Employees may leave their role in your company in different ways, such as through redundancy, dismissal or resignation.
Something to consider when ratifying an employee’s departure from your company is placing them on garden leave for the duration of their notice period.
This is a scenario where you tell the employee to stay away from the business. This could be not coming to the office, not contacting clients, working at home or not performing any duties until they officially leave the company (save any duties you specifically request of them if you provide for this).
It is a decision that requires thoughtful consideration, and you need to be mindful of how this impacts your business.
What are the positive aspects of garden leave?
For employers, it’s a fine balancing act, deciding if garden leave is beneficial for the business, your team and the employee leaving the company. There are positive and negative effects of garden leave and risks involved with placing an employee on garden leave.
There are plenty of positives for placing employees on garden leave, including retaining control of their responsibilities. You ultimately decide if they work or not in this period, and by law, they remain employees.
In addition to this, retaining this control means you can also protect company information such as future plans and client details, as you can ensure the employee doesn’t work and returns all company equipment.
Other benefits of garden leave include allowing new hires to adjust to the role, protecting existing staff, preventing the employee from starting a new role elsewhere and ensuring the employee follows what they are contractually obliged to until their notice period finishes.
What are the negative aspects of garden leave?
While there are benefits to garden leave, there are negative aspects to consider, and these are centred around costs and legal concerns.
Should you place an employee on garden leave upon starting their notice period, they are entitled to full pay whether they are working or not. Further costs follow as employees can also be entitled to other contractual benefits.
Costs can add up very quickly, especially if you’ve brought in that employee’s replacement during the garden leave period.
There are also legal risks to be mindful of. You should be including the possibility of garden leave in your employee contracts if you wish to consider placing employees on garden leave.
If you place an employee on garden leave and their pay is based on commissions and bonuses, or they need to work to maintain a certain professional skill level, you could be in breach of contract.
In this instance, your employee may choose to resign and file a claim of constructive dismissal. For employers, this would remove the garden leave rights and potentially other aspects of the employee contracts, including post-termination restrictions and increase costs further should formal legal proceedings take place.
In addition, many post-termination restrictions provide that they are reduced by any period the employee spends on garden leave (as they generally would not have contact with clients during this time), which may be something you wish to avoid.
Is placing employees on garden leave the right approach to take?
As noted above, there is plenty to consider, and you need to decide what is best for your company. Given the various ways employees leave a company, you need to consider whether garden leave is appropriate in each individual set of circumstances.
Before deciding to place staff on garden leave, whether that is aligned with your redundancy plans or an employee resigning, you should speak with employment law experts.
They can guide you by offering tailored advice and support, examining the employee’s circumstances, including the importance of their role, and reviewing employee contracts and associated entitlements.
If you need support with garden leave matters or other employment law concerns, get in touch with our team.