Garden Leave: What It Is and Your Rights During It

What garden leave is and why employers use it

Garden leave (sometimes written as "gardening leave") is a period during which an employee is required to stay away from the workplace and not perform any work — while remaining employed and receiving their full contractual pay. The name is said to derive from the idea that an employee can spend the time tending their garden rather than coming to the office.

Employers use garden leave for a range of practical and commercial reasons:

• Protecting confidential information: Once an employee has resigned to join a competitor, an employer may not want them in the office with access to sensitive client data, pricing information, or strategic plans. Garden leave removes that access while the notice period runs.
• Protecting client relationships: A departing employee — particularly one in a sales, advisory, or management role — may be tempted to use their notice period to transfer client relationships to their new employer. Garden leave prevents this by removing the employee from contact with clients entirely.
• Managing team dynamics: A disgruntled or departing employee in the workplace can affect morale. Garden leave is a cleaner alternative to having someone physically present but mentally absent.
• Extending the effective period of any restrictive covenants: Post-termination restrictions only kick in after employment ends. A long garden leave period means the restrictions start running later — extending the practical window of protection from a competitor's perspective.

For the employee, garden leave is a double-edged arrangement. You receive your full salary without having to work. But you are also stuck in a kind of professional limbo — unable to start your new role, barred from certain activities, and potentially losing momentum in your career.

Is garden leave in your contract? What happens if it is not?

The right to place you on garden leave must have a contractual basis. It is not a right employers automatically have simply by virtue of employing you.

Express garden leave clause

Many employment contracts — particularly for senior employees, those with access to sensitive information, and those in client-facing roles — include an explicit garden leave clause. This will typically say something to the effect that the employer may require you to remain away from the workplace during any period of notice, while continuing to pay you in full. If this clause is in your contract, the employer's right to place you on garden leave is well-established and relatively straightforward.

No garden leave clause — can the employer still impose it?

Without an express clause, the position is more nuanced. An employer can still argue that you are lawfully placed on garden leave — because they are paying you in full and you remain employed — but you have a stronger basis to resist it if:

• Your role requires you to maintain and exercise particular skills that will deteriorate without practice (e.g. surgeons, barristers, certain financial roles)
• Your remuneration depends partly on performance (bonuses, commission) that you cannot earn if you are not working
• There is an established practice in your profession of the right to work during notice

In these circumstances, you may have the right to require your employer to provide you with work — and if they refuse, their failure to do so could itself constitute a breach of contract. Take legal advice quickly if you believe garden leave is being imposed without contractual authority and it is damaging your interests.

Pay and benefits during garden leave

During garden leave, your employment continues in full. This means you are entitled to everything you would have received had you been at work — your employer cannot strip out benefits simply because you are not attending the office.

Salary

Your full basic salary continues throughout garden leave. Your employer cannot reduce it unilaterally. It is taxed as normal employment income (not as a termination payment), and your P60 and payslips will reflect it as ongoing pay.

Bonus and commission

This is where disputes most commonly arise. If a bonus is contractually guaranteed or has already accrued, you remain entitled to it during garden leave. But if the bonus is genuinely discretionary — and the discretion has not been exercised improperly — the employer may have scope to withhold it for periods when you were not contributing. Review your contract carefully. If your contract says bonuses are only payable to employees "in employment and not under notice" on the payment date, that clause may disentitle you — but such terms must be explicit to be enforceable.

Pension contributions

Employer pension contributions continue during garden leave if they are part of your contractual package. The employer cannot simply suspend contributions because you are not working.

Private medical insurance, car, and other benefits

Contractual benefits in kind — company car, private health insurance, life assurance, income protection — all continue during the garden leave period. Your employer cannot remove them early. Benefits that depend on active participation (such as the use of company equipment for work purposes) may be reclaimed if they are purely work tools, but contractual perks remain.

Can you work for someone else during garden leave?

This is the question most people on garden leave want answered. The short answer is: it depends on your contract — and on the nature of the work you want to do.

Express restrictions

Many garden leave clauses, or associated employment terms, prohibit you from working for a competitor (or anyone else) during the notice period. If your contract contains an express prohibition on working elsewhere during your notice, breaching it risks a claim for breach of contract and could be used to forfeit your pay for the period.

Implied duty of fidelity

Even without an express clause, you owe your employer a duty of fidelity during your employment — which means you cannot take active steps that damage your employer's legitimate business interests. Working directly for a competitor while being paid garden leave would almost certainly breach this implied duty, even without an express term saying so.

