Gardening Leave: What Is It And How Does it Affect Employees?

Gordon Legal are expert employment lawyers in Sydney and Melbourne. Gordon Legal are able to advise you on what your rights and entitlements might be to ensure that you are afforded a fair go and ensure that you are treated according to the Law. Gordon Legal takes pride in the fact its employment lawyers focus on employees and their rights in the workplace and our employment lawyers are experienced in assisting employees faced with gardening leave issues. 

Gardening Leave

When an employee gives notice of their resignation, or is given notice of the termination of their employment, their employer will sometimes direct them to stay away from work for the duration of the notice period. An employee in this situation is said to be on “gardening leave”.

Gardening leave can be a mixed proposition for employees. It provides them with some paid time-away from the workplace before they start a new job which can be seen as a plus. Although a negative is that skills can sit idle and employees remain bound to their employment contracts during the gardening leave period.

Gardening leave is also seen as a useful tool by many employers. It gives them assurance that, for the duration of the departing employee’s notice period, that employee cannot take up employment with a competitor and remains bound by their fundamental obligations of loyalty and fidelity. 

However, complications can arise. The Victorian Supreme Court case Actrol Parts Ltd v Coppi (No 2) demonstrates that if gardening leave is not managed carefully, the employee may be able to establish that their contract has been prematurely ended and argue about loss and damages.

Actrol Parts Pty Ltd v Coppi (No 2)

The case concerned an employee who had been placed on gardening leave after he handed in his notice of resignation. The employee’s contract didn’t contain a provision allowing for gardening leave and, in addition to directing the employee to stay home from work, the employer required him to return his company-issued car, iPad and mobile phone. This proved to be a costly mistake.

During the period of gardening leave the employee joined a rival company and, as a result, the employer sought a ruling that this breached the employment contract. The employee raised two arguments to refute the claim of breach.

First, he argued that as there was no provision in his contract allowing for gardening leave, the employer had breached and repudiated the contract, leaving him free to take up the new job. The Court disagreed, holding that there was an implied term allowing for gardening leave in the employee’s contract. The Court held that the implied term existed on circumstances where the position of the employee within the organisation means that allowing them to continue working during their notice period – and potentially access the company’s confidential information – would be damaging to the employer. The employee’s position in this case was National Sales Manager, which led the Court to find that the implied gardening leave power was available.

The employee’s second argument was that the employer’s insistence that he return his company car amounted to a fundamental breach of the employment contract. The Court accepted this argument, finding that by removing the employee’s company-issued possessions the employer had unilaterally reduced the remuneration of the employee, and therefore, committed a breach of an essential term of the employment contract. As a result, when the employee entered into the agreement with a new employer, he accepted the repudiation and brought the contract to an end. Accordingly, the employer’s application was dismissed.

Lessons For Employees

Actrol Parts Pty Ltd v Coppi shows that it is important that employees who are put on gardening leave are aware of their rights.

The first point to note about the case is that the Court did not find that an implied gardening leave power exists in all circumstances. Employers might be able to place employees on gardening leave even without an express contractual provision if they have a certain level of organisational responsibility. This means that employees probably cannot use gardening leave for lower-ranking employees unless there is a specific provision that provides for it in the contract.

If you have been placed on gardening leave by your employer, it will be worth checking to see whether your contract contains a gardening leave provision.

The second point to note is that the case makes it clear that employees placed on gardening leave do not need to accept any reduction in their pay or benefits during their time away from work. In simple terms, just because you’re not going to work whilst on gardening leave, that doesn’t mean that your employer doesn’t have to fulfil your contractual entitlements. So things like phones, cars and other entitlements cannot unilaterally be taken away during the gardening leave period.

If you are in this situation, you should seek legal advice about whether or not your employer has breached the employment contract – you may be entitled to damages as a result or start that new job sooner.

Gordon Legal have a team of specialist employment lawyers who have experience in this field and would be more than happy to help you – call us today on 9603 3000.