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What Is Garden Leave
Garden leave is when an employer requests that an employee not work for a certain period of time in anticipation of their departure while remaining on the company’s payroll.
This term is used in many European countries to indicate that a person is on “leave” while still employed for the company.
Some say that it’s called a “garden” leave as the employee is still employed by his or her employer and cannot work for another employer while on leave.
As such, all the person can do is to spend time in his or her “garden”.
In the United States, garden leave is similar to an “administrative leave”.
The term “garden leave” was used in the BBC sitcom Yes, Prime Minister, and in Silent Witness.
From then on, the term is used to refer to employees who are leaving a job but are not authorized to work for another.
In 2018, Massachusetts became the first US state to adopt a law requiring employers to pay their workers’ garden leaves after leaving their job.
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Why Put Employees On Garden Leave
The main reason why employees are put on garden leave is to allow the employer and employee put an end to the employment contract and prevent the employee from immediately working for a competitor.
Employees, particularly those who have access to important company information, may be highly valuable to the employer’s competitors.
The garden leave allows enough time to pass by so that should the employee get hired by a competitor, he or she will not have access to the latest and most strategic company information.
The garden leave serves as a time buffer where the old employer no longer provides the employee with any meaningful information about its business so the employee’s “knowledge” of the company slowly fades away.
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How Garden Leave Works
Garden leave refers to when an employer provides a written notice period to an employee not to work for a certain period of time.
During the garden leave period, the employee remains on the employer’s payroll, receives his or her salary, and continues to have the employee benefits as usual.
However, during this type, the employee is not authorized to come to the employer’s offices, can no longer access the computer systems and networks, and cannot communicate with company clients, vendors, suppliers, employees, and other stakeholders.
Typically, employees who go on garden leave are required to return their laptop, cell phone, or any other company equipment they may have.
While on garden leave, the employee is prohibited from sharing any information he or she knows about the company with anyone.
Also, the employer can request the employee to provide transitional services, answer questions related to work, or even handle a few work-related matters.
The employee has to perform the tasks demanded by the employer.
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When To Use Garden Leave
Garden leave can be used in different scenarios such as to prevent an employee from accessing sensitive information, to prevent the employee to work for a competitor, or to observe a contractual agreement.
In the first instance, a company can provide notice to an employee to go on garden leave to prevent the employee from having access to the company’s sensitive information.
This can happen when the employer suspects that the employee may be looking to work for the competitor or the competitor is sourcing employees.
Another common reason garden leaves are used is to simply prevent the employee from working for a competitor during the garden leave period.
Companies can leverage their human resources and their talent to achieve a competitive advantage in the market.
An employer may want that its key employees or those in strategic roles go on a garden leave so they don’t immediately start working for a competitor if they leave the organization.
Alternatively, the garden leave can be a mutually negotiated aspect of an employment contract.
It’s possible that the employee negotiates a garden leave in his or her employment contract.
When there’s a garden leave clause, the company or employee can trigger the clause as needed.
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Pros And Cons of Garden Leave
There are advantages and disadvantages in garden leaves that you should be aware of.
The most notable advantages of garden leave are the following:
- Employees remain available for transitional services
- The employer can find a new successor employee
- Prevents employee from poaching other employees when leaving
- Prevents the exiting employee from contacting clients and stakeholders
- Prevents employee from working for a competitor
- Ensures the employee is bound by the terms of the employment contract
- Prevents departing employee to cause damages to the employer
On the other hand, garden leaves also have disadvantages to consider, such as:
- It’s costly to pay an employee not to do any work
- It’s costly to maintain the employee’s contractual benefits
- The employer is exposed to legal risk if the employee considers there was a breach of its duties or contract
- There’s a risk employees file a constructive dismissal claims
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Garden Leave FAQ
What does “garden leave” mean?
A garden leave refers to a period of time an employee is not authorized to work but remains on the company’s payroll.
Typically, employers put employees on garden leave when they are looking to terminate their employment contracts.
The garden leave is similar to a non-compete clause with the main difference that the employee remains on payroll and is not permitted to work anywhere else.
Why is it called garden leave?
The name garden leave comes from the BBC sitcom Yes, Prime Minister and Silent Witness.
The idea is that an employee is asked not to come to work but is also prohibited from working elsewhere.
As a result, the employee can only spend time doing personal things, such as spending time in the garden.
What happens during garden leave?
The garden leave is a protective measure that is triggered when an employee is terminated or resigns.
During this time, the employee will no longer be given access to company sensitive information or be involved in the company’s affairs.
This way, competitors will not be able to immediately hire the employee and take advantage of the employee’s knowledge of his or her previous employer.
Takeaways
So there you have it folks!
What is garden leave?
In a nutshell, garden leave refers to a period of time an employee is not permitted to work following a resignation, employment contract termination, or other reasons the employment contract terminates.
In the United States, this term is used more frequently in the banking and financial service sectors.
The idea is to prevent an employee from leaving the company and taking the latest information available to them to the competitor.
The garden leave is a period of time that the employee is not permitted to work for another employer and is unable to share any information with anyone about the prior employer.
This time buffer protects employers in case they feel the employee may have strategic information or may work for a competitor, among other reasons.
Now that you know what garden leave means and how it works, good luck with your research!
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