Definition
Garden Leave
Garden leave is a period during a notice phase when an employee is kept away from work but remains employed and paid, often to protect confidential information before they exit.
Garden leave happens when an employer, during the notice period, asks an employee to stay away from the workplace and not work, while continuing to pay salary and benefits until the employment formally ends.
It is used to keep a departing employee — especially one joining a competitor — away from sensitive information, clients and systems, while still bound by the employment contract and its confidentiality and non-compete terms.
During garden leave the employee cannot usually start a new job, since they remain on the current employer's rolls. Salary and accruals continue normally and are taxed as usual.
Related terms
- Retention BonusA retention bonus is an incentive paid to keep an employee from leaving, typically conditional on staying for a defined period, and is fully taxable as salary.
- Notice Pay RecoveryNotice pay recovery is the amount an employer deducts when an employee leaves without serving the full notice period, effectively buying out the unserved notice.
- Full and Final SettlementFull and final settlement (F&F) is the process of clearing all dues between employer and employee when employment ends, netting off salary, benefits and recoveries.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.