Redundancy and Garden Leave: How Does it Work?

Garden leave, or gardening leave as it is sometimes referred to, is a strategy used by employers to protect their business interests when an employee is leaving the business. The strategy can also be used when an employee is made redundant. But how does garden leave work? KLG has put together a guide to help you understand the process.

What is garden leave?

During garden leave the individual will be retained as an employee during their notice period, but they will be kept away from the business. This means that the employee will not be required to complete any work, attend work, or communicate with colleagues and clients.
The purpose of garden leave is to allow the employer to protect their business and business interests by keeping the employee away from the business. If reasons for dismissal are such that the remaining period of employment may cause an issue, garden leave may be required. By doing this for the final period of their contract, the employer is reducing the risk of losing clients, colleagues, and useful information to competitors.
During garden leave, the employee’s implied and express contractual terms continue, including the right to receive a salary and any benefits. This also means that employees will be required to abide by any restrictive covenants that are within their contract. If the employee breaches their contract, the employer may be entitled to take further action, such as dismissal without notice.

When does garden leave occur?

Garden leave occurs when an employee is leaving the business and they are required to fulfil their notice period. This effectively means that garden leave will only be practicable where an employee has resigned and needs to see out their notice period, or they have been dismissed with notice. An example of where an employee can be dismissed with notice is during redundancy, where they must work their notice period before their last date of service.

How long is garden leave?

The length of the garden leave period will depend on the length of the employee’s notice period. Garden leave is usually for more senior employees, who are likely to have a longer notice period than the statutory minimum. Therefore, this period of garden leave could be for a few weeks or few months depending on the employee’s contractual notice period.

What are the pros and cons of garden leave (for the employee)?

Pros of garden leave
The employee will continue to receive their usual salary without having to work.
The employee will also continue to receive their benefits without having to work. The specific benefits will depend on the individual’s circumstances and they may include: health insurance, a company car, a company phone, a company laptop, etc.
Holidays continue to accrue during garden leave.
Cons of garden leave
The employee will be unable to start a new role until the end of their garden leave. This could be incredibly frustrating for the employee as they will be unable to have a fresh start or they may lose job opportunities.
The employee may feel isolated without being able to contact colleagues.

Garden leave: The Risk for Employers

Employers should exercise caution when deciding to place an employee on garden leave. In each situation, the employer should weigh up the pros and cons of putting that specific individual on garden leave.
One factor that should be taken into consideration is whether the employer can make salary payments on time. For example, if the employer is going through a redundancy scenario, they may be unable to afford the individual’s salary due to financial issues. It may not be beneficial to place that employee on garden leave and continue paying a large salary when it could be cost-effective to pay them a statutory redundancy payment instead. If the employer fails to pay the employee their salary, the employee may have an employment tribunal claim for unlawful deduction of wages.
Employers should also be aware that they should not place an employee on garden leave unless there is an express clause in the contract permitting this. Placing an employee on garden leave without this could amount to a fundamental change in the employee’s contract. If the employee is not in agreement with this change, they may have an employment tribunal claim for constructive dismissal. Unfair redundancy can cause unwanted stress for a business; if you think you need advice or guidance, get in touch with a redundancy lawyer.

Contact us

If you are considering legal action, or if you are simply looking for further advice on your situation, contact us today on 0330 221 0684 or by e-mailing [email protected]. As specialists in employment law, we have the knowledge and experience to guide you through your matter.