Guide to drafting a garden leave clause

Your standard senior employment contract (and directors service agreement) should reserve you the power to put the employee on garden leave when notice is given either by you or the employee.

If your contract does not contain an express power to impose garden leave this can still be implied, but the Court will have to balance the employee’s right to work and exercise his/her skills against your interests in a keeping a key employee who may have confidential information away from your competition by having them on garden leave.

How having the power to impose garden leave can help:

Your employee has resigned giving notice and you learn that he is planning to go to work for your main competitor. You don’t want to pay in lieu of notice and nor do you want the employee in the office day-to-day as that will allow him the opportunity to plan how to poach your clients and maintain contact with them.  You put him on garden leave and impose restrictions including a block on him having contact with your clients. This is a way of delaying the employee’s ability to poach your clients and delay his arrival at your competitor.

You have a senior employee who you have been consulting with about her possible redundancy. The employee has threatened a number of claims during the process and you have attempted settlement unsuccessfully. When you confirm the redundancy your options are to make her work her notice (not great given she has made threats) or to pay her in lieu of notice. Another option would be to put the employee on garden leave. Such action usually assists in getting an employee to the negotiating table to agree exit terms which work for both sides even (if you later agree to pay in lieu for the balance of the notice period).

If you need help in:

• drafting a garden leave clause or seeking to impose garden leave where you have no express power to do so;
• exiting a senior-level employee where you have been unable to reach settlement;
• threatening or taking action against a former employee who is poaching your clients;

Please contact David Greenhalgh on 020 3603 2177.

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This article/blog is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.