Companies often rely on “garden leave” clauses to stop departing employees jumping ship straight to a competitor as soon as they hand in their notice. Under these clauses the employer is not required to provide work during the notice period but the employee may not work anywhere else.
In this case the contract of employment contained no garden leave clause but the employer sought an injunction in the High Court to stop two senior employees from taking up employment with a competitor until their periods of notice following their resignations had ended. The employer had discovered that they had been gathering confidential information for months before their resignations, and had encouraged other employees to leave with them.
The employees notified the company that they were treating this as a repudiatory breach of their contracts of employment, which they would accept, and that they would not therefore have to serve their notice period (enabling them to take up work with the competitor immediately). They argued that the employer was in breach of its duty to provide them with work.
The court granted the injunction, since the employees’ right to work under their employment contracts was qualified, in that the employees must be “ready and willing” to do the work. As these employees had engaged in wrongdoing, by taking confidential information and other employees to a competitor, thereby damaging the claimant’s business, they were clearly in breach of their contract and not “ready and willing” to work for the employer. It was therefore reasonable for the employer to withhold work from them for the remainder of their notice periods.
This case highlights the difficulties an employer may face if it does not use express garden leave clauses in employment contracts. It demonstrates how the employee’s right to work and the employer’s right to refuse to provide work interrelate. Employers should note that the best way to avoid litigation is to have an express term in the contract.
SG&R Valuation Service Company LLC v Boudrais and others