Alternatives to Garden Leave in NZ

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Table of Contents

• What Is Garden Leave
• Three Alternatives to Garden Leave
• Key Takeaways
• Frequently Asked Questions

The question of whether to put an employee on garden leave can be tricky for your businesses. This decision will largely depend on your business’ specific circumstances. For instance, a common situation is when an employee tells you they are giving notice and have accepted a job offer from a competitor business. While putting the employee on garden leave is a common recourse, there are also alternatives you can offer. You might decide to rely on a restraint of trade provision or give the employee alternative work. This article will explain what garden leave is and other alternatives you can take. 

What Is Garden Leave

In terms of employment law, garden leave is not a legal concept. Although, it is a common practice used by all kinds of employers in select situations. If an employee is on garden leave, they receive full pay, and your business treats them as if they are carrying on full employment. However, they stay at home and do not work from home. There are a few situations where garden leave is helpful, including:

• when an employee has given notice to resign and there is a need to separate them from proximity in the business to sensitive information and knowledge. This is often a recourse if an employee is leaving to work for a competitor business; and
• if there is a difficult situation at work and it is not tenable for the employee to continue working there. If you and the employee agree, they can take garden leave for a period of time. Note that this is separate from a suspension and does not need to follow a particular process, so long as the employee agrees.

Three Alternatives to Garden Leave

While garden leave is a useful tool for employers in certain situations, some alternatives can be preferable depending on the circumstances. For example, garden leave often does not represent the best use of an employee’s time when they have given notice. This is particularly in situations where there is concern about sensitive information but otherwise a willingness for the employee to continue work. 

Giving Employee Alternative Work

You can give the employee in question alternative duties or work instead of placing them on garden leave. For instance, an employee who has given notice can temporarily work in a different role rather than continue working with commercially sensitive information. You might prefer this option rather than have your employee sit at home without making a final contribution. This could also be a good idea if an employee needs to be removed from a particular office but could be temporarily placed at a separate workplace. 

Relying on a Restraint of Trade Clause

You may have concerns that an employee might look to solicit employees or clients in their final time with your business before leaving to work for a competitor business. In that case, you do not necessarily need to place them on garden leave. Instead, you could continue them working out their notice period and look to enforce a restraint of trade clause with a non-solicitation clause. This clause will prohibit employees from soliciting other employees or clients. 

Suspending the Employee

Garden leave is separate from a suspension, where employees do not necessarily agree to be suspended. Garden leave should not be a replacement for a suspension to get around the procedural requirements of a suspension, for instance, during or following a misconduct investigation. Seek advice from an employment lawyer on the best way to approach managing the employee in this situation. 

Key Takeaways

Garden leave can be a helpful option in certain situations. For example, your employee may leave to work for a competitor business, and you both agree that garden leave is a good stop-gap solution to a difficult situation at work. However, there are other options. Some alternatives include giving an employee alternative duties or an alternative workplace. Additionally, your business can rely on a restraint of trade clause if you are concerned about your clients or employees being solicited away. You should also not mistake garden leave for suspension and pursue the latter where appropriate in a misconduct process. 

If you would like more information about garden leave and alternatives, contact LegalVision’s employment lawyers on 0800 005 570 or complete the form on this page.

Frequently Asked Questions