What is Garden Leave?
Garden leave is the colloquial term used where an employer does not require you to attend the workplace but will still pay your usual remuneration during the period of garden leave.
You remain an employee throughout the period of garden leave. At the end of the garden leave period your employment maybe considered to have come to an end and your entitlements should be paid to you if this is the case.
Alternatively your employer may direct you to return to work.
What am I allowed and not allowed to do whilst on “Garden Leave”?
You are:
a) not required to attend work or perform your normal duties unless directed to do so;
b) not permitted to work for another employer during the period of garden leave;
c) bound by the existing terms of your employment during the garden leave period;
You must:
a) adhere to your normal conditions of employment including confidentiality and leave procedures; and
b) remain ready, willing and able to work if directed to do so.
If you contravene any of your employment conditions during your period of garden leave you may be liable for breach of contract. In these circumstances your employer may have recourse to take legal action against you.
Why would my employer put me on “Garden Leave”?
Garden leave usually occurs when an employee will have their employment terminated at a future date or have provided notice of their resignation.
Your employer may place you on garden leave during the notice period to restrain you from communicating information to competitors or using company resources for other employers. This frequently occurs where there is no restraint of trade clause contained in your contract of employment.
Your employer may have placed you on garden leave to allow you time to find alternative employment.
Alternatively, you may have been placed on garden leave where you have been suspended pending disciplinary action.
Is it lawful for my employer to put me on “Garden Leave”? For how long can my employer place me on “Garden Leave?”
Unless your contract of employment expressly requires the provision of work, it is lawful for your employer to direct you to go on garden leave.
There are certain professions requiring particular skills or talents, such as surgeons and TV presenters, where an employer owes an obligation to the employee to provide work. In these circumstances, it is not lawful for your employer to place you on garden leave.
If your contract of employment contains a clause allowing garden leave, it will be lawful for your employer to direct you to go on garden leave.
Case Law
Habersberger J considered the concept of “garden leave” in Bearingpoint Australia Pty Limited v Robert Hillard [2008] VSC 115. In this case Mr Hillard was employed as the Managing Director of Information Management and attempted to resign to work for a competitor, Deloitte Touche Tomatsu. Bearingpoint Australia sought to enforce the 180-day notice period required under his contract of employment from working for a competitor during the 180-day notice period in order to prevent him.
In this case Habersberg J defined garden leave as follows:
‘“Garden leave” is a colloquial or euphemistic term for an employer insisting that an employee, who has given notice, stay away from work for the duration of the notice period, whilst continuing to pay the employee’s remuneration’, at [84];
“It goes without saying that if the employment contract contained an express term permitting BearingPoint to direct Mr Hillard to go on garden leave then it would not be a breach of that contract to have given that direction. Equally, an express term that BearingPoint was obliged to provide work for Mr Hilliard would also put the issue beyond doubt.”, at [85];
Habersberger J ultimately held that:
a) Bearingpoint was entitled to direct Mr Hillard to go on garden leave for the duration of his 180 day notice period as it was entitled to vary or modify Mr Hillard’s duties even to the extent of putting him on garden leave once he had given notice;
b) Mr Hillard would suffer no loss as his remuneration would be the same whether or not he was on garden leave and any performance bonuses are discretionary; and
c) Mr Hillard’s position was not within the category of special and unique positions that imply an obligation on the employer to provide an employee with work.