Garden Leave (businesses and employers)
What's the problem?
Generally, individuals, (usually senior executives), handing in their notice to go and work for a competitor, contacting your clients or customers, using your confidential information or otherwise damaging your business during their notice period.
What is Garden Leave?
You send the individual home for the notice period and continue to pay them but to stay away from work, at home – in the garden.
Must there be a contractual term – what’s the issue?
No, but you can face real problems, since although some people quite enjoy being paid to do the gardening, others want to get on and start their new role and you could be committing a very serious breach of contract – particularly if you are not paying them a bonus or commission which they would otherwise have received or you are preventing them from using their skills.
Yes. It could be entirely counter-productive and really damaging for your business. The breach could be so serious that it entitles the individual to leave as a result. Not only can that jeopardise the enforceability of any restrictive covenants but you could also be facing an unfair constructive dismissal or other court claim, depending on the circumstances.
The solution? - garden leave clauses
A well drafted garden leave provision that dovetails with the rest of the agreement can ensure that you solve the problem when the contract is terminated (by either party) – the individual is away from the workplace, not contacting your clients or customers and not working for a competitor.
However, garden leave clauses are rather like restrictive covenants and a clause will only be enforceable if it is reasonable.
Careful consideration is needed, since, if the person is a long time on garden leave, followed by lengthy (perhaps otherwise enforceable) restrictive covenants, the length of both together maybe unreasonable and render the restrictive covenants unenforceable.
Contact Roberta for help.