Garden Leave: Complete Guide for Employees and Employers

Imagine a scenario where a key employee resigns or is terminated, and you face the risk of them joining a competitor with valuable company knowledge. 

This is where the concept of garden leave becomes a strategic asset for employers serving as a protective measure for your business interests. 

In this article, we will explore the benefits of garden leave, how it can safeguard your company's confidential information, and the legal considerations you need to be aware of. By understanding and effectively implementing garden leave, you can ensure a smoother transition and maintain a competitive edge in your industry.

Let’s begin!

Key Takeaways

• Learn about garden leave, garden leave period, its key components, and how it differentiates from other practices.
• Understand the reasons why companies often implement garden leave in the employment contract.
• Understand the drawbacks of company garden leave during the notice period.
• Learn about the psychological impact of garden leave on employee's notice period.
• Discover tips and methods for employers and employees to navigate garden leave effectively.
• Gain additional knowledge on the legal considerations to ensure compliance with local laws and industry practices.

What is Garden Leave?

Garden leave is a period during which an employee, after resigning or being terminated, remains on the payroll but is contractually not allowed to work or join a competitor, primarily to protect the employer's interests.

While the employee won't be actively working for your company anymore, they will still get paid their usual full salary and benefits, such as bonuses, health insurance, and pension contributions.

Interestingly, garden leave was only recently introduced in the US, with Massachusetts being the first state to pass it in 2018.

3 Key Components of Garden Leave

The garden leave consists of several significant elements, such as:

1. Duration

The time you spend on garden leave depends on factors such as your company's policy, position, and why you're leaving. It could be a short break of just a few weeks or stretch out for months. In sporadic cases, it could even be a whole year.

2. Restrictions

While the employee enjoys some downtime during their garden leave, they won't be able to come into the office or access company systems and information. This helps ensure a smooth handover to the new person and protects confidential and proprietary information.

3. Availability

Even though they won't work their usual hours, the employee may be asked to lend a hand occasionally during their break, like offering advice on past projects or answering questions.

Why Do Companies Use Garden Leave?

Employers use garden leave for several reasons, all of which aim to protect the business during the transition period.

1. To Keep Sensitive Information Safe

Businesses have confidential information, including clients’ personal information, marketing strategies, or product development plans. When an essential employee leaves, a garden leave clause helps ensure that confidential or sensitive information doesn't go with them. Their contract still binds them, so they can't share or use confidential details for their gain. This gives the company time to adjust without losing their edge.

2. For Smooth Transitions

Let's say the client’s favorite manager is leaving. Their clients might be worried because who will be working with them now?

Luckily, a garden leave creates space for a smooth handover. The new manager can take over responsibilities and win over the clients while the departing manager is still on the payroll. This way, clients aren't left hanging, and the new manager can get up to speed without feeling overwhelmed.

3. To Maintain a Positive Work Environment

Sometimes, when an employee leaves, especially if it's not under the most ideal circumstances, things can get a bit tense in the office. 

However, garden leave empowers seniors and other employees in a company to create a clear separation by placing the departing employee on garden leave. This allows the remaining team members to focus on their work without distractions and helps maintain a positive and productive atmosphere.

4. Legal Agreements and Non-Compete Clauses

Many employees sign contracts that include non-compete agreements. These clauses restrict them from working for a competitor or starting a similar business for a certain period after leaving the company. Garden leave can help enforce these agreements. 

Preventing employees from working during this period ensures they're not breaking the rules and potentially harming the other's legitimate and business interests.

Keep in mind that garden leave isn't supposed to punish the employee. Instead, it is a tool to protect the employer's business during a transition. When used correctly, it can benefit everyone involved.

Drawbacks of Garden Leave for Employers

While garden leave can be beneficial for companies, it also has some drawbacks:

1. Cost to Consider

This one's pretty straightforward—you'll still pay the employee's salary even though they're not 100% actively working during their garden leave. 

2. Legal Do's and Don'ts

Review your garden leave policy regularly to ensure it complies with your state's current laws and industry practices. This can help you avoid legal trouble.

To ensure compliance with employment contracts, consider consulting with a lawyer. They can help you draft an employment contract clause that protects your company's interests while staying within legal boundaries.

3. Employee Morale

It's essential to be mindful of how garden leave affects the employee. Imagine being required to stay home away from close colleagues; it can feel isolating.

Don’t forget that open communication is key.

So, clearly explain the reasons for garden leave and what's expected of them during this period. Perhaps allow them to attend occasional meetings or training sessions if their presence isn't disruptive to ongoing work. This can help them ease through the transition.

4. Be Clear and Upfront

Communicate the garden leave policy to the employee in writing, including their rights, obligations, and benefits. This can help prevent any confusion down the line.

The Psychological Impact of Garden Leave

Garden leave may seem to be a paid leave, but that is not always the case. Although you receive your salary, you are out of the office loop for any activities. This means no emails, phone calls, or even a conversation with a co-worker.

