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Could “garden leave” replace non-competes?

On Behalf of | Dec 26, 2023 | Employment Law

Most of the time, when an employee gives their notice that they’re leaving a company, they’re either asked to work out that notice or shown the door right away. The former usually happens when the company needs them to help during a transition period, while the latter usually happens when the company wants to protect its assets from potential misuse.

Garden leave” is somewhere in the middle. It’s the practice of paying a key employee to stay home during their notice period. They continue to receive all the benefits of their employment, but they’re not allowed to work. Instead, they can usually do whatever else they please – even take up gardening (which is how the term got its name).

Given that non-compete agreements are becoming increasingly controversial and less and less likely to be enforced, garden leave clauses may become more common in employment contracts.

What are the pros and cons of garden leave?

Employers like garden leave because it helps protect their interests. Key employees often have access to sensitive information, including client lists, trade secrets and other confidential data. Since that data can change pretty swiftly, even a short garden leave period can effectively make everything the departing employee knows “old news” if it gets relayed to some other employer.

Employees like garden leave because they continue to receive their salary, they keep their health insurance and they have access to all the other perks that may come with their job during the entire notice period. The fact that they’re not working makes it easier for them to concentrate on their future and their job search, without worrying about dividing their energies.

On the other hand, garden leave isn’t without its drawbacks. It can be costly for an employer to pay that salary and benefits, especially when they need to bring in someone new to cover the absent employee. Employees, too, can sometimes chafe under their restrictions. They may feel like the garden leave is an unnecessary delay on their way to another career stage, and they may worry that they’ll be stigmatized if word gets out that they were not trusted to behave ethically as they moved on.

When you’re looking at any kind of restrictive covenant in an employment contract, it’s always wisest to get an experienced legal take on your situation. That can keep you from making an agreement that you may later regret.

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