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01.05.2019

How garden leave can protect your business

 

 

Garden leave – A vital protection when key employees leave the business

Most readers will be aware that corporate governance issues within the Football Association of Ireland have led to John Delaney ‘stepping down’ from his role with the organisation. While it is unclear what exactly John Delaney’s current employment position is, it is possible that he has been placed on ‘garden leave’ pending an internal investigation. The term ‘garden leave’ originated in Britain but is now widely used across common law jurisdictions including Ireland.

What exactly is garden leave?

Garden leave is a term most commonly used to describe a scenario in which an employee who is leaving their position is instructed to stay away from the workplace during their notice period. It is most commonly used as a way to prevent an employee from immediately joining a competitor with up to date information on the employer’s current activities. As the notice period expires, the employer’s information becomes dated and less valuable. This practice became known as garden leave as all the employee was permitted to do during their notice period was their gardening. While garden leave has similarities with a paid suspension and employees on garden leave continue to receive their salary, it is important not to use the terms interchangeably.

Include a policy on garden leave in the employee handbook

Employers are recommended to have a policy within their employee handbook setting out when they will be entitled to use the garden leave provisions. The policy should clearly inform employees that they are still bound by their contractual terms and that they continue to owe a duty of fidelity to their employer during any period of garden leave. In addition, the contract of employment must expressly reserve the right to put the employee on garden leave and the employer must act reasonably at all times in exercising the contractual right.

Why put an employee on garden leave?

The principal reason for placing an employee on garden leave is to ensure that the employee’s access to sensitive business information is restricted when the employment relationship is ending. In certain circumstances, it is necessary to prevent the departing employee from having access to colleagues, clients or company data. It is vital that employers review and restrict the employee’s access to IT platforms where necessary. Company mobile phones, laptops, and social media accounts may all contain valuable information.

Final matters

It is important to note that whilst an employee is on garden leave, they continue to accrue annual leave. Employers need to take this into consideration when calculating the departing employee’s final salary payment. If an employee breaches the terms of their garden leave by starting work in their new position or otherwise, the affected employer would need to consider the merits of suing the employee for breach of contract.

Need help with at the end of an employment contract?

Please contact the advice line on +353 1 886 0350 to speak with a consultant on this or any other HR issue affecting your organisation.

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