What is usually permitted

During garden leave, you can generally:

• Take up a new role with a completely unrelated business in a different sector
• Do voluntary or charitable work
• Work in a personal capacity on activities unconnected to your employer's business
• Study or obtain qualifications

What you almost certainly cannot do is join a direct competitor, solicit your former employer's clients or colleagues, or disclose confidential information to your new employer — regardless of whether you have formally started there.

Conflicting with restrictive covenants

Garden leave and post-termination restrictive covenants are separate things, but they interact. Post-termination restrictions — non-compete clauses, non-solicitation clauses, non-dealing clauses — only begin to run after your employment ends. Garden leave extends the period of employment, so it pushes back the date from which those restrictions run.

From an employer's perspective, this is an additional reason to put you on garden leave — a three-month garden leave period followed by a six-month non-compete clause effectively keeps you away from the competition for nine months in total. Courts generally accept this as a legitimate commercial objective, provided the garden leave clause and the restrictive covenants are themselves reasonable.

However, there is an important limit. Courts will not allow employers to use garden leave and restrictive covenants together to impose an unreasonably long total period of restriction. Where the combined effect is excessive, courts may shorten or void the covenants — or treat overly long garden leave as a breach of contract by the employer.

Challenging excessive garden leave

If your employer places you on garden leave for an unreasonably long period — particularly where your skills will deteriorate, where you depend on continued market activity, or where the length serves no legitimate purpose beyond preventing you from working — you may be able to challenge it.

Options include:

• Negotiating a shorter period: In practice, many garden leave situations are resolved commercially. If your new employer needs you to start promptly, both employers may agree to shorten the notice period and release you early — often in exchange for a payment from your new employer to your old one.
• Seeking a court injunction: In extreme cases, you could apply to the court to have the garden leave obligation lifted on the basis that the restriction is unreasonable. This is expensive and uncertain.
• Treating the employer's conduct as a breach: If your employer is also in breach of the contract in some material respect — for example, by withholding pay or removing benefits — you may be able to accept that breach, terminate the contract, and argue that the garden leave obligation falls away as a result.

Garden leave vs. payment in lieu of notice (PILON)

Garden leave and payment in lieu of notice (PILON) are two different mechanisms for ending employment, and they have different consequences for you.

Garden leave

Under garden leave, your notice period runs in full while you remain employed. You receive your pay and benefits month by month as normal employment income. Your employment — and any associated restrictive covenants — run until the notice period expires.

PILON

Under PILON, your employer terminates your employment immediately and pays you a lump sum equal to the salary you would have earned during your notice period. Your employment ends on the date of termination. Crucially, since April 2018, all PILON payments are fully taxable as employment income — there is no tax benefit to receiving PILON rather than working your notice, regardless of what your contract says.

Key practical differences

• Under garden leave, you cannot start your new job until the notice period expires. Under PILON, your employment ends immediately and (subject to any restrictive covenants) you can start your new role straight away.
• Restrictive covenants run from the end of employment. Under PILON, that is the date of immediate termination. Under garden leave, it is later.
• Benefits (bonus accrual, pension, private health) continue during garden leave but stop on the PILON date.

If you want to start your new role quickly and your new employer is pressing you, PILON is usually the better outcome. If you want to maximise your benefits during the transition — particularly where a large bonus is due — garden leave may serve you better. Negotiate which mechanism applies if you have leverage to do so.

When garden leave ends — practical checklist

As you approach the end of your garden leave period, there are practical steps to take to ensure a clean transition and protect your position:

• Confirm the exact termination date in writing — Ensure you have written confirmation of the date your employment ends. Do not assume the date in your original notice letter is the operative one if there has been any variation or negotiation since.
• Request your P45 — Your employer must issue your P45 promptly at the end of employment. Chase it in writing if it is not received within a few days of your final pay date.
• Review your final payslip — Check that all salary, outstanding holiday pay, and any agreed payments are correctly included and taxed appropriately.
• Confirm the return of company property — Return all equipment, access cards, and company materials, and get a receipt or written acknowledgement. Keep a copy for yourself.
• Check your bonus and commission position — If a bonus or commission is due after your garden leave ends but relates to work done before, confirm with your former employer (in writing) whether it will be paid and when.
• Review your restrictive covenants — Know exactly when they expire and what they cover. Share them with your new employer before you start.
• Note the reference arrangement — If you negotiated an agreed reference as part of your departure terms, obtain a written copy and check who is authorised to provide it if contacted.