When an employee leaves a company, there can be a period of time between when they give their notice and their last day. This time is typically spent working and transitioning responsibilities to other employees. But sometimes, a company will ask an employee to stay home during this period. This is called gardening leave.
It might sound strange to pay someone to stay home, but there are some good reasons why a company might do this. Let's take a closer look at what gardening leave is, the benefits and drawbacks, and how it might impact your small or medium business.
What is gardening leave?
Gardening leave is when an employee who is leaving a company is asked to stay away from work during their notice period. The employee is still paid their regular salary and benefits, but they are not allowed to come to the office or do any work. They may be asked to work remotely or not at all. The term originated in the British civil service, where employees could request special leave for exceptional purposes.
The length of gardening leave can vary depending on the situation. It might be a few weeks, a few months, or even longer. During this time, the employee is usually not allowed to work for another company or start their own business.
Why do companies use gardening leave?
There are a few reasons why a company might use gardening leave. One of the main reasons is to protect the company's interests. When an employee leaves, they might take sensitive information with them, such as client lists or trade secrets. By putting the employee on gardening leave, the company can prevent them from sharing this information with competitors. Some examples of sensitive information include future business strategies.
Another reason for gardening leave is to ensure a smooth transition. When an employee leaves, it can take time to find and train a replacement. By giving the employee gardening leave, the company can give themselves more time to prepare for the employee's departure.
Finally, some companies use gardening leave as a way to protect their reputation. If an employee is leaving under difficult circumstances, such as being fired, gardening leave can help to prevent them from saying or doing anything that could damage the company's image.
When is gardening leave appropriate?
While gardening leave can be used in a variety of situations, it is most suitable for senior employees or those with access to confidential information. This is especially important when an employee is leaving to join a competitor, as it prevents them from using sensitive information to their new employer's advantage.
Benefits and drawbacks of gardening leave
Like any company policy, gardening leave has both benefits and drawbacks. Here's a quick overview:
How is gardening leave implemented?
If you're considering using gardening leave in your small or medium business, there are a few things to keep in mind.
First, you'll need to make sure that you have a clear policy in place. This policy should outline the circumstances under which an employee will be placed on gardening leave, the length of the leave, and the employee's rights and responsibilities during this time.
Second, you'll need to communicate this policy to your employees. Make sure that they understand what gardening leave is and how it works.
Legal and contractual considerations
It's important to make sure that your gardening leave policy is legal and complies with all applicable employment laws.
Legal requirements
In some jurisdictions, there may be restrictions on how long an employee can be placed on gardening leave or what they are allowed to do during this time. For example, some jurisdictions may require that the employee be given the option to work remotely during their gardening leave.
Contractual terms
You should also make sure that your employment contracts include a clause that allows you to place employees on gardening leave. This clause should be clear and unambiguous, and it should be communicated to employees before they sign their contracts. The enforceability of garden leave clauses primarily relies on their explicit inclusion in the employment contract and whether the restrictions are necessary to protect the employer's legitimate business interests.
How gardening leave might impact a business
Gardening leave can be a valuable tool for small and medium businesses. It can help to protect company interests, ensure a smooth transition, and maintain morale. However, it's important to weigh the benefits and drawbacks carefully before implementing a gardening leave policy.
If you need advice about leave types, our 24/7 Employer Advice Line is available to all Australian business owners. Call 1300 144 002 today to get all your questions answered today.