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What is Garden Leave?
Garden leave is a period where an employee remains bound to their contract of employment but is requested to avoid attending the office and contacting clients/customers. Employers seek to use garden leave during an employee’s notice period to prevent any interaction with customers, clients, fellow employees and to stop the employee in question from joining a competitor.
Dan Ashworth – Newcastle United to Manchester United – Garden Leave
Dan Ashworth is a football director who has recently been in the news following his drawn out move from Newcastle United to Manchester United, which was confirmed on 1 July 2024. This brought an end to months of negotiations between the clubs.
Back in February 2024, Ashworth was placed on garden leave by Newcastle United, after he notified them of his intention to move to Manchester United. It was widely reported that Ashworth’s garden leave period was 18 months. Sir Jim Ratcliffe, minority shareholder of Manchester United, was publicly critical of the situation. In an interview, he said that he saw “no point in gardening leave [in football]” and complained that garden leave was impeding his recruitment plans.
Up until the clubs reached an agreement in recent weeks, it looked like Ashworth was going to remain on garden leave till 2025. This raises plenty of questions, including whether employers can impose a garden leave period for this length of time and why would they want to do that. We take a look at this in more depth below, as well as detail some of the key considerations for employers when it comes to garden leave.
Is an 18-month Garden Leave Period Legal?
There is no maximum time limit on the period of garden leave that can be agreed between an employer and employee in a contract of employment.
However, it is likely that a court will only find garden leave to be enforceable if it is for a length of time that is considered reasonably necessary to protect the employer’s legitimate interest. The longer the period of garden leave, the less likely the court will enforce it for its full duration.
In most situations, a court will typically only enforce gardening leave for no more than six months.
We will not know as to whether the court will have enforced Dan Ashworth’s 18-month period of gardening leave, however, there have only been two cases in which the court has ordered a 12-month garden leave injunction.
Why is it important for Senior Executives to be placed on Garden Leave?
There are several reasons for placing an employee on garden leave. Some of the key benefits for employers include:
- Preventing the employee from accessing confidential or sensitive data;
- Preventing the employee from poaching clients or other employees;
- Keeping the employee out of the marketplace for enough time so that any information that they may have, goes out of date, and is no longer useful for a competitor; and
- Bettering the employer’s bargaining position.
The decision from Newcastle United to place Dan Ashworth on garden leave for an 18-month period was mainly designed to protect the club’s interests and prevent any confidential information from reaching the hands of a direct competitor. The nature of Ashworth’s role means he would have almost certainly had access to critical information in relation to players. Newcastle was undoubtedly determined to avoid a situation where Ashworth could utilise this information for a rival. Ultimately, the club was able to leverage Ashworth’s garden leave to agree on a substantial undisclosed compensation package with Manchester United, which has assisted them in their attempts to comply with the Premier League’s Profit and Sustainability Rules.
What should Employers consider?
This high-profile situation demonstrates the importance of garden leave. We have listed below some of the main considerations for employers:
- Nature of the Business – Employers should consider whether they will have sensitive information that they will want to protect. This may include information concerning IP rights, clients, customers, confidential information and / or trade secrets.
- Seniority – Garden Leave is typically used for more senior employees; those who may have access to confidential or sensitive information. For more junior employees, who bear no risk of harming the company on their departure, it will most likely not be necessary to place them on garden leave.
- Length of Garden Leave – This will normally correspond with the employee’s notice period. Employers will want to ensure that the employee is only placed on garden leave for the length of time that is considered reasonably necessary to protect their legitimate interest, otherwise, they risk the duration of garden leave not being enforceable.
- Contract – If an employer decides that it would be preferable to have the option to place an employee on garden leave, they will need to ensure that there is a garden leave clause included within the employee’s contract of employment.
If you wish to discuss any of the issues raised in this article, please contact the Michelmores Employment team.
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