Understanding Garden Leave: A Guide for Employers and Employees in the UK

If you work in the UK or run a business with employees, you’ve probably heard the term “garden leave”-it pops up a lot during resignations or redundancies. But what exactly is garden leave, when can you use it, and what should both employers and employees know to make the process fair and compliant?

The reality is, garden leave can be a powerful tool for businesses and a confusing process for employees. Done right, it can protect business interests and help transitions go smoothly. But if you get it wrong, you could face disputes and costly legal claims.

In this guide, we’ll break down exactly what “garden leave” means, when it’s used, the legal basics you need to know, and practical steps to handle it with confidence-whether you’re an employer or an employee. Let’s help you get protected from day one.

What Is Garden Leave?

Garden leave is when an employee who’s resigned, been dismissed, or made redundant is instructed to stay away from work during their notice period, but continues to receive full pay and benefits. The idea is that the employee spends time “tending their garden”-not working for the company, but also not working for a competitor or starting their new job just yet.

Garden leave keeps the employee out of active duty, but they’re still officially employed. This arrangement protects the employer’s business by:

• Preventing the employee from accessing sensitive information, clients, or systems during the transition
• Ensuring the employee doesn’t join a competitor or set up a rival business during their notice
• Allowing time for a smooth handover if needed

It’s a balancing act-employees still get paid and keep their contractual rights, but can’t work elsewhere or for the competition for a set period.

When Is Garden Leave Used?

Garden leave is commonly used for senior staff, client-facing employees, or anyone with access to confidential information or key business relationships. It’s especially popular in sectors like finance, tech, law, and sales-though any business can use it, so long as it’s written into employment contracts.

Scenarios where garden leave might be applied include:

• A senior manager resigning to work with a competitor
• An employee being made redundant where the business wants to limit their activity in the market during the notice period
• Staff with access to confidential information stepping down or being dismissed, where ongoing access could pose a risk

It’s not just big corporates-many small businesses also use garden leave clauses as part of robust employment contracts, especially as they grow.

Is Garden Leave Legal in the UK?

Yes-garden leave is generally legal in the UK, as long as it’s handled properly and the terms are clear in the employment contract. There’s no specific law called the “Garden Leave Act,” but the practice has been established by contract law and employment law principles.

Key legal points to consider:

• Contractual basis: Most garden leave clauses must be included in the employment contract or handbook. Without an express clause, it’s harder (but not impossible) for employers to enforce garden leave. More on contract terms here.
• Statutory employment rights: Employees must still receive all their statutory rights during garden leave-including full pay, holiday entitlement, benefits, and the right to accrue continuous service.
• Restrictions must be reasonable: Any restriction you impose (not working for rivals, contacting clients, etc.) must be necessary to protect the legitimate business interests of the employer-otherwise, it may not hold up in court. See our guide to restrictive covenants here.
• Not a workaround for redundancy: If the real reason for the absence is redundancy, the correct redundancy procedures-like consultation and notice-still apply. Learn more about redundancy law.

If you don’t set it up right, trying to put an employee on garden leave without proper grounds could result in claims of breach of contract or constructive dismissal.

How Do Garden Leave Provisions Work in Practice?

Let’s walk through a typical scenario:

• An employee (let’s call her Jane) resigns, giving 3 months’ notice as required by her contract.
• The company is concerned Jane will take client information to her new job at a competitor.
• Jane’s contract includes a garden leave clause, allowing the employer to exclude her from the premises and from work duties, while continuing to pay her salary and benefits during the notice period.
• Jane spends her notice period away from all active duties-she cannot contact clients, log into company systems, or access files.
• Once the notice period ends, her employment is formally terminated and she is free to start her new role elsewhere (unless a further post-termination restrictive covenant is in place).

During garden leave, Jane:

• Must still comply with reasonable directions from her employer (for example, attending handover meetings or returning company property)
• Cannot begin work with another employer without written permission
• Continues to accrue holiday, pension, and other contractual benefits

What Are the Key Points for Drafting a Garden Leave Clause?

If you want to use garden leave in your business, it’s essential to include a clear clause in employment contracts. Here’s what a well-drafted garden leave provision should cover:

• Right to exclude: Grants the employer power to exclude the employee from premises and work duties during notice
• Obligation to pay: States that salary, holiday accrual, and contractual benefits will continue throughout the garden leave
• Employee’s status: Clarifies that the employee is still bound by all contractual duties (including confidentiality and loyalty) while on leave
• Duration: Specifies the maximum period (usually the length of the contractual notice)
• Restrictions on activities: Lists activities the employee cannot do (such as working for a competitor, contacting clients/suppliers, or speaking to staff)
• Recall to work: States whether you can require the employee to attend work for specific purposes (such as a handover or to assist with transition)

Avoid writing these terms yourself - get them drafted professionally, as unclear or overly restrictive clauses may not be enforceable. To make the most of garden leave, you’ll want your employment contract to be up-to-date and tailored to your business. Read our complete guide to staff contracts here.

What Happens to Pay, Benefits, and Holiday During Garden Leave?

Employees on garden leave keep their full pay, pension contributions, and all contractual benefits - just as if they were actively working. Here’s what to expect:

• Monthly salary or wages are paid as usual
• Company benefits such as health insurance, company car, or stock plans continue
• Holiday entitlement continues to accrue - if not taken, you may need to pay it in lieu at the end of employment
• Pension scheme contributions must be maintained
• Any bonuses or commission should be dealt with according to the contract

It’s important not to withhold pay or benefits-they’re still owed unless the employee is in breach of contract or a separate settlement is agreed.

