Garden Leave and the Day That Is Not a Day
Working notice, garden leave and payment in lieu: what each does to post-termination restrictions, and why the last day is not the end date.
How long before a six-month restriction even starts to run, by route
Employment continues, duties suspended; the person is out of the market for eighteen weeks in total.
Employment continues to the end of notice; the clock starts then.
Whatever the agreement says, which is why it should say something.
Employment ends immediately; the clock starts today.
Same date, but the position on the restriction itself may be weaker.
Clock starts today; nothing is paid in respect of notice.
Three of the six routes start the clock today and three delay it, and the delay is added to the restriction rather than absorbed by it. This describes shapes, not rules; which route is available where, and with what effect, is a question for somebody qualified in the place concerned.
The date employment ends and the date somebody stops coming in are different dates, and confusing them causes most of the trouble in this area. Somebody on garden leave has a last working day in one sense and remains employed in another — still bound by the contract, still accruing service, still owed the things an employee is owed.
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The choice between working notice, garden leave, payment in lieu and immediate termination is usually made on operational instinct. It has consequences for notice pay, for benefits, for continuity, and above all for when any post-termination restriction starts running.
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The four routes, and what distinguishes them
Working notice is the default: the person stays, does their job, and employment ends at the end of the period.
Garden leave keeps the employment alive while suspending the duties. The person is paid, remains bound by the contract including the duty of loyalty, and cannot start elsewhere. Whether it can be imposed at all depends on what the contract says and on where you are.
Payment in lieu ends the employment now and pays the notice as a sum. Whether the contract permits it matters a great deal more than people expect.
Summary termination ends it now without notice pay, and is a different proposition requiring conduct that justifies it.
The restriction clock
A six-month restriction that runs from the termination date behaves very differently depending on which route was chosen. Garden leave for three months followed by termination means the restriction ends nine months after the person stopped working. Payment in lieu on day one means it ends six months after they stopped working.
Whether periods of garden leave can be set off against restrictions, and whether a restriction is enforceable at all, differs by jurisdiction and by drafting. The practical point for anybody making the decision is simply to know that the choice moves the date, and to ask before choosing rather than afterwards.
Payment in lieu without a clause
Where the contract permits payment in lieu, paying it is a contractual act. Where it does not, ending the employment immediately and paying a sum may be something else entirely, with consequences for what else the organisation can rely on — including, in some systems, the restrictions.
This is the single most common expensive mistake in this part of the process, and it is made by organisations trying to be decisive. It is a question for somebody qualified in the place concerned, and the answer takes one phone call before the letter goes out and is worth very little afterwards.
What continues during garden leave
Everything in the contract that is not the duty to work: confidentiality, loyalty, restrictions on other employment, the obligation not to compete while employed, benefits, pension, leave accrual.
That last one surprises people. Someone on garden leave for three months is usually still accruing holiday, which has to be either taken during the period — if the contract allows the organisation to require it — or paid at the end. Working it out at the start avoids an argument in the final payment.
Keeping them available, or not
Garden leave is often written as requiring the person to remain available to answer questions. In practice they are available for about a fortnight and then stop being, and an organisation that genuinely needs their knowledge should extract it in the first week.
It is also worth deciding deliberately what access they keep. A person on garden leave with full system access is a continuing exposure; a person with none cannot answer the questions they are being retained to answer.
Benefits during the period
Somebody on garden leave remains employed, which means contractual benefits normally continue: pension contributions, insurance cover, a car, a subscription, whatever the contract provides. Switching them off because the person has stopped attending is a breach waiting to be noticed.
The same point applies in reverse to payment in lieu, where employment has ended and cover usually ends with it. Somebody who believes they still have medical cover and does not is a specific and avoidable harm, and telling them clearly what ends and when is a line in the letter rather than a project.
Telling people which it is
Internally, garden leave and termination look identical: the person is not there. Externally they are different, and somebody will ask whether the person is still employed — a reference request, a new employer, a regulator.
Record the actual termination date prominently in the file, separately from the last working day, because they will be confused by whoever answers that question. It is a small distinction that costs nothing to record and generates genuine problems when it is not.