Why companies use garden leave
Garden leave is used mainly when an employee is moving to a competitor or holds sensitive information: client relationships, pricing, product plans or trading positions. Keeping them away from the office and systems during the notice period protects that information, while the company still keeps the person bound by the notice period. It is seen in banking, broking, sales and technology roles in larger companies, and is written into the appointment letter or a separate agreement.
How garden leave works in practice
The last working day is still the end of the notice period, and the relieving letter carries that date. The employee is simply not asked to work during the garden leave, which is why the arrangement does not change settlement dates or the length of service.
- The employee stays on the rolls and is paid salary and benefits as usual
- System access, client contact and office access are withdrawn
- The employee must stay available to answer handover questions
- The employee cannot join a new employer before the last working day
- Leave balances and service continue until the exit date
Garden leave vs notice period buyout
The two are opposites. In a buyout, the notice period is shortened and the employee leaves early, with notice pay recovered or paid. In garden leave, the notice period runs in full, but the employee does not work. A buyout suits the employee who wants to join sooner; garden leave suits the employer who wants to delay a move to a competitor. Whether a garden leave clause can be enforced in a particular case depends on its wording and the facts, so draft it with legal advice.
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Is an employee paid during garden leave?
Yes. An employee on garden leave remains employed and receives full salary and benefits for the notice period, just as if they were working. The only difference is that they are asked not to come to work or contact clients. Their last working day, relieving letter and settlement follow the normal notice period dates.
Can an employee on garden leave join a new company?
No, not until the notice period ends. The employee is still employed by the current employer during garden leave, so starting with another employer would breach the employment terms. The new employer should plan the joining date for the day after the last working day stated in the notice or relieving letter.