Garden leave is a period of time during which an employee remains away from work or works remotely while on notice. The employee stays on the payroll and is in the process of being terminated, but is not permitted to return to work or begin any other employment during the garden leave.
Garden is a term used in the financial industry in the United Kingdom, Australia, and New Zealand. Massachusetts became the first state in the United States to enact a garden leave clause in 2018.
While the term “garden leave” may sound appealing, and an employee may choose to spend their notice period relaxing at home rather than at work, the limited nature and negative connotations of this leave might make it less than desirable.
Reasons for employing garden leaves
Following an employee’s resignation or firing, an employer may decide to send the person on garden leave. The fundamental purpose for doing so is to protect against potentially harmful acts or conduct by employees during their notice period.
The employer may be concerned that the employee will become uncooperative, or that they will have a negative impact on the working environment and other employees. The employer may also prefer that the employee limit contact with clients for fear the employee may persuade clients to follow them to their new employer.