Why Is There A Garden Leave Clause In My Compromise Agreement?
http://www.lawsays.net/articles/6445/1/Why-Is-There-A-Garden-Leave-Clause-In-My-Compromise-Agreement/Page1.html
Andrew Crisp
For further information regarding compromise agreements and a wide range of advice from experienced professionals, please visit our website at http://www.compromiseagreement.org.uk By Andrew Crisp
Published on 11/19/2010
Your compromise agreement may provide that you will be on "garden leave" until the end of your employment. "Garden leave" is the term used for a period during which you remain on normal salary and bound by your contract of employment but you are requested not to attend the office or contact customers.
Your compromise agreement may provide that you will be on "garden leave" until the end of your employment. "Garden leave" is the term used for a period during which you remain on normal salary and bound by your contract of employment but you are requested not to attend the office or contact customers.
Nobody knows why this arrangement is called garden leave, except that it seems that your are expected to use the time to catch up with some gardening!
The potential benefits to an employer of putting a garden leave clause into the compromise agreement are as follows:-
* Confidential information about the business will be out of date by the time you are free to join another employer;
* A replacement will have time to establish themselves with your customers and business contacts;
* The employer's competitors are less inclined to poach employees if their compromise agreement requires them to stay on garden leave for a long period.
If your notice entitlement is short, there may be little benefit to the employer of putting a garden leave clause in the
compromise agreement. It also costs the employer to continue paying you full salary, benefits, National Insurance
contributions at a time when you will be unproductive and not contributing to the business. Your employer may decide in these circumstances not to include a garden leave clause in your compromise agreement.
If your compromise agreement contains a garden leave clause, it should be very clear as to what this involve. In particular, it would usually cover the following points:-
1. The right to require you not to attend work during your notice period (your compromise agreement should state what date your notice period finishes);
2. Whether or not you will receive your full salary and benefits during the garden leave period;
3. The right to assign appropriate projects for you
to undertake at home during garden leave, usually at your employer's discretion;
4. A prohibition against you being employed by or providing services to any competitor during your garden leave period;
5. Details of whether you will receive your profit share or bonus for the period when you are on garden leave;
6. The right to require you to resign from all directorships and other offices from the start of the garden leave period (this may be covered in another clause in your compromise agreement).
Garden leave clauses are more common in compromise agreements given to senior employees who have significant contact with confidential information. They may also be used where the employee is due to join a competitor provided that the duration of the garden leave period is not too long.
If your compromise agreement contains a garden leave clause, it is important that you have good legal advice from an experienced solicitor on your rights and duties during the garden leave period.
Nobody knows why this arrangement is called garden leave, except that it seems that your are expected to use the time to catch up with some gardening!
The potential benefits to an employer of putting a garden leave clause into the compromise agreement are as follows:-
* Confidential information about the business will be out of date by the time you are free to join another employer;
* A replacement will have time to establish themselves with your customers and business contacts;
* The employer's competitors are less inclined to poach employees if their compromise agreement requires them to stay on garden leave for a long period.
If your notice entitlement is short, there may be little benefit to the employer of putting a garden leave clause in the
compromise agreement. It also costs the employer to continue paying you full salary, benefits, National Insurance
contributions at a time when you will be unproductive and not contributing to the business. Your employer may decide in these circumstances not to include a garden leave clause in your compromise agreement.
If your compromise agreement contains a garden leave clause, it should be very clear as to what this involve. In particular, it would usually cover the following points:-
1. The right to require you not to attend work during your notice period (your compromise agreement should state what date your notice period finishes);
2. Whether or not you will receive your full salary and benefits during the garden leave period;
3. The right to assign appropriate projects for you
to undertake at home during garden leave, usually at your employer's discretion;
4. A prohibition against you being employed by or providing services to any competitor during your garden leave period;
5. Details of whether you will receive your profit share or bonus for the period when you are on garden leave;
6. The right to require you to resign from all directorships and other offices from the start of the garden leave period (this may be covered in another clause in your compromise agreement).
Garden leave clauses are more common in compromise agreements given to senior employees who have significant contact with confidential information. They may also be used where the employee is due to join a competitor provided that the duration of the garden leave period is not too long.
If your compromise agreement contains a garden leave clause, it is important that you have good legal advice from an experienced solicitor on your rights and duties during the garden leave period.