Garden Leave in Contracts: What It Means and How It Works
Garden leave (also called gardening leave) is a contractual provision where an employee who is leaving a company remains on the payroll during their notice period but is not required to come to work. The employee stays home but continues to receive salary and benefits.
How Garden Leave Works
During garden leave:
- You remain employed and bound by your employment obligations (confidentiality, non-solicitation, duty of loyalty)
- You receive your regular salary and benefits
- You are not required to perform any work duties
- You are typically prohibited from starting work with a new employer
- You may be restricted from contacting clients, colleagues, or vendors
Garden leave periods typically range from two weeks to six months, depending on the employee's seniority and the sensitivity of their role.
Why Employers Use Garden Leave
- Protect confidential information: By the time garden leave ends, time-sensitive business information may be less valuable to competitors.
- Client relationship management: The period allows the company to transition client relationships to other team members.
- Alternative to non-competes: In states that restrict or ban non-competes (like California), garden leave can serve as a softer alternative since the employee is being compensated during the restriction.
- Massachusetts requirement: Under the Massachusetts Noncompetition Agreement Act, employers must provide either garden leave or other mutually agreed consideration to support a non-compete.
What to Negotiate
- Duration: Shorter is generally better for the employee. Negotiate the shortest period that is practical for transition.
- Full compensation: Ensure you receive full salary, benefits (health insurance, 401k contributions), and any bonus accruals during garden leave.
- Contact restrictions: Clarify exactly what you can and cannot do during garden leave. Can you attend industry events? Can you update your LinkedIn?
- Early release: Negotiate the right to request early release from garden leave if you find a new opportunity.
When to Consult a Lawyer
If your employment contract includes a garden leave clause, particularly one paired with a non-compete or non-solicitation, consider having an employment attorney review the terms. The interaction between garden leave and other restrictive covenants can be complex.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.