Gardening leave is where an employee takes paid leave after they have been given notice of termination or has resigned from a business. The employee is not required to perform their duties during this notice period. However, they must be available or contactable throughout the entire period. Employers often use this form of leave when they want to protect confidential information or the employee’s relationships with clients or suppliers before they commence employment elsewhere. Gardening leave clauses are often explicitly set out in employment contracts alongside post-employment restraint of trade clauses. This article sets out the advantages of gardening leave clauses as well as the requirements for employees who are on this form of leave.
Advantages for Employers
There are a number of advantages of having a gardening leave clause to protect your business’ interests. As the employee is still bound to the terms of an employment contract, they are bound by the contractual obligations of the agreement, including:
- acting in the best interests of the employer;
- protecting the business’ confidential information; and
- prohibited from working for another organisation.
Another advantage is that employees are not physically present in the workplace. This absence helps protect the employee from soliciting clients or encouraging other employees to leave the organisation.
For businesses that deal with confidential information or employ staff who hold relationships with external stakeholders including clients and suppliers, gardening leave addresses the potential for departing employees to take this information with them. Without such a clause, departing employees can potentially approach existing competitors or use confidential information to the detriment of the business.
Obligations for Employees on Gardening Leave
If you are on gardening leave, you must adhere to the terms set out by your employer and employment agreement. Terms may include:
- not attending work or performing work functions;
- abiding by the existing terms of your employment agreement;
- being available to return to work or being contactable during the notice period; and
- not working for another employer during the notice period.
Note that employers may place you on gardening leave to grant you time to find a new employer. You should seek clarification from your employer regarding the terms of the leave period if you are unsure, especially if you are pending disciplinary action. Employers cannot place you on gardening leave indefinitely or for an extended period.
Courts have also found in certain limited circumstances that there is an implied duty for the employer to provide an employee with work where their remuneration depends on commission, or ongoing employment is required to maintain public reputation (e.g. entertainers, presenters) or skill (e.g. athletes, surgeons). However, employers are only obliged to provide work if it is set out in the employment contract. Otherwise, it is lawful for an employer to direct you to go on gardening leave.
As an employer, a gardening leave clause can protect your business’ interests. Although employers could use a post-employment restraint clause to protect the business’ confidential information and relationships, they can be costly to enforce compared to a gardening leave clause. While an employee is on gardening leave, they are still entitled to the same benefits as if the employee was still working, including remuneration. Employers should ensure they have the right to place an employee on gardening leave. Otherwise, it could be treated as being constructively dismissed and give rise to wrongful dismissal. If you have any questions about how gardening leave would apply to your organisation, or are on gardening leave and want to understand your rights, get in touch with our employment lawyers on 1300 544 755.