Garden Leave or Annual Leave?

15 November 2018 | Anoop Sodhi

Garden leave and payment of outstanding annual leave – where do you stand?

So, you have an employee who has been put under notice that their employment will be terminated in three months’ time.  The employer has decided that the employee will not work their notice but to be put on garden leave.  The employer considers the employees’ outstanding accrued annual leave entitlement – can the employer force the employee to take their annual leave entitlement during the garden leave period?

Let us first look at the definition of garden leave and if annual leave could be taken during this time.

What is garden leave?

Garden leave is the penultimate process before termination of employment.  The employee would be put under notice by the employer and asked not to come into work during their notice period.  This could be for a number of reasons such as protecting customer data, to avoid disruptions at work but most importantly to prevent the employee from gaining further business knowledge and sharing knowledge with a competitor.  The employee continues to remain employed during the notice period. 

Should the employee have holidays outstanding, can the employer force the employee to take this holiday during the garden leave period to save the business money?

Yes, in the case of Maschek v Magistratsdirektion der Stadt Wien, the ECJ ruled workers on garden leave are not entitled to pay in lieu of unused holiday which could have been taken during the garden leave period.   The exception to this is where the employee has been unable to take leave due to sickness.  The case suggests that it is not necessary to have a contractual clause to insist that employees use the remainder of their holidays.  However, under UK law, it is advisable to have a contractual right to insist that annual leave is taken during this time.

Read more on the exit management process here - there is a free download too.

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