Can Employees Work Elsewhere During Garden Leave?

In almost all cases, the answer is no. A typical garden leave clause states that the employee cannot work for another employer-especially a competitor-during their notice period, unless the existing employer gives written permission.

Why? Their contractual obligations continue while they’re on garden leave, so taking on work elsewhere would likely be a breach of contract. This is one of the biggest protections garden leave gives the employer over simply letting an employee serve notice actively.

If an employee is considering another opportunity during garden leave, it’s wise to get written permission from their employer or negotiate a settlement agreement that alters the terms. Read more about settlement agreements here.

How Is Garden Leave Different from Restrictive Covenants?

Garden leave and restrictive covenants often get confused, but they serve different purposes and have key legal differences.

• Garden Leave: Keeps the employee away from work, but still “on the books,” receiving normal pay and benefits. It works during their notice period, when the employment relationship still technically exists.
• Restrictive Covenants (like non-competes, non-solicitation or confidentiality clauses): Apply after the employment relationship officially ends, and usually restrict things like joining a competitor, poaching clients, or divulging secrets for a set time after leaving.

Employers sometimes use both to protect their business. The benefit of garden leave is that you don’t have to prove a restriction is “reasonable” in the same way as a post-termination covenant, since the employee is still under contract and being paid.

Are There Legal Risks or Pitfalls in Using Garden Leave?

Absolutely-if you get garden leave wrong, you could face costly legal claims. Some common traps include:

• Putting an employee on garden leave without a proper clause in their contract (could be a breach of contract)
• Failing to pay salary or benefits in full during the garden leave period
• Trying to “double up” garden leave and restrictive covenants, extending the total restricted period unreasonably (which a court may strike down)
• Not providing clear communication or written notice about the garden leave decision
• Allowing the contract to lapse or become outdated

For employers, it’s important to review your employment contracts regularly and seek advice before putting any employee on garden leave. For employees, it pays to know your rights and consult a legal expert if in doubt.

Legal Steps for Employers: How to Put Someone on Garden Leave Safely

To use garden leave with confidence, here’s a step-by-step process for employers:

1. Check the contract: Ensure there is a clear, professionally drafted garden leave clause and that its terms are reasonable and current. Have a solicitor review your employment contract if uncertain.
2. Confirm the notice period: Make sure you follow the correct notice terms as set out in the contract and by employment law.
3. Provide written notice: Officially notify the employee in writing that they’re being placed on garden leave and outline what this means for their pay, benefits, duties, and restrictions.
4. Honor all contractual rights: Continue paying salary/benefits and treat the employee fairly-they have a right to be kept informed and consulted about any changes.
5. Monitor compliance: Do occasional check-ins (if appropriate) to ensure the employee isn’t contacting clients or working elsewhere during garden leave.
6. Document everything: Keep clear records of communications and decisions to reduce risks if there’s a dispute.

Legal Steps for Employees: What to Do if You’re Put on Garden Leave

If you’re an employee and your employer puts you on garden leave:

• Request written details: Ask for formal confirmation of your status, pay, benefits, any required duties, and when your last day will be.
• Know your rights: You’re still entitled to full pay and holiday accrual. If pay or benefits are withheld, seek legal advice promptly.
• Be careful about new jobs: Don’t start working with any employer (especially a competitor) until your garden leave period ends, unless you have express written permission.
• Review your contract: Check both your garden leave clause and any post-termination restrictions for overlapping timeframes or unreasonable limits.
• Keep communication open: Stay in touch with HR or your employer to ensure a smooth transition, return of property, and payment of any final sums.

Don’t ignore your obligations-breaching the garden leave period could mean forfeiting pay or facing legal action.

Common Questions About Garden Leave in the UK

How Long Can Garden Leave Last?

Usually for the length of the employee’s contractual notice period-occasionally longer if agreed, but excessive durations may be challenged as “unreasonable restraint.”

Does Garden Leave Count as Continuous Service?

Yes-the employment relationship technically continues, so your continuity of service (important for redundancy or unfair dismissal rights) is preserved.

Can an Employee Be Forced to Take Holiday During Garden Leave?

Employers can direct an employee to take accrued holiday during garden leave, but must provide appropriate notice (at least twice the length of the holiday to be taken, unless the contract says otherwise). Find out more here.

Is Garden Leave Taxed?

Yes-salary and benefits during garden leave are subject to normal deductions for tax and National Insurance.

Key Takeaways

• Garden leave is a period during an employee’s notice where they stay home, still paid and bound by contract, but don’t work for the employer (or anyone else) until employment ends.
• It must be clearly set out in the contract for an employer to enforce garden leave without risk.
• Employees on garden leave keep all rights, pay, benefits, and accrue holiday as normal.
• Garden leave can protect sensitive information, client relationships, and help transition between teams or new hires-but must be used fairly and lawfully.
• Employers should always use carefully worded contracts and proper procedures to avoid legal pitfalls with garden leave.
• Employees should know their rights, and both parties can benefit from expert legal guidance to avoid disputes.

Need Garden Leave Advice? Let’s Chat

Whether you’re an employer wanting to safeguard your business or an employee facing a garden leave agreement, Sprintlaw can help you get it right. For tailored legal advice, contract drafting, or review, email us or call 08081347754 for a free, no-obligations chat with our friendly team.