In J M Finn & Co v Holliday, the High Court considered the case of a Claimant whose contract provided for a 12 month notice period and allowed the employer to require him to be on ‘garden leave’ throughout the notice period.

Accordingly, when the Claimant resigned, he was put on garden leave, his security pass was taken from him and he was denied access to emails including daily email briefings about the financial and investment markets. The Claimant alleged that this was a repudiatory breach of contract which entitled him to regard himself as completely free of any contractual restrictions. The employer applied to court for an injunction to enforce the terms of the garden leave clause. The injunction was granted.

When considering the terms of a garden leave clause, the court must, as with a restrictive covenant, consider whether it is reasonable in extent and duration.

However, unlike with restrictive covenants, reasonableness is decided as at the date when the garden leave provisions are triggered, not as at the date the contract was entered into. Furthermore, the court has discretion over how long an injunction can last. In this case, the court considered it reasonable to enforce the garden leave clause for the whole 12 month notice period.

Points to note –

  • The Claimant’s argument on repudiatory breach failed. The court considered that the employer was under less of a duty to an employee who had handed in his notice and was on garden leave. In such circumstances, the Claimant did not need to be completely up to date with general business matters. The employer’s only real remaining obligation was to pay him for the duration of the notice period and this was what the employer was doing.
  • When considering how long to enforce restrictive covenants for, the court must decide whether the period stated in the contract is unreasonable. The court has more flexibility when enforcing a garden leave clause; it can decide what period it considers to be reasonable.  This means a garden leave clause may be easier to enforce, however while it is in force the employee must still be paid.