Garden or Gardening leave is where an employee who has either resigned or been terminated is requested to remain away from the workplace and not undertake any work for the duration of their notice period. This is more commonly used for senior executives to keep them from operational decisions and confidential information whilst also keeping them from commencing work with another employer or competitor.
While there is not necessarily a need to include a garden leave clause in a contract, it is recommended that a detailed clause be included to ensure clarity of when and how garden leave can be used and to minimise risks of challenge. Keep in mind that the use of garden leave in situations where employee’s earnings are dependent on them working, for example commission earnings, or where it is necessary to work to maintain a certain skill level, for example, doctors, garden leave may be deemed to be in breach of their contract.
Employees placed on garden leave are to suffer no reduction or loss of their contracted benefits. To determine what is a benefit and what is considered a tool, an assessment would need to be made. For example, payments such as private health insurance, increased superannuation benefits etc would need to remain in place during the period of garden leave. Laptops would generally be considered a tool and could be removed prior to the garden leave commencing. Other items that could be considered either a benefit or a tool could be a company car or mobile phone. If these items are provided for private and work use, they would be deemed a benefit and would need to remain in place during the period of garden leave. If, however they are only provided for business use, they can be removed from the employee prior to garden leave commencing.
An employee can refuse to comply with the requirement to remain on garden leave and elect to commence their new employment early. Should this occur, the old employer will need to decide if they will let it go or sue for damages which is generally a costly and complex process.
For assistance with your garden leave clauses and correct processes, please contact us at [email protected] or 1300 720 004.
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