Garden Leave

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Though it is not a term found in New Zealand legislation, garden leave refers to a period of time in which an employee retains their employment and receives full pay, but is not reporting to work. Garden leave can be effective in certain circumstances if both you and your employee agree on how it is to be used.

While an employee is entitled to attend work, they are also obliged to work. You cannot ask an employee to go on garden leave unless both of you agree. Often an agreement of this nature will see a clause on garden leave in the employment agreement, which has been entered into with good faith. If your employment agreement does not have a clause on garden leave, it is best to avoid this leave for your employees until there is a mutual agreement.

If there is a garden leave clause in the employment agreement, and an employee is off work on this type of leave, the employee must continue to follow all other terms and conditions of employment. Regardless of whether garden leave clauses in the employment agreement are specific or broad, both parties have an obligation to act in a reasonable and fair manner.

Garden leave during a notice period

Garden leave is typically used during the notice period of either an employee resigning or if you end the employment of a staff member. Some examples can include:

• if the employee has commercially sensitive information and is going to be working for a competitor at the end of their notice period
• an employee that is distracting other workers while they’re on their notice period
• where an employee is being made redundant and you are giving them time to look for a job instead of reporting to your workplace
• an uncomfortable situation being avoided where an employee has been dismissed and them being on site is making the atmosphere worse

Other potential periods

It can also be used if there has been an issue between employees and where one, or more than one, of your employees are going through counselling and it would be best if an employee was not in the workplace. Importantly, in this kind of situation you should make it clear that neither of the employees are being punished by being placed on this leave.

Alternatives to garden leave in New Zealand

There are options available to you instead of using garden leave, such as:
• suspension, instead of garden leave given the difference in the agreement needed from employees
• enforcing any restraint of trade provision
• alternative duties if there is no work
• payment in lieu of notice following termination, ending the employment straight away, instead of serving notice on garden leave

For advice on when or how to use it in your workplace contact Employsure on 0800 568 012.

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