In this article...

• The background
• The facts
• The decision
• What does this mean for me?

The background

‘Garden leave’ is the colloquial term for any period of time that an employer requires an employee to remain away from work during their notice period. Employees on garden leave are bound by all the terms of their contract of employment, except the requirement to perform work. However, employees may have to make themselves available to their employer, as required, by telephone or email, and / or ensure that they are within a specified distance of their workplace for the duration of the garden leave period.

Enforcing garden leave is usually uncontroversial where there is specific provision for garden leave in the employee’s contract of employment, or the garden leave is by mutual agreement. The situation is more complicated where the employer wishes to force the employee to take garden leave without any specific contractual entitlement to do so, and against the wishes of the employee.

Employees are likely to resist a requirement to work their notice on garden leave where they work in a fast-moving industry in which their skills or knowledge would quickly become ‘stale’ and / or where the employee wants to maintain contact with the employer’s clients or customers.

In an earlier judgment, William Hill Organisation v Tucker, the Court of Appeal held that enforced garden leave would not be permitted. However, in that case, there was specific reference in Mr Tucker’s contract of employment to his ‘right to work’, both before and during his notice period. The question of whether an employee has a ‘right to work’ was examined recently in SG & R Valuation Service v Boudrais and others.

Back to top

The facts

Two senior employees resigned from SG & R Valuation Service (“the Company”) within a day of each other, each giving three months’ notice as required. The employees had no express garden leave clauses in their contracts of employment. When the Company subsequently discovered evidence of various breaches of the employee’s duty of fidelity to the employer, the employees were informed that they must serve out the remainder of their notice at home. 

The employees responded to this by submitting letters of resignation with immediate effect, alleging that by compelling them to remain at home, the Company had committed a breach of contract. The Company applied for a court order to enforce their decision to place the employees on garden leave.

Back to top

The decision

The High Court (“HC”) said that the first question to ask when deciding this issue is whether the employment contract stipulates a right to work. In this case, the HC found that there was such a right.

The employees’ duties included attracting new business and underwriting property valuations, which required skills that would go stale after a period of inactivity in the market. The HC was also persuaded by the seniority of the employees and their significance to the Company, as well as the existence of a contractual right to a bonus as part of their remuneration package.

Ultimately, however, the HC decided in favour of the Company. Observing that the Court in Tucker had been careful to identify limits to the employee’s claim, Cranston J. added the important caveat that the right to work is not an unqualified right:

		an employee can only rely on a right to work if they are “ready and willing to work”; and
		the question of whether the employee is ready and willing to work must be considered “through the lens of the employer”.

The HC stated that an employee’s right to work cannot be relied upon if their conduct has made it impossible or reasonably impracticable for the employer to provide work. In this case, the employees’ breaches of fidelity meant that it was entirely reasonable for the Company to withhold work from the employees. This meant that:

		the Company had not committed a breach of contract; and
		the employees were not entitled to resign with immediate effect.

The Company was, therefore, entitled to demand that the employees remained at home for the duration of their notice periods.

Back to top

What does this means for me?

This decision suggests that employers may be able to unilaterally enforce garden leave more readily than before, but much will depend on the particular facts of a case.

Employers seeking to place an employee on garden leave, in the absence of an express contractual entitlement to do so, must consider:

		whether the employee has an express contractual entitlement to perform their duties (as opposed to an entitlement to remuneration only); or
		whether the nature of an employee’s employment implies a right to be at work (e.g. if their skills would stagnate if not exercised); and
		if an employee has an implied ‘right to work’, would it be reasonable to withhold work from the employee in light of their prior conduct.

Given the restrictions in this decision, it remains a wise precaution to ensure that your employees’ contracts of employment specifically allow for you to place them on garden leave during their notice period.

Back to top