When an employee resigns from a senior position or is given notice of termination, employers often face a challenging transition period. The departing employee may have access to sensitive commercial information, established client relationships, and detailed knowledge of business strategy. Allowing them to continue working during their notice period can create significant risks for the business.
This is where gardening leave comes into play. This arrangement allows employers to direct a departing employee to stay away from the workplace during their notice period while continuing to pay them their normal salary and benefits.
This comprehensive guide explains how gardening leave works under Australian employment law, when it should be used, and what both employers and employees need to know about their rights and obligations.
Key Takeaways
- Gardening leave keeps an employee on the payroll during their notice period while directing them not to attend work or perform their usual duties
- It is a contractual arrangement, not a term defined in the Fair Work Act 2009, meaning a clear employment contract clause is essential
- Employees on gardening leave continue to receive their normal pay and benefits, and leave entitlements generally continue to accrue
- Common restrictions during gardening leave include prohibitions on contacting clients, working for competitors, and engaging in conflicting employment
- Gardening leave differs significantly from payment in lieu of notice, where employment ends immediately
- Upcoming non-compete clause reforms expected from 2027 may affect how employers approach post-employment restraints, though gardening leave remains an in-employment measure
What is Gardening Leave?
Gardening leave is a period during which an employee who has resigned or been given notice of termination remains employed and continues to receive their normal pay, but is directed not to attend work or perform their usual duties.
Remember: The employment relationship continues throughout the gardening leave period, which means all the usual employment obligations remain in place.
For an arrangement to constitute gardening leave, several key elements must be present:
- The employee has either resigned or been given notice of termination
- The employment relationship continues throughout the notice period
- The employee receives their normal salary and benefits
- The employer directs the employee not to attend work or perform their usual duties
- The employee remains bound by their employment obligations, including confidentiality requirements
How Gardening Leave Fits Within Australian Workplace Law
Understanding the legal framework surrounding gardening leave is essential for both employers and employees. While gardening leave is a well-established practice, it operates within the broader context of Australian employment law.
Not a Defined Term in the Fair Work Act 2009
The Fair Work Act 2009 (Cth) does not specifically define or regulate gardening leave. Instead, it is a contractual mechanism that employers use alongside the minimum entitlements provided by the National Employment Standards (NES). This means the terms and conditions of gardening leave are primarily governed by the employment contract rather than legislation.
The NES sets out minimum employment conditions that apply to all national system employees, including provisions relating to notice of termination, annual leave, and other entitlements. Any gardening leave arrangement must comply with these minimum standards.
Notice Period Requirements Under the NES
Under the NES, employers must provide minimum notice periods when terminating employment, based on the employee’s length of service:
- Less than 1 year of service – 1 week’s notice
- 1 to 3 years of service – 2 weeks’ notice
- 3 to 5 years of service – 3 weeks’ notice
- More than 5 years of service – 4 weeks’ notice
Employees over 45 years of age with at least 2 years of continuous service are entitled to an additional week’s notice.
Employment contracts often require longer notice periods than the NES minimums, particularly for senior positions. These contractual notice periods form the basis for gardening leave arrangements.
Employee Obligations During Gardening Leave
Employees on gardening leave must typically:
- Remain available: Be contactable and available to respond to reasonable requests from the employer
- Maintain confidentiality: Continue to protect confidential information and trade secrets
- Comply with lawful directions: Follow reasonable instructions from the employer
- Avoid conflicts of interest: Refrain from activities that conflict with their employment obligations
- Adhere to contractual restrictions: Comply with any specific restrictions set out in their employment contract or gardening leave direction
Employee Entitlements During Gardening Leave
Employees on gardening leave are entitled to:
- Normal salary and wages: The employee continues to receive their regular pay throughout the gardening leave period
- Superannuation contributions: Employer superannuation contributions continue as normal
- Other benefits: Any contractual benefits such as car allowances, health insurance, or phone allowances typically continue
- Leave accrual: Annual leave generally continues to accrue based on ordinary hours of work during paid periods that count as service
Why Employers Use Gardening Leave
Employers commonly use gardening leave to protect legitimate business interests during the notice period. One key reason is to safeguard confidential information by limiting the departing employee’s access to sensitive commercial data in their final weeks of employment. Gardening leave also helps preserve client relationships by allowing employers to transition clients to other team members without interference or disruption.
Another important consideration is maintaining team stability. Removing a departing employee from day-to-day operations can reduce uncertainty, minimise disruption to projects, and support morale among remaining staff. Gardening leave is also used to manage competitive risk, particularly where an employee may be moving to a competitor, by keeping them away from active business operations during the notice period.
Finally, gardening leave can facilitate an orderly handover process, providing time for knowledge transfer while allowing the employer to control the employee’s level of involvement before the employment relationship formally ends.
