What Is Gardening Leave? Understanding The Key Differences In Australia & New Zealand
In today¡¯s fast-paced corporate world, data security and trade secrets are critical and competitors are doing whatever they can to find an edge. This ultimately means businesses must do whatever they can to protect their own interests.
One such way that employers look to achieve this competitive edge is through a contractual mechanism called ¡®Gardening Leave¡¯, which acts as a contractual provision that prevents employees from working during their notice period, whilst keeping them on full pay.
What Is Gardening Leave?
Gardening leave simply refers to the period during which an employee who has resigned or been terminated remains on the company payroll but is not required to be at the workplace or continue working on any projects related to their role.
This will typically mean that the employee is no longer allowed to engage with clients, access company systems or work for a competitor during this time.?
Therefore, the goal of a gardening leave clause is to safeguard confidential information, important client relationships and critical business strategies.
How Does Gardening Leave Differ in Australia and New Zealand From Elsewhere?
Gardening leave within ANZ (Australia & New Zealand) comes with a few unique quirks due to stricter employment laws compared to other countries. Certain requirements are:
- Contractual Requirement: A specific ¡®Gardening Leave, clause must already exist within the employee¡¯s contract ahead of enforcing it.
- Restraint of Trade Clauses: For any employee that is placed on gardening leave, a post-employment restraint period may be adjusted or restrained to ensure fairness.
- Employment Rights Remain Intact: Employees that are placed on gardening leave must still receive their salary, all benefits and entitlements, including company bonuses (if applicable).
- Fair Work Act (FWA) Protections: If gardening leave is deemed to be unfairly enforced, an employee may have grounds for a legal challenge under the Fair Work Act 2009. In New Zealand, employees may engage with the Employment Relations Authority when seeking a legal challenge.
What Are the Pros and Cons of Gardening Leave?
For employers, gardening leave is commonly used as a strategic benefit to:
- Stop employees from immediately joining a competitor and sharing sensitive knowledge and trade secrets.
- Prevent risking key client relationships.
- Allow for a smooth transition of responsibilities without disruptions.
However, there are also some disadvantages to activating a period of gardening leave. The main disadvantage of placing an employee on gardening leave is that the firm has to pay the employee their full salary and entitlements whilst they are not actively engaged in their employment. Depending on the state of company finances, this is a trade-off that often needs to be carefully considered.?
It is critical that the company does not try to engage in reducing the employees remuneration or entitlements during this notice period, as this opens the organisation up to legal challenges due to breaches in employment within Australia and New Zealand.
Gardening leave is perhaps more common in mid-size to enterprise-level industries where employees have access to commercially sensitive information. Many of which, Â鶹´«Ã½ serves as core industries, including:
- Banking and Financial Services
- Technology and IT
- Legal and Consulting Firms
- Media and Advertising
Frequently Asked Questions
How Long Does A Period Of Gardening Leave Last?
The length of time gardening leave typically lasts may vary by industry as well as the seniority of the employee¡¯s job role. Usually, gardening leave will range between 1-6 months and in some rare occurrences may sometimes extend up to 12 months. Longer periods are expected for more senior roles. However, enforcing these time periods can often be negotiated, often with a 3rd party lawyer, ombudsman or settlement between competitor companies.
Can a Company Legally Force Gardening Leave?
Gardening leave cannot be legally forced by an employer unless the employment contract explicitly states this as a condition. However, if no gardening leave clause exists, the employer has no choice but to either allow the employee to work their agreed notice period or move to negotiate a mutual agreement that is fair to both parties.
Should You Include a Gardening Leave Clause in Your Employment Contracts?
Depending on the industry you are operating in, a gardening leave clause can act as a very valuable and sensible safeguard against employees taking critical knowledge and key client relationships directly to a competitor.?
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Gardening leave is a useful tool for protecting business interests while ensuring employees receive their agreed entitlements. However, in Australia and New Zealand, it must be carefully managed within employment contracts and legal frameworks to be enforceable. This means that employers should consult the necessary legal expertise to ensure their policies align with employment laws and business needs.??
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