The following Employment Tax guidance note Produced by Tolley in association with Hannah Freeman at Old Square Chambers provides comprehensive and up to date tax information covering:
Putting someone on ‘garden leave’ means an employee is paid and receives their full contractual benefits during their notice period but is not permitted to attend for work. In these circumstances, the employee continues to be subject to their other contractual obligations ― for example, not competing with the employer and the duty of fidelity. An employee can be placed on garden leave when they resign or when they are dismissed with notice.
In some situations, employees are pleased to be sent on garden leave and no difficulties arise. However, there are circumstances in which garden leave can be a major area of dispute, often because the employee wants to leave work immediately in order to work for a competitor.
An employee may also object to being put on garden leave where this will cause financial loss, cause them to become de-skilled or make it more difficult for them to find a new job. In this situation, there may be a right to work during the notice period unless the employer has a clear contractual right to require the employee to go on garden leave.
The main reason why employees are put on garden leave is to remove them from the workplace during the notice period, while preventing them from working for a competitor. Garden leave therefore tends to be used more frequently for senior staff, who might cause more harm by working for a competitor. Garden leave will keep the employee out of the marketplace so that any sensitive information they have will go out of date. It could also help the employee’s successor to establish themselves, to he
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