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Garden Leave Clauses in Employment Contracts

CM Advocates > Legal News  > Garden Leave Clauses in Employment Contracts

Garden Leave Clauses in Employment Contracts

Garden leave is a term used to reference the practice of having an employee work away from the office with limited access to the employer’s resources following a notice of termination or resignation.

Garden leave provisions may be included in employment contracts, separation contracts, or even full on non-compete and confidentiality agreements, depending on the goal that the parties want to achieve. These include:

  • Protecting the Employer’s Legitimate Interest
    Garden leave provisions include terms that restrict the employee from engaging in competing business or practice with those of the employer during the pendency of the garden leave period. Non solicitation clauses may also be included to limit the employee from contacting clients of the employer or from poaching other employees.Garden leave provisions in this case prevent an employee from, leaving the employ of his employer and immediately setting up or joining a competing business, using information or trade secrets of his employer or sharing that information to the latter’s detriment.Employers may elect to provide for a garden leave period long enough to thwart any of these threats from affecting their business, should they materialize.
  • Safeguard against possible detrimental behavior of the employee
    For employment contracts, garden leave provision may be important to employers who need to immediately terminate an employee from employment, but may be restricted by employment laws which require due process to be followed before termination of employment.For instance, in cases where an employee’s improper conduct is the reason for termination of employment and where the employer is of the opinion that the conduct may continue, the employer may deny the employee access to the office and to certain resources to safeguard against the bad conduct.

Rights and Obligations Provided by Garden Leave

A person on garden leave is still considered an employee of their employer and therefore continues to enjoy the benefits of the employment contract, such as the basic salary, fringe benefits and in some cases bonuses.

Equally, the person is bound by a corresponding obligation to continue with his contractual duties as per his contract, but in some pro-employer contracts, the employer may reserve the right to assign those duties to the employee within the garden leave period.

It is common to have a garden leave provision that includes non-compete clauses, terms on confidentiality, restrictions on anti-poaching and non-solicitation clauses. The Employee is still obligated to the employer and expected to maintain loyalty during the continuation of the garden leave.

Garden Leave as an Alternative to Non-Compete Provisions

Garden leave also sometimes include restrictive trade provisions that limit the employee from engaging in competing business with the employer or from, soliciting employees and clients away from the employer.

However the Kenyan courts’ attitude on non-compete and restrictive clauses is quite clear

(Read The Courts’  Decision On Covenants In Restraint Of Trade In Employment Contracts.

Garden leave provisions offer a good alternative to non-compete and restrictive trade clauses often so when the employer is seeking to protect legitimate business interest. The courts might be more tolerant to garden leave provision as opposed to restrictive trade provisions because garden leave periods are usually shorter (1-3 months) than the typical non-compete 6months-12 months’ period.

Also it may be easier for an employer to enforce garden clauses as opposed to restrictive trade provisions because of the continuing obligation of the employee towards his/her employer contrasted to the non-existent relation where non-compete clauses are used in separation agreements.

The Advantages of Garden Leave Provisions

From the discussion above we can pick out some of the advantages of using garden leave.

First garden leave clauses might be comparatively easier to enforce than non-compete clauses.

Secondly it offers a more orderly transition following the termination of employment contract contrasted with transition offered by the shorter 1-month notice period that are common to most employment agreements or separation agreements.

Thirdly it is less likely to be overused by employers to stifle competition, compared to non-compete provisions, because of the cost implication.

Lastly, garden leave offers added protection to employers who have the ability to include restrictive clauses within the period of garden leave to prevent the employee from revealing critical information, soliciting clients, poaching employees and working for a competitor against the employer’s best interest.

Limitations of Garden Leave Provisions

Without a doubt garden clauses are expensive for an employer as they require them to continue to remunerate an employee who does not perform any work.

Secondly, the protection period offered by garden leave provisions to safeguard against completion is shorter than that provided by non-compete period, which normally exclude an employer from competing with his employer for up to 6 months at least.

Thirdly, case law on garden leave provisions is not sufficiently established neither does the Employment Act specifically provide for it, creating an un-certainty in the enforcement of garden leave provisions

Also the fact that an employee is still bound by his employment contract during garden leave may raise interesting questions about their constitutional right to freedom from servitude, especially when the employee does not want to continue to be bound.

Conclusion

The Employment Act (2007) does not make a provision for Garden Leave, however the law of contract allows for its use where both parties are accepting of the provisions and agree to be bound.

Garden leaves presents a good common ground for both the employer and employees especially in negotiating post-termination terms. It will be quite interesting to see how the Kenyan courts develop jurisprudence surrounding garden leave as their use become more common in employment practice.

How can CM Advocates help?

We, at CM Advocates LLP, have excellent and experienced corporate and commercial  lawyers  who will help you draft and/or review your  employment agreements to ensure that you have the appropriate and enforceable clauses. Contact any of our team today or book an online consultation here.

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