing clauses — operate after the employment ends. Garden leave operates during the notice period, while the employee is still employed. The two interact in an important way:

• The garden leave period runs concurrently with any contractual restriction period. A 6-month garden leave followed by a 6-month non-compete gives the employer 6 months of market absence — not 12.
• Courts take the garden leave period into account when assessing whether PTRs are reasonable in duration. An employer who has already had 6 months of garden leave may find it harder to justify a further 12-month non-compete as proportionate.
• Garden leave is generally considered more enforceable than PTRs (because the employee is paid during it), and employers sometimes prefer longer garden leave as an alternative to relying on uncertain PTR enforcement.

6. Can the Employee Work Elsewhere?

During garden leave the employee remains employed and subject to the implied duty of fidelity (loyalty). Working for a direct competitor during garden leave would almost certainly breach this duty, and could also breach an express 'no other employment' clause commonly found in senior contracts.

The employer's remedies for an employee who works for a competitor during garden leave include:

• An application to the High Court for an interim injunction requiring the employee to cease working for the competitor pending a full hearing
• A claim for damages for breach of contract
• A claim that the breach by the employee releases the employer from further obligations under the notice period (though this is complex and employers should take advice)

If the other work is for an entirely unconnected business (e.g. freelance photography for an employee who works in financial services), and the employment contract does not prohibit secondary employment, the position may be different. The employee should check the contract carefully before undertaking any work.

7. Duties During Garden Leave

Because the employment contract continues, the employee retains all their contractual and implied duties, including:

• Duty of fidelity: the employee must not act against the employer's interests — this includes not approaching clients or colleagues to join a rival, not setting up a competing business, and not disclosing confidential information
• Duty of confidentiality: all confidential information (trade secrets, client lists, pricing, strategy) remains confidential during and after garden leave
• Duty to follow reasonable instructions: the employer can require the employee to remain available for handover queries, assist with transition, and return company property and data
• Duty to co-operate: the employee should co-operate with any post-employment restrictions that are lawfully enforced

The employee is not obliged to attend the workplace or perform their normal duties — that is the whole point of garden leave. But the implied duties that do not depend on physical attendance continue in full.

8. Gardening Leave vs Pay in Lieu of Notice (PILON)

These two mechanisms are commonly confused but are legally and practically distinct:

• Garden leave: the employment contract continues, the employee is paid and employed during the notice period but does not attend work. The employee remains an employee throughout.
• Pay in lieu of notice (PILON): the employer makes a lump-sum payment equivalent to the notice period pay and terminates the contract immediately. The employment ends on the date PILON is paid. Contractual PTRs then begin to run immediately.

Since April 2018, PILON is always subject to tax and National Insurance (following changes to the 'termination payments' tax rules) — eliminating the previous tax-free treatment of unexpected PILONs. All PILON (whether contractual or not) is treated as earnings.

From the employer's perspective, garden leave allows the full notice period to run (keeping the employee bound by their duties) whereas PILON ends the contract immediately but triggers the PTR clock. Employers with well-drafted PTRs may prefer PILON; those who want the employee out of the market for the longest possible time may prefer garden leave combined with PTRs.

9. Length of Garden Leave

Garden leave can only last as long as the notice period — it cannot extend beyond it. Employers who want a longer period of market exclusion must rely on post-termination restrictive covenants once the notice expires.

Courts have shown willingness to reduce the enforced period of garden leave if:

• The garden leave clause is disproportionate to the employer's legitimate business interests at the time it falls to be enforced
• The employee's knowledge has become stale or the specific concerns the employer had no longer apply
• The employer's business circumstances have changed materially

In Credit Suisse Asset Management Ltd v Armstrong [1996], the Court of Appeal confirmed that garden leave clauses are subject to a reasonableness test and can be limited by the courts even where an express clause exists. The court may grant an injunction for a shorter period than the contractual notice if it considers the full period disproportionate.

10. Injunctions and Enforcement

If an employee on garden leave breaches the arrangement — for example by starting work for a competitor — the employer's primary remedy is an application to the High Court for an interim (interlocutory) injunction.

The American Cyanamid test applies: the employer must show:

• There is a serious question to be tried (that the garden leave clause exists and has been breached)
• Damages would not be an adequate remedy (because client relationships and confidential information, once lost, cannot be compensated financially)
• The balance of convenience favours granting the injunction

Garden leave injunctions are commonly granted because courts recognise that the employer is offering to pay the employee and is seeking to enforce a pre-agreed contractual arrangement. This contrasts with purely restrictive covenant injunctions (where the employee is restrained without pay), which courts scrutinise more strictly.

The interplay between garden leave and PTRs means that employers who have already had the benefit of a long garden leave period may find PTR injunctions harder to obtain for the same duration.

Key facts at a glance