What Employers and HR Should Know About Garden Leave

An employer may ask its employee not to report to work or work from home or a different location during their notice period. This practice is called "Garden leave", and the employee would still receive the same wage and employment benefits as stated in their contract.

Garden leave is not mentioned in employment laws, but it is sometimes used to describe a period when a worker keeps their job, receives full wages, and does not report to work. 

The issues with garden leave

A problem that occurs in practice is a worker's position during the period between them giving notice and the notice period's expiry. 

It is usual for the employer to ask the worker to stay at home during the garden leave. The employer may use this method instead of waiving the notice. They wish to ensure that the worker does not go to work for a competitor during the garden leave or give the employee's replacement time to take over their contacts and business.

Employment contracts typically provide the employer with this right. 

As of now, there are no local cases that handle the legal position of "garden leave". Judges in Malaysian cases have discussed "garden leave" in the context of "...the worker was placed on garden leave...". But, unfortunately, they did not expand any further on the legal position or its applicability in this country.

Hence, one can consider the Australian, English and New Zealand's positions of "garden leave".

Australian position

There is an article on Mondaq by an Australian Law firm Holding Redlich. Here are some lessons for employers:

• Employers must ensure provision is made in the employment contract that entitles them to place workers on garden leave during notice periods when either they or the employee gives the termination notice.

• While a worker is on garden leave, they are entitled to all the employment benefits and remuneration as if they were working for the employer ordinarily. Employers cannot remove access to mobile phones, vehicles, or other work tools unless they are sure they constitute "Tools of trade" instead of agreed components of the worker's remuneration package. 

• If the employer does not have an express right in the contract to place their worker on garden leave, they must obtain legal advice as to whether that right occurs by implication.

During a garden leave, the employee still receives pay and employment benefits.

English position

An English law firm Slater & Gordon, has a brief article on garden leave. 

The article states that the worker is also entitled to their standard pay and contractual benefits over their gardening leave period. However, they are not permitted to either accrue or a bonus, depending on the wording of the employment contract. 

The employer may also require the worker to take their accrued leave days during the garden leave period. 

New Zealand's position

In New Zealand, an employer cannot ask a worker to go on garden leave unless they both agree. The agreement must include a garden leave provision in the employment contract, written in good faith. 

Garden leave can be helpful when both the employer and worker agree to its use in a specific situation. Nevertheless, employers should be cautious using it if the worker wants to remain at work.

If the employment contract does not include a garden leave provision, the employer should not put a worker on garden leave without their consent. 

Workers must follow all the terms and conditions of their employment contract while they are on garden leave. 

Sources: myindustrial3employment, employment.gov.nz, Mondaq & Slater & Gordon

Articles that may interest you 
Employer’s Guide to Conduct COVID-19 Risk Assessment at Workplace
Companies Must Lodge Statutory Documents to SSM Before Dec 31
Do Malaysian Labour Laws Recognise Gig Workers as ‘Employees'?