Garden leave – how does it work?

Garden leave – a leave entitlement for employees that exists but very few are aware of it. This, in turn, sees many employees confused about it and employers not utilizing the leave to its full potential.

Below are some of the basic garden leave information employers and employees alike should be aware of.

Is garden leave mandatory?

Garden leave, also known as gardening leave, is a workplace leave where an employee – who resigned, dismissed or made redundant – is requested by their employer to not report to work remotely or in-office during their notice period. Employees on garden leave will be contractually retained as an employee but will no longer be keeping up with their responsibilities. This includes completing work tasks, attending meetings or communicating with colleagues and clients.

Garden leave is an effective method for employers to ensure the employee is taken out of involvement and contact with the company until their employment contract ends. It also allows employers to control the employee’s work and how and where it is necessary. This includes restricting employees from taking up another role with a competitor company while on garden leave.

Read more: Ask a lawyer: Does HR have other legal means to prevent poaching?

Benefits of garden leave for employers

Garden leave greatly benefits employers in more ways than one. The leave primarily helps employers retain key employees and clients during an employee's exit. Suppose the exiting employee plans to poach clients and other colleagues to transfer with them to the new employer. In that case, the garden leave allows the company to minimize poaching and maintain the loyalty of the employees and clients. ­­­

The leave also allows employers to protect confidential information from leaking out. Since the garden leave does not allow the employee to go or do any work, the company is able to limit the access the employee has to any new information, confidential or sensitive information that could potentially harm the company, its employees and clients. It also ensures that competitors do not get a hold of any confidential information that they could use against the company or as leverage.

In addition, garden leave limits the employee from pursuing other roles and opportunities in other companies while their employment is still ongoing. In certain scenarios, employees sometimes get a head start working for a new employer while their notice period is still ongoing. Having the employee on garden leave limits the actions the employee can take and ensures there will be no conflict with them starting a new role somewhere else where the employee can use company information in their new role.

Other benefits include:

• Ensuring the employee is available for the employer for any queries or handover help for the employee’s replacement;
• Allowing the employee’s replacement to transition into the role smoothly; and
• Enabling the company to seek damages should the employee cause any damage to the business and prevents an employee from benefiting from the breach of their ongoing duties.

What happens when an employee is on garden leave?

Employees on garden leave will still receive full pay and are still employees of the company. There are no specific legal requirements regarding garden leave and its process in Singapore. Offering the leave depends on the company and whether it is agreed upon under the employment contract. If the employee is put on garden leave and is covered under the Employment Act, the company is required to pay their final salaries on their last day of employment once they serve their notice period.

However, if a garden leave clause was not covered and agreed upon in the employee's employment contract, an employer may not have legal rights to send an employee on garden leave so quickly. If it happens, an employee may claim that they have the right to work and putting them on garden leave is a breach of the employment contract.

Depending on the nature of employment, the company may have a duty to provide the employee with work as they may have an implied right to work. If there is a right to work for employees, it is not allowed to put them on garden leave. The right to work is determined based on whether the employee is required to use specific skills often, the employee’s position in the organisation, if their employment was a fixed term or not, and if the remuneration was a fixed rate or commission basis.

How long does garden leave last?

A company should ensure a garden leave period is a reasonable length necessary for the protection of the employer. It usually runs for the size of the employee’s notice period in the employment contract and does not extend beyond the notice period. If it goes beyond what is needed, then the employer is at risk of harming the company with legal issues that could see the leave order being deemed unenforceable by the courts.

Disadvantages of garden leave

Despite the many benefits of gardening leave, it also has some disadvantages, which can significantly affect the company, employees, and clients.

Putting an employee on garden leave could be costly for the company. Having the employee not report to work but remaining an employee with full benefits and pay can be expensive, especially if a garden leave is unnecessary in the employee’s exit case. It also sees usual workflow and output come to a significant halt since the employee is no longer reporting to work.

There is also a legal issue that could arise if a garden leave is not handled correctly. Using a garden leave in the absence of any contractual entitlement and going against the right to work of the employee can cause a breach of the employment contract. It allows the employee to file a complaint against the company, which could damage its employer image and carry hefty legal fees. In addition, the employee could feel forced to resign and claim constructive dismissal due to the employer’s breach.

Read more: How to protect confidential information post-employment

Despite all this, it is up to the employer whether or not a garden leave is needed. To minimize any legal issue and conflict in the future, it is best for the company to set a garden leave clause for employees that is detailed in the employment agreement and employee handbook. In this way, it is straightforward for both parties how the leave – its process and effect – would go.