What Is Garden Leave?
Garden leave (sometimes called "gardening leave") is a provision in an employment agreement that requires an employee who has given notice of resignation (or been given notice of termination) to remain employed and paid during the notice period but not perform any work duties. The employee stays home — metaphorically tending their garden — while continuing to receive their salary and benefits.
During the garden leave period, the employee remains bound by all employment obligations including confidentiality, non-solicitation, and loyalty duties. But they are excluded from the workplace and typically cannot access company systems, attend meetings, or contact clients.
How Garden Leave Works
The Notice Period
Garden leave is triggered when either party gives notice of termination. The agreement specifies the notice period — commonly 30 to 90 days for senior roles and up to 6 months for executives. When notice is given, the employer has the option to invoke the garden leave clause.
During the Garden Leave Period
While on garden leave, the employee:
- Remains officially employed by the company
- Receives their full salary and benefits
- Is bound by all contractual obligations (confidentiality, non-solicitation, loyalty)
- Must be available to answer questions or assist with transition activities if requested
- Cannot start working for a new employer or competing business
- Cannot contact clients, customers, or employees for business purposes
After Garden Leave Ends
When the garden leave period expires, the employment relationship ends. At that point, any post-employment restrictive covenants (non-compete, non-solicitation) begin running. Some agreements credit the garden leave period against the post-employment restriction period, effectively reducing the total time the employee is restricted.
If your agreement includes both a garden leave clause and a non-compete clause, specify whether the garden leave period counts toward the non-compete duration. For example, if the garden leave is 3 months and the non-compete is 12 months, does the total restriction last 12 months (with the first 3 months paid) or 15 months? This distinction significantly affects the practical impact on the employee.
Benefits of Garden Leave
For Employers
- Immediate separation — The employee is removed from the workplace, reducing the risk of them taking clients, data, or colleagues
- Continued loyalty obligations — The employee remains bound by fiduciary duties during the garden leave period
- Softer than a non-compete — Because the employee is paid, courts are more likely to enforce the restriction
- Client protection — Time to transition client relationships to other team members
- Information protection — Reduces the risk of the employee carrying current competitive intelligence to a new employer, as the information becomes less current during garden leave
For Employees
- Continued income — The employee receives full pay during the restriction period
- Benefit continuation — Health insurance and other benefits remain in effect
- Time to decompress — A paid transition period before starting a new role
- Less adversarial — Garden leave is perceived as less punitive than a non-compete
Garden Leave vs. Non-Compete
Garden leave and non-compete clauses serve similar purposes — keeping the employee away from competitors for a period after departure — but they operate differently.
| Feature | Garden Leave | Non-Compete |
|---|---|---|
| Employee is paid | Yes, full salary and benefits | No (unless contract specifies) |
| Employment continues | Yes, during the notice period | No, employment has ended |
| Enforceability | Generally high (employee is compensated) | Varies by state; banned in some states |
| Cost to employer | Significant (full compensation) | No direct cost |
| Duration | Typically 1-6 months | Typically 6-24 months |
| Employee perception | More acceptable | Often resented |
In states like Massachusetts, employers are required to provide "garden leave pay" or equivalent consideration to enforce non-compete agreements. This reflects a growing trend toward compensating employees for the burden of post-employment restrictions. Even in states that do not require it, paid restrictions are more likely to be enforced.
When to Use Garden Leave
Senior Employees With Client Relationships
Employees who manage key client relationships are prime candidates for garden leave. The period allows the company to transition those relationships to other team members before the employee can contact clients on behalf of a new employer.
Employees With Access to Sensitive Information
Employees with deep knowledge of competitive strategy, product roadmaps, pricing, or trade secrets benefit from a garden leave period that allows that information to become less current before they join a competitor.
Departures to Direct Competitors
When an employee announces they are leaving for a direct competitor, garden leave allows the employer to act immediately to protect its interests while still honoring its contractual obligations.
As a Non-Compete Alternative
In states where non-competes are banned or heavily restricted, garden leave provides a lawful way to achieve a similar result. Because the employee is paid and remains employed, garden leave avoids many of the legal challenges that non-competes face.
Drafting a Garden Leave Clause
Specify the Notice Period
Define the required notice period and note that the employer may, at its discretion, invoke the garden leave provision during all or part of the notice period.
Define the Employee's Obligations
Clearly state what the employee must and must not do during garden leave:
- Remain available for reasonable requests
- Continue to comply with confidentiality and non-solicitation obligations
- Refrain from working for any other employer during the garden leave period
- Return company property at the start of the garden leave period (or upon request)
- Not contact company clients, customers, or employees for business purposes
Address Compensation
Confirm that the employee will continue to receive their base salary, benefits, and any other compensation during the garden leave period. Address how bonus and commission payments are handled during this time.
Employer's Discretion
The clause should give the employer the discretion to invoke or waive the garden leave requirement. Not every departure warrants garden leave, and the employer should retain flexibility.
Interaction With Other Covenants
Specify how the garden leave period interacts with any post-employment non-compete or non-solicitation clauses. Options include:
- Garden leave runs concurrently with the non-compete period
- Garden leave is credited against the non-compete period
- Garden leave and non-compete run consecutively
Practical Considerations
Cost
Garden leave is expensive. Paying an employee to not work for 3 to 6 months represents a significant cost. Employers should weigh this cost against the value of the protection provided.
Employee Morale
Employees who are placed on garden leave may feel isolated or punished. Communicate the purpose of the garden leave clearly and professionally to maintain the relationship.
IT and Access
When garden leave begins, immediately revoke the employee's access to company systems, email, and physical offices. This is a critical step in protecting confidential information.
Legal Review
Garden leave clauses interact with employment law in complex ways, including issues around COBRA, unemployment insurance eligibility, and state wage payment laws. Make sure your clause is compatible with all applicable laws.
Best Practices
- Reserve the right to invoke garden leave — Make it discretionary, not automatic
- Continue full compensation during the garden leave period
- Revoke system access immediately when garden leave begins
- Specify obligations clearly — What the employee can and cannot do
- Address the interaction with non-compete clauses explicitly
- Communicate professionally — Explain the purpose of garden leave when invoking it
- Keep the period reasonable — 1 to 6 months depending on the role
- Consider the cost-benefit — Garden leave is most valuable for senior roles with significant client relationships or access to competitive intelligence
Garden leave clauses provide a balanced approach to protecting business interests while compensating employees for the restriction. They are increasingly popular as non-compete laws become more restrictive, and they offer a practical alternative that courts and employees find more palatable.