Practical Tips for Employers
Using gardening leave effectively requires advance planning and clear communication. Before employment begins, employers should ensure contracts include well-drafted gardening leave clauses that are tailored to the role and business needs. Existing contracts and templates should also be reviewed to identify gaps and ensure consistency across different role types.
When placing an employee on gardening leave, it is important to provide clear written direction confirming the start and end dates, the restrictions that apply, and that salary and benefits will continue as normal. Practical matters such as the return of equipment, system access, and handover arrangements should be addressed early, with all directions documented to minimise misunderstandings.
During the gardening leave period, employers should maintain appropriate communication, continue processing payroll and entitlements, and monitor compliance where necessary. Planning for the employment end date, including final pay and separation processes, should also occur in advance.
Throughout the process, employers must ensure compliance with NES requirements and any applicable awards or enterprise agreements. Gardening leave should not be used to avoid statutory entitlements, and legal advice should be sought where circumstances are complex or there is a risk of dispute.
Gardening Leave vs Payment in Lieu of Notice
One of the most common areas of confusion is the difference between gardening leave and payment in lieu of notice (PILON). While both involve the employee not working during the notice period, they have fundamentally different legal effects.
| Aspect | Gardening Leave | Payment in Lieu of Notice (PILON) |
|---|---|---|
| Employment status | Employment continues until the end of the notice period | Employment ends immediately when notice is given |
| Work requirement | Employee does not work but remains employed | Employee does not work and is no longer employed |
| Payment | Employee continues to receive normal salary and benefits during notice period | Employee receives a lump sum payment covering the notice period |
| Employment obligations | All employment obligations continue to apply | Obligations dependent on employment cease |
| Confidentiality obligations | Continue in full during the notice period | Only post-employment confidentiality obligations apply |
| Restraint of trade clauses | Not yet triggered (as employment is ongoing) | Triggered immediately upon termination |
| Leave entitlements | Continue to accrue during the notice period | Stop accruing from the termination date |
| Availability to employer | Employee must remain available for reasonable directions | Employee has no obligation to remain available |
| Employer control | Employer retains control over the employment relationship | Employer control ends with termination |
| Ability to start new employment | Generally restricted during notice period | Employee may commence new employment immediately |
Choosing Between the Two Options
The choice between gardening leave and payment in lieu of notice depends on the employer’s priorities:
Gardening leave is preferable when:
- The employer wants to maintain control over the employee during the notice period
- There are concerns about the employee joining a competitor
- Client relationships need to be carefully managed during the transition
- The employer may need the employee’s assistance with handover matters
- Triggering post-employment restraints immediately is not desirable
Payment in lieu of notice is preferable when:
- A clean break is desired
- The employer does not need ongoing access to the employee
- Post-employment restraints should take effect immediately
- Administrative simplicity is a priority
- The employee’s continued employment (even on gardening leave) creates risks
Frequently Asked Questions
Can my employer force me to take gardening leave?
If your employment contract contains a gardening leave clause that permits the employer to direct you not to attend work during your notice period, then yes, your employer can require you to take gardening leave. The key is whether there is a contractual right to implement the arrangement. Without such a clause, an employee may argue they have a right to work and perform their duties.
Do I still get paid during gardening leave?
Yes, you continue to receive your normal salary and benefits during gardening leave because your employment has not ended. The employment relationship continues throughout the notice period, and all your usual entitlements apply. This includes superannuation contributions and any other contractual benefits.
Can I start a new job while on gardening leave?
Generally, no. During gardening leave, you remain employed by your current employer and are bound by your employment obligations, which typically include a duty not to work for competitors or engage in conflicting employment. Starting a new job during gardening leave could constitute a breach of your employment contract. You should wait until your employment formally ends before commencing new employment.
Does annual leave continue to accrue during gardening leave?
Yes, annual leave generally continues to accrue during gardening leave. Under the National Employment Standards, annual leave accrues based on ordinary hours of work and continues to accrue during paid periods that count as service. Since gardening leave is a paid period where employment continues, leave accrual typically continues as normal.
What happens if I breach the restrictions during gardening leave?
Breaching the restrictions that apply during gardening leave could have serious consequences. Because you remain employed, a breach may constitute misconduct and could result in disciplinary action, including termination for serious misconduct. Additionally, the employer may seek legal remedies such as injunctions to prevent ongoing breaches or damages for any loss suffered.
Is a contract clause required for Gardening Leave?
While there is no strict legal requirement for a specific gardening leave clause, having one is considered best practice and significantly reduces the risk of disputes.
Need legal advice about gardening leave?
If you have questions about gardening leave provisions in your employment contracts or need assistance managing an employee transition, our experienced employment lawyers can help. Contact us today to discuss your situation and receive tailored advice for your circumstances.
About the Author
Farrah Motley
Contact an Australian Business Lawyer Today.
Contact us for a free consultation
