Employment Practice Guide
Garden Leave Explained: What It Is, How It Works, and When Employers Use It
Garden leave is a practice in which a departing employee is paid their full salary and benefits during a notice period but is asked to stay away from the office — typically not to compete, not to contact clients, and not to perform work. It is an alternative to a non-compete: instead of locking the person out of the industry after they leave, the employer pays them to do nothing for a defined period. Garden leave is most common in finance, law, consulting, and senior executive roles.
Last updated: July 11, 2026 · Reading time: 6 min read
garden leaveemploymentnotice periodnon-competeexecutive
How Garden Leave Works
When an employee resigns or is terminated with notice, the employer can place them on garden leave: full pay, full benefits, but no work, no access to systems, and typically a non-solicitation obligation. The duration is usually 30 to 180 days, depending on the seniority of the role and the sensitivity of the information the employee has access to. Garden leave is most often used to prevent a senior employee from immediately joining a competitor or soliciting clients during the notice period.
Pay continues in full: The defining feature of garden leave is that the employee continues to receive their full salary, bonus (often prorated), and benefits during the garden leave period. The employee is still employed — they just are not performing work. This is why garden leave is typically reserved for senior roles where the cost is justified by the value of the relationships at risk.
Garden Leave vs. Non-Compete
- Garden leave — employee is paid in full, employment continues, restrictions last only during the notice period (30–180 days). Used to prevent immediate competitive activity.
- Non-compete — employee is typically not paid after departure, restrictions can last 6–24 months post-termination. Used to prevent longer-term competitive activity.
- Enforceability — garden leave is generally more enforceable than non-compete because it is a paid restriction during an active employment relationship, and many jurisdictions scrutinize post-termination non-competes more strictly.
- Cash cost — garden leave has a clear, predictable cost (full salary for the duration). Non-competes have a less obvious cost but can prevent the employee from earning a living.
- Notice period — garden leave typically runs alongside the notice period, so it does not extend the date of separation.
When Garden Leave Makes Sense
- Senior executives — where the relationships and competitive risk justify the cost of full pay during notice
- Investment bankers, traders, and finance professionals — where regulatory and client-confidentiality concerns require a clean break before departure
- Law firm partners — to prevent a departing partner from immediately soliciting firm clients during the notice period
- Sales executives with major accounts — to prevent the employee from using the notice period to move customer relationships
- Engineers and product leads with sensitive roadmap knowledge — to prevent information leakage during the transition
Frequently Asked Questions
Do employers have to put employees on garden leave?
No. Garden leave is a choice. The employer can either have the employee work out their notice, place them on garden leave, or terminate them immediately (in which case any notice period is typically paid in lieu). For garden leave to apply, the employment contract usually must explicitly authorize it, or the employer must obtain the employee's agreement.
Does garden leave count toward the non-compete period?
It can. Many employment contracts specify that any period of garden leave counts toward the non-compete restriction period. This means a 90-day garden leave followed by a 12-month non-compete effectively results in 15 months of restriction — though the non-compete portion is unpaid. This is a common point of negotiation in executive employment agreements.
Can an employee work during garden leave?
Generally no — that is the point. During garden leave, the employee is restricted from working for competitors, contacting clients, and sometimes from any other employment at all. Some contracts allow other work with the employer's consent. Employees who violate garden leave restrictions typically forfeit remaining pay and may face breach-of-contract claims.
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