Garden Leave

Garden leave arises where an employee, having resigned or given notice of termination of employment, is instructed by the employer not to perform their regular duties, contact customers/clients or attend the workplace for some (or all) of the notice period.  During garden leave, an employee receives their full salary and benefits and remains an employee of the company (until the end of their notice period).

In Ireland, garden leave means an employer tells an employee, usually senior, to stay away from work during their notice period, while still being paid and remaining employed, to protect confidential information or prevent them from joining competitors, requiring a specific clause in the contract to be enforceable, and it can be challenged if overly restrictive. Employees must adhere to their contract, including confidentiality, but can seek recourse via the Workplace Relations Commission (WRC) if the terms are unfair or not in the contract, as seen in the Vodafone case.

Key Aspects of Garden Leave in Ireland:

  • Purpose: 

Prevents employees with sensitive knowledge (senior execs, sales) from accessing clients, colleagues, or sensitive data while leaving, making information “stale” or allowing a successor to establish themselves.

  • Contractual Basis: 

Must be a specific clause in the employment contract; employers can’t impose it if it’s not agreed upon.

  • During Leave: 

Employee receives full pay and benefits, remains under contract, but must not work, contact clients, or attend the workplace.

  • Employer’s Goal: 

To protect business interests, keep the employee “out of the market,” and prevent them from immediately working for a rival.

  • Employee Rights: 

Employees are still bound by duties like good faith and confidentiality.

  • Enforceability: 

Clauses must not be excessively restrictive, or they risk being challenged, as demonstrated by the High Court case Octavio Hernandez v Vodafone Ireland, where an employee successfully appealed being prevented from earning an income.

  • Legal Recourse: 

If an employee believes they are unfairly placed on garden leave or the terms are too restrictive, they can contact the Workplace Relations Commission (WRC).

When It’s Used:

  • When an employee resigns or is terminated.
  • For senior staff with high access to sensitive information.

What to Do if You’re on Garden Leave:

  • Check your contract to see if the clause exists.
  • Continue to act in good faith and protect confidential information.
  • Contact the WRC if you believe your employer is acting illegally or unfairly.

Conclusion

The effect of garden leave, from an employer’s perspective, is that the employee is effectively ‘out of the market’ while on garden leave and does not have access to clients/customers, colleagues and confidential information.  The goal, from an employer’s perspective is that the employee is kept out of the market long enough that any confidential information they may have goes ‘stale’/out of date, or the employee’s successor can establish themselves (and retain customers, clients, etc.).  Garden leave can be a particularly helpful tool for an employer who wishes to prevent a senior executive with a long notice period from immediately joining a competitor or starting their own business.

Ideally, the employment contract should contain an express provision permitting an employer to place an employee on garden leave and the provision should also outline the powers of the employer/duties of the employee during garden leave.