What is Garden Leave?
In Singapore, employees are sometimes placed on “garden leave” while serving their notice period. Garden leave is a period of time where the employer requests an employee not to report for work although the employee’s employment contract has not expired. Employers might wish to place their employees on garden leave to take them out of the office before the employee commences another job in competition with the employer.
This is unlike a non-compete clause where the employee is restrained from working for a competitor after the termination of his employment.
What Happens When an Employee is Placed on Garden Leave?
When a person is placed on garden leave, he remains an employee of the company.
Additionally, garden leave helps ensure that handing over of duties to the replacement employee is conducted properly.
For instance, an employer may require the person placed on garden leave to assist in instructing and updating the replacement employee with regard to the duties he/she will be passing over.
Are Employers Entitled to Place Employees on Garden Leave in Singapore?
Whether or not an employer can place an employee on garden leave might depend on whether they are expressly entitled to do so under the employment contract.
If the employment contract expressly entitles the employer to do so
If a garden leave clause is expressly stated in the employment contract, the employer may enforce it.
A garden leave clause could say:
‘During any period of notice of termination (whether given by the company or the employee), the company shall be under no obligation to assign any duties to the employee and shall be entitled to exclude [him] from its premises.
The company shall not require the employee to contact any customers, suppliers or employees provided that this does not affect the employee’s entitlement to receive [his] usual salary and contractual benefits.
During any such period of exclusion, the employee will continue to be bound by all the provisions of this agreement and shall at all times conduct [himself] with good faith towards the company.’
However, employees who do not wish to be placed on garden leave may attempt to challenge the validity of the garden leave clause by arguing that the clause is unreasonable. This may occur even after the employee is put on garden leave.
Some considerations that determine whether a garden leave clause is reasonable include:
- The duration of garden leave. The shorter the duration, the more likely it is reasonable.
- Whether the employer will suffer detriment if the employee is not put on garden leave. The employer might suffer detriment if the employee is in possession of confidential information such that it may favour the employer’s competitor. If so, it is more likely that the clause is reasonable.
- Whether placing the employee on garden leave will result in a deterioration of the employee’s skills. Some employees require opportunities to exercise their skills. If placing them on garden leave deprives them of such opportunities, the clause may not be reasonable.
- Whether the employer has a legitimate interest to be protected by enforcing the garden leave clause. Legitimate interests include confidential information, trade connections and stability of workforce. If there is a legitimate interest to protect, it is more likely to be reasonable.
If the employment contract does not expressly entitle the employer to do so
In some instances, the employment contract does not expressly state that the employer is entitled to place the employee on garden leave. In such situations, it is not clear whether the employer can place an employee on garden leave.
The employee placed on garden leave may argue that there is a breach of the employment contract.
This is because depending on the nature of employment, the employer may have a duty to provide the employee with work, while the employee may have an implied right to work.
If the right to work exists, then the employer may not be entitled to place the employee on garden leave (which requires the employee to cease his/her duties).
The employee may sue the employer or seek to terminate the employment contract since it is a breach of the obligations under the contract.
Some considerations to determine whether this right to work exists include:
- Whether the employment required the employee to use certain skills often. If so, it is more likely that there is a right to work;
- The employee’s position in the organisation. The higher the position, the more likely a right to work exists;
- Whether the employment was for a fixed term or not (E.g. Full time employment as compared to freelance); If so, it is more likely that the right to work exists.
- Whether the remuneration was at a fixed rate or on a commission or piece-rate basis. If it is commission or piece-rated, it is more likely that the right to work exists; and
- Whether the employment allowed the employee to display his abilities in public. In particular, case law has found that an actor must be given an opportunity to display her abilities in public. If so, it is more likely that the right to work exists.
Alternatively, Can Employees Ask to be Placed on Garden Leave?
It is possible for employees to ask to be put on garden leave, if it is not in the employment contract and you wish to be put on garden leave.
However, this is subject to your employer’s agreement.
What If Your Employer Refuses to Let You Take Garden Leave Despite being Entitled to it?
Garden leave clauses serve to protect the interests of the employer. Hence, such clauses are typically drafted to give the employer discretion on whether to put employees on garden leave or not.
If the employer has discretion, you will not be able to choose whether to go on garden leave or not.
What will Happen while Employees are Placed on Garden Leave?
Employee’s duties and obligations
Your responsibilities and obligations during garden leave depends on the agreement between you and your employer.
For instance, your employer may stipulate that you are to do or not to do certain tasks, such as staying away from the office or returning company property.
Additionally, employees on garden leave continue to owe their employer a duty of good faith and fidelity as they remain employees of the company.
This means that you cannot engage in competitive activity with your current employer while you are on garden leave.
At the same time, you are not under any duty to take steps to further or advance your employer’s business.
Employee’s right to receive remuneration
The employee’s right to remuneration depends on the terms in the employment contract.
Employees are typically entitled to their full pay and benefits in their employment contract during garden leave.
However, a garden leave clause may expressly state that remuneration during garden leave differs from the employee’s usual remuneration.
If so, that alternative remuneration rate could apply instead.
How long can an employee be on garden leave for?
Garden leave typically runs for the length of the notice period in the employment contract. It does not extend beyond the period of employment in the employment contract.
However, the period of garden leave cannot be excessive. This depends on the facts of the case and would vary in each case.
When will the employee receive their remaining unpaid salary?
There are no specific legal requirements on by when employees placed on garden leave must receive all remaining unpaid salary in Singapore.
However, employees covered under the Employment Act are entitled to have their final salaries paid on their last day of employment if they serve their required notice period.
This should apply equally to employees on garden leave.
While Singaporean employers might place employees on garden leave, employees are advised to check if your employment contract expressly states that your employer can place you on garden leave.
If you feel that your employer may have breached the employment contract, by placing you on garden leave or during the period of garden leave, please feel free to contact our employment dispute lawyers.