UK Garden Leave 2026 — Pay, Rights, Restrictive Covenants Explained

Reviewed by Alex Morgan · Updated April 2026 · 12-year recruiter view on senior resignations

What employers can and can't do during garden leave

Why employers use garden leave

• Stop client poaching — sales, broker, partner roles where the departing employee has direct client relationships. Garden leave gives the employer time to transition clients to new account managers before the employee can pitch them at a competitor.
• Protect confidential information — senior strategy, M&A, R&D roles. The employee's commercial knowledge "ages" during garden leave, reducing its value to the new employer.
• Stop colleague poaching — team-leader resignations often trigger a wave of follow-on resignations. Garden leave isolates the leaver from being able to recruit colleagues.
• Regulatory cool-off — banking, asset management, audit. Some FCA/PRA roles have regulatory restrictions making active duty post-resignation problematic.
• Investigation pending — if the employee is under disciplinary investigation, garden leave keeps them away while the process completes.
• Reputation management — high-profile resignations are often "gardened" to avoid the awkwardness of the employee on their last weeks while announcement leaks.

Garden leave vs PILON (Payment in Lieu of Notice)

Garden leave and PILON achieve similar ends but with key differences:

From the employer's perspective: garden leave is preferred when delaying competitor entry matters most. PILON is preferred when ending the relationship cleanly matters more (e.g. messy circumstances, immediate exit for security reasons).

Restrictive covenants — what kicks in after garden leave

Most senior UK employment contracts include post-termination restrictive covenants. Standard types:

• Non-compete — prevents you from joining a direct competitor for X months. Most heavily challenged in courts. Reasonable scope (geographic + product) and duration (3-12 months typically) is required.
• Non-solicitation of customers/clients — prevents you from contacting your former employer's clients to win business. Usually 6-12 months.
• Non-dealing — broader than non-solicit; prevents dealing with former clients even if they approach you.
• Non-poaching of employees — prevents recruiting your former colleagues. Usually 6-12 months.
• Confidentiality — typically indefinite, particularly for trade secrets.

Garden leave reduces the bite of restrictive covenants: the High Court has ruled in multiple cases that long garden leave + long post-termination non-compete is unreasonable in combination. A 6-month garden leave + 12-month non-compete is increasingly likely to be reduced to 6 months total market-exclusion. Always take legal advice on restrictive covenants — they vary heavily and the enforcement risk is contract-specific.

What to do when you're put on garden leave

1. Get the garden leave clause in writing — ask HR for the specific contract clause they're relying on. If they can't provide one, take legal advice immediately.
2. Confirm pay and benefits continuation — get HR to confirm in writing that salary, benefits, pension, equity vesting will all continue.
3. Clarify holiday treatment — will accrued unused holiday be paid out at the end, or do you need to take it during garden leave? Most employers require it taken during the period.
4. Check the restrictive covenants — review your contract for post-termination restrictions. If overly broad, consider a legal opinion now (better than after termination).
5. Don't engage with clients/colleagues — even informal LinkedIn updates, social events with current colleagues, etc. can be evidence of breach. Set an out-of-office and let your contacts know you're unavailable.
6. Use the time productively — interview at competitors (you can; you just can't start), do training, plan handover notes for your replacement, take genuine holiday. The 1-6 month window is rare; use it well.
7. Document a clean transition — leave thorough handover notes; this protects you against later "you damaged the business" allegations.

Common garden leave disputes

• "You don't have a clause" — employee challenges; employer may try to argue implied right or rescue with PILON.
• "You're paying me but won't let me work" — for skilled workers (surgeons, performers, salespeople), prolonged inactivity can damage skills/reputation, giving grounds to refuse garden leave.
• "You can't extend my garden leave to delay competitor entry" — courts have struck down employer attempts to unilaterally extend periods beyond the contractual notice.
• "I want to be paid out via PILON instead" — generally an employer's choice, not employee's, unless the contract specifies.
• "Bonuses earned during garden leave" — typically discretionary and often disallowed, but contractually-defined bonuses tied to specific events (deal closes, payment dates) may still be due.

Pair this with

• → UK Notice Period Calculator — calculate your notice period for garden leave duration
• → UK Job Offer Playbooks — 15 negotiation scenarios
• → UK Employment Rights — full statutory floor
• → UK Redundancy Guide 2026
• → UK Day-1 Unfair Dismissal 2026
• → UK Self Assessment 2026/27 — for tax on PILON / settlement payments

Sources

1. Acas — Garden leave guidance
2. gov.uk — Handing in your notice
3. gov.uk — Notice periods
4. Employment Rights Act 1996, s.86 — statutory notice
5. William Hill Organisation Ltd v Tucker [1998] EWCA Civ 615 — leading case on right to work