What Is Garden Leave?

What Is Garden Leave?

Let me explain garden leave to you directly: it's a practice that's big in the financial sectors of the UK, Australia, and now starting to appear in the US, where an employee who's leaving—either resigning or being let go—keeps getting paid but has to stay away from the office during their notice period.

You can't take on new work or do anything for your current employer, but you're still on the payroll. This setup protects the company's secrets and prevents any mess during the handover. Sure, it costs the employer money, but it's a smart way to avoid risks when someone important is heading out.

Key Takeaways on Garden Leave

Here's what you need to know: garden leave means you get your salary and benefits while being kept from competing or harming your employer's business. It's mainly about protecting company info and client ties by isolating you from the workplace.

Massachusetts led the way in the US by making it law in 2018, and it's common in the UK, Australia, and New Zealand, with growth in places like Illinois and New York's finance world. For you as an employee, it means steady pay without work duties, but it can block new job starts and limit your networking, which might frustrate your career moves.

Employers, you have to balance the high costs and legal hurdles against the protection it offers—it's not cheap, and enforcing it can lead to disputes.

Navigating Garden Leave Norms and Practices

You might hear 'garden leave' tossed around in finance circles in the UK, Australia, and New Zealand, and now Massachusetts has it on the books since 2018 as the first US state. The name sounds nice—like you could just chill at home instead of grinding at work—but the restrictions can make it feel more like a cage.

It's a shield for employers when you're fired or quit: you're out of all work activities, can't jump to a new job or go solo, but you keep getting paid until it's over. The 'garden' part comes from the idea you might as well tend your yard with the free time. Sometimes it's seen as a polite way to say you're suspended, implying you're only good for light hobbies.

Why Employers Use Garden Leave

If you're an employer, you might put someone on garden leave after they resign or get dismissed to prevent any trouble during their notice. You worry they could slack off, stir up drama with the team, or poach clients for their next gig.

Another angle is keeping fresh intel away from competitors—by the time they're free, that info's stale. It's also a way to bench them from the job market, better than just paying them off and cutting ties immediately.

Assessing the Appropriateness of Garden Leave

You have to decide if garden leave fits: it's for when employment ends, no matter why. Ask yourself if their exit risks your business, what the transition involves, if laws block it, and how long it should last.

Remember, paying a non-working employee—especially a key one—is expensive, and you might not even be allowed legally. Weigh the costs, rules, and real benefits before pulling the trigger.

Employee Rights and Obligations During Garden Leave

As an employee, you're owed your salary and benefits, but check your contract for bonuses or extras—they might not apply. Expect to be locked out of company systems, data, and contacts with clients or colleagues. You'll have to hand back gear like laptops or cars.

Stay ready for calls from your employer—they might need info or even pull you back in. Don't book trips without okay, and they could make you use up vacation days during this time.

Understanding Garden Leave Clauses in Employment Contracts

Employers don't always need a garden leave clause when hiring, but it's smart for execs and managers. Without it, enforcing one could lead to breach claims. Bonuses and commissions complicate things, often sparking fights or lawsuits.

Evaluating the Benefits and Drawbacks of Garden Leave

For employers, it's a defense: keeps employees available for questions, stops client theft, smooths handovers, blocks sensitive access, and delays competitor jumps. But it's costly—paying big salaries for no output—and you deal with legal mazes, bad PR, and possible backlash.

From your side as an employee, you get paid with light duties, can job hunt (but not start), and might keep bonuses. Downsides include restrictions on actions, no fulfillment from work, career stalls during long periods, and a sour exit if it's forced.

Garden Leave in the US

Massachusetts set the precedent in 2018, requiring at least 50% base pay during garden leave. Illinois' 2021 law curbs non-competes, affecting garden leave limits, and the FTC banned non-competes in 2024. In New York finance, it's used but barred for lawyers by professional rules.

Example of Garden Leave

Take the SEC filing for uniQure's ex-COO: from August 19 to 31, 2019, they were on garden leave—no facility or system access, available for CEO consults, and limited to officer communications only.

Common Questions About Garden Leave

What do you do on it? Mostly nothing work-related; you're paid but relieved of duties, with expectations spelled out. Can you start a new job? Usually not—pursue yes, but starting breaches contracts. Does it exist in the US? Yes, via Massachusetts law, New York adoption, and Illinois traction. Rules vary: 30-90 days notice, payroll stay, no office return, limited contacts.

The Bottom Line

To wrap this up, garden leave is how companies shield assets when you're leaving: you get paid to step back, with reduced roles and tight restrictions on access and communications until you're out.