Sudden separation can lead to a tide of emotions. Leaving after a long time can be a form of grief. When you spend a significant part of your day at work and socializing with colleagues, you can feel homesick when away.

In addition, working remotely may cause the employee to lose touch with his or her co-workers and feel even more isolated and alone.

Plus, the unknown can be scary. Will you find a new job you love as much? 

These worries can build up and stress you out. Finally, going from a busy schedule to significantly reduced activity can be frustrating for some. Without a set routine or feeling productive, anxiety can increase.

4 Tips for Employees for Navigating Garden Leave

Garden leave can be challenging for employees and, on rare occasions, psychologically draining.

Here are a few ways to deal with it:

1. Upskill and Learn

Remember when you wanted to take that short marketing course but never had time? Well, now you do!

Take online courses or attend workshops to boost your skills and make yourself even more marketable. This time off can be an excellent opportunity for personal and professional development.

2. Turn it into a Project

Garden leave doesn't have to be a sit-around-and-stare-at-the-wall situation. Think of it as a chance to tackle your unique project. Make a schedule, set some goals, and get organized. This will keep you feeling productive and ready to hit the ground running when your new job starts.

3. Focus on You

Sometimes, life gets hectic, and this is your chance to hit the pause button and simply relax. 

Finally, hit the gym, tackle that novel on your nightstand, or pick up that dusty guitar you haven't touched in ages. This is the perfect time to prioritize your well-being and recharge your batteries before jumping into your next job.

4. Network Openly

Some companies might put restrictions on actively seeking new jobs during garden leave. This can feel like a pause button on your career move.

When you are gainfully employed, you may not feel comfortable responding to invitations to have conversations with recruits, this is no longer a roadblock while you’re on garden leave.

Knowing that the transition is coming, it would be expected that employees use this time to actively network.

Utilize online platforms like LinkedIn to connect with people in your field. Just be mindful of any restrictions your company might have detailed in your contract.

Legal Considerations and Best Practices for Employers

Garden leave is like any other employment contract. That’s why it’s essential to ensure that all the rules, employment laws, regulations - or restrictions - are clearly stated in the employee's employment contract from the beginning for the sake of transparency, such as:

1. The Length of the Break

It’s important to be clear about the duration of the break. How long will the employee be on garden leave? While a lengthy break might have a negative psychological impact on the employee, a shorter one deprives you of time to prepare. Finding balance will be key.

2. What They Can (and Can't) Do

The employee might be unaware of the rules of garden leave. That’s why the employer should outline the legal restrictions, such as contacting colleagues or clients, working for competitors, or using confidential information for better clarification.

3. Pay and Benefits

The employee still gets paid their regular salary and receives benefits like health insurance and pension contributions. They're still technically your employee, just not working. 

4. Termination During Garden Leave

Garden leave is an alternative to immediate termination. 

However, if the employee breaks the rules outlined in their contract during gardening leave, like sharing confidential information with another employee or working with a competitor, you can still terminate their employment during this period.

5. Talk to a Lawyer

Consulting with an employment lawyer ensures your garden leave policy is legally sound and helps you draft clear, enforceable clauses.

3 Tips for Navigating the Garden Leave for Employers

Here are 3 tips for you to follow as an employer:

1. Clear Communication is Key

Be upfront with the employee about the terms of their garden leave, including the duration, restrictions, contractual benefits, and expectations. This helps avoid any confusion or frustration.

2. Plan the Handoff

Use this time to find and train a replacement. This will ensure a smooth transition and minimize disruption to your employer's business interests.

3. Be Respectful

Garden leave isn't a punishment. It's a way for everyone involved to manage the transition.

Thank the employee for their contributions and wish them well in their future business interests and endeavors.

Also, while the employee isn't actively working, clearly instruct them on who to contact if they have questions or need clarification.

Use Knit People: A Streamlined HR Platform for Garden Leave

Knit People simplifies garden leave management for HR teams. Our user-friendly platform offers everything you need to foster a positive experience for departing employees:

• We offer departing employees access to a vast library of online courses and training materials within our Learning Management System.
• Knit provides departing employees with a safe platform through Document Management to access and store important employment documents like paystubs and contracts.
• Knit maintains a clear line of communication with the departing employee through our Employee Portal. This allows for essential information exchange while adhering to garden leave restrictions.

So what are you waiting for?

Try the free trial of Knit People's HR platform today!

Final Word

Garden leave is like a bridge between jobs, with upsides and downsides for employees and companies. For employees, it’s a time that they might need to prepare for a new job.

However, the employee might be barred from working at their current company, competing, or contacting clients.

Similarly, garden leave allows companies time to find a replacement and train them while keeping their confidential information safe. Garden leave remains a helpful tool as workplaces change.

Understand the details of the gardening leave clause and follow best practices to help employees and companies navigate this change smoothly and respectfully.