What is Gardening Leave ? The employee is effectively forced to remain commercially inactive during the period of his garden leave. It is useful to protect employers from an employee exercising influence or accessing confidential information in their final days. Four days before the end of the executive’s gardening leave , AECI commenced proceedings for legal enforcement of restraint of trade clauses in his contract, preventing him from working with Incitec. The South African Labour Courts have, until now, not had the opportunity to consider what impact, if any, a so-called “gardening leave” provision may have on the enforceability of a restraint of trade.
The term “ gardening leave” arises from this general principle and refers to an employer’s legal right to require (usually senior) employees not to report for duty during the notice perio but.
Garden leave intertwines with post-termination restraint of trade. It is the nature of business that employees often resign in order to take up jobs with competitors. In some cases, these employees are privy to valuable business information which soon-to-be ex-employers are keen to protect.
He was subject in his contract to a clause precluding him from engaging in any other employment during the term of the agreement, a six-month garden leave clause , and a restraint of trade clause (no working in competing business for six months after termination). In considering the matter, the Court noted the general principle that a restraint of trade period is enforceable unless it is unreasonable. So, if the period of garden leave and the period of the restraint , when taken together , result in the employee being kept on the sidelines for longer than is reasonably necessary to.
Vodacom argued that the restraint of trade period would only take effect once the notice period had run its course, even though Motsa had been placed on ‘garden leave ’. Gardening leave clauses are often explicitly set out in employment contracts alongside post-employment restraint of trade clauses.
This article sets out the advantages of gardening leave clauses as well as the requirements for employees who are on this form of leave. The author argues that garden leave has a direct effect on the enforcement of a post-termination restraint of trade clause. As such, it must be reasonable to be legally enforced.
The maximum period of garden leave must normally be no more than about six months. In this regar there is no one right answer as to whether a garden leave period should or should not count towards any post-employment restraint obligation. The Court held that the purpose of garden leave is to keep employees out of the clutches of competitors and protect confidential information, while still being remunerated. In the case of a restraint of trade agreement, the employee is not commercially inactive outside the bounds of the agreement.
However, the Employment Court has indicated it will take into account any period of garden leave when deciding whether, and for how long, a restraint of trade should be enforced. In other words, it is likely that any period of garden leave served by an employee will be deducted from the period of post-employment restraint specified in the employment agreement. In essence, this meant that he would not be able to work for a competitor for a period of six months as his three month restraint clause wouldn’t commence until his three month gardening leave period had expired and he could not work for a competitor whilst on gardening leave. The issue whether a period of gardening leave counts as service for calculating the length or term of a restraint of trade will be determined by ordinary principles of contract interpretation. Keywords: employment contract, restraint of trade , garden leave , proprietary interest and reasonableness.
You may think there is benefit to you putting someone on garden leave if they have a restraint of trade in their employment agreement that prevents them from, say, working for your competitors for a period after their employment ends. Practical Law Employment, with Rachel Farr, Taylor Wessing LLP Table summarising key decisions on the enforceability of restraint of trade clauses in contracts of employment. The table covers restrictive covenant, garden leave and confidentiality cases, as well as cases dealing with team moves and springboard injunctions. Accordingly, a restraint of trade will be enforced only if the employer. A restraint of trade usually becomes operational upon the termination of employment whilst a garden leave applies to the period before the termination of the employment contract.
Finally the Court held that “where the garden leave is found to have been excessive, the subsequent restraint might not be enforce or fully enforced.
The court confirmed that the restraint was reasonable and that the employee had to spend six months on gardening leave and could not work for the competitor for a further six months. The remedies available to a business where a new employer and competitor employs a former employee who is bound by a restraint , are to apply for an interdict or institute a claim for damages under the common law of delict. The difference is that gardening leave protects the employer’s interests in the last few weeks of the employee’s employment, and restraint of trade clauses aim to do this post-employment.
Where an employer has put an employee on garden leave and then seeks an injunction to restrain the unwilling employee from joining a competitor before the expiry of his notice perio an injunction to enforce that period of garden leave must be considered in light of the restraint of trade doctrine as a matter of public policy to prevent abuse. Employees are entitled to use the general knowledge and skills acquired during employment with a particular employer once they leave its employment, even if their new employer benefits from such knowledge and skills. Restraints of trade can only be imposed with an employee’s agreement.
While the judgment was in favour of Vodacom, the court sounded a warning that where an employee has a long notice perio for example, months, and the employee has been on garden leave for that perio that period needs to be considered when seeking subsequently to enforce a restraint of trade agreement. The effect of the clause is to prohibit the employee from taking up any employment during the agreed period post the cessation of the employment. This frequently occurs where there is no restraint of trade clause contained in your contract of employment. Gardening leave is usually insisted upon in higher paid and executive positions. Your employer may have placed you on garden leave to allow you time to find alternative employment.
Often the particular employment contract will set out the terms on which the employee can be put on gardening leave. It is also important to include a restraint of trade which will cover the employee after the end of the employment. Restrictions can also be enforceable for a period of time after the employment ends.