Yes, garden leaves are generally enforceable to prevent an employee from taking a job at a competing business immediately post-termination of their contract.
What is garden leave?
Garden leave allows an employee who has left their position and no longer needs to report to work but still remains on the payroll and entitled to full wage. This prevents a leaving employee from sharing confidential information when they are on the notice period.
This period of garden leave is often used by employees to pursue travel or pursue hobbies – such as gardening – hence the name ‘gardening leave’ or ‘garden leave’.
Benefits of garden leave
1) It helps employers retain key employees and clients
Employers, during garden leave, can consolidate relations with colleagues to ensure they do not get poached by the employee on garden leave when that employee starts their next job. Similarly, employers often consolidate relations with customers, to ensure they retain their business and are not taken by the employee on garden leave.
2) It helps protect confidential information
During the garden leave period, an employee is not required to report to work, so they cannot access any new sensitive, confidential and/or proprietary information produced by the company during that period. Also, it ensures that an employee is kept out of the job market for long enough, such that any information in their possession becomes outdated. This prevents competing businesses from obtaining an unfair competitive advantage through the ex-employee.
3) It can prevent employees from immediately joining a competitor or starting their own competing business
During the garden leave, an employee is normally restricted from joining a competitor or starting their own business to compete with their employer.
When is garden leave enforceable?
It is likely that if an employment agreement contains an express garden leave clause it will be enforceable, even if the employee has the right to work.
In order to enforce a garden leave clause, an employer must obtain an injunction. An injunction is an order from a court demanding that an employee comply with the terms of the employment agreements or refrain from joining a competing business in breach of the employment agreement.
Courts will likely only enforce garden leave clauses for a length that is necessary for the protection of the employer and their legitimate interests. Legitimate interests include protecting trade secrets, confidential information, relationships with customers, and maintaining a stable workforce. If the employee that leaves would not cause the employer to suffer any loss, and lead to the loss of confidential information or technical skills, it is unlikely that the garden leave clause will be enforced.