October 20, 2020
By: Colin A. Walker
Garden Leave, doesn’t that sound nice? A little historical color: in England, some employees would agree to a period of time just before the end of their employment during which they would be paid, but would not work. During this time, they could do things like work in the garden (gardening being very popular in England), hence the term “Garden Leave.”
Closely related to non-compete agreements, garden leave provisions provide that the C-Level executive and the company must give some period of notice, typically 30 or 60 days, prior to resignation or termination. The company may relieve the executive of his/her duties during that period, and may wish to do so if the relationship has become acrimonious, but must continue to pay the executive. Since the executive is still employed, he/she will still have a duty of loyalty, which will prevent him/her from competing against the company, recruiting its employees, usurping its opportunities, etc.
This provides the company with a period of time to solidify its customer relationships, recruit a replacement, secure its trade secrets, etc. It provides the executive with pay and time during which the executive can search for new employment or just enjoy paid time off. Of course, the company cannot force the executive to work for it.
Note that some courts in the U.S. have refused to enforce garden leave provisions.