Garden Leave vs PILON and Restrictive Covenants

Garden leave is where an employer keeps a departing employee employed and on full pay through their notice period, but tells them to stay away from work; gov.uk guidance confirms pay and contractual benefits continue throughout, and imposing it normally needs a contractual right.

What Is Garden Leave?

Garden leave (also called gardening leave) is where an employer tells a departing employee not to come into work, or not to carry out their normal duties, for some or all of their notice period. The employee remains employed throughout: gov.uk confirms they get "the same pay and contractual benefits" as if they were working, and their contract, including confidentiality obligations and the duty of good faith to their employer, keeps applying. Employers use garden leave to keep a departing employee, particularly one moving to a competitor, away from clients, colleagues and confidential information while a replacement is recruited or a handover risk is managed. Because the employee is still bound by their contract, they generally cannot start a new job, approach clients, or use confidential information while on garden leave, even though they are not attending work.

Garden Leave vs Payment in Lieu of Notice (PILON)

Garden leave and PILON both let an employer deal with a departing employee's notice period without having them come into work, but they work very differently. Garden leave keeps the employment relationship alive: the employee stays employed, keeps being paid, and remains bound by their contract until the notice period actually ends. PILON, by contrast, ends employment immediately; gov.uk describes it as the employer offering "a one-off payment instead of allowing you to work out your notice period." Once PILON is paid, the employee is no longer employed and duties such as the duty of good faith fall away, though a restrictive covenant can still apply if it is drafted to survive termination. Both usually depend on the contract: gov.uk states PILON is only available "if it's in your contract or you agree to it," and garden leave typically needs an equivalent contractual right.

Restrictive Covenants After Employment Ends

Restrictive covenants are different again: they take effect only after employment has already ended, whether that ending came through working notice, PILON, or the end of a period of garden leave. Common covenants include a non-compete (barring the former employee from working for a rival for a set time), a non-solicitation clause (barring them from approaching former clients or staff), and a non-dealing clause (barring them from doing business with former clients even if the client makes the approach). Because a restrictive covenant restrains someone from earning a living after their job has already ended, courts will only enforce one that goes no further than reasonably necessary to protect a legitimate business interest, such as trade connections, confidential information, or a stable workforce; a covenant drafted more widely than that is at risk of being unenforceable.

Garden Leave, PILON and Restrictive Covenants Compared

Can an Employer Require Garden Leave?

Whether an employer can require garden leave usually depends on the contract of employment. Most employers rely on an express garden leave clause, which reserves the right to instruct an employee not to attend work during notice while continuing to pay them in full. Without such a clause, an employer generally needs the employee's agreement before insisting they stay away from work, since simply withholding work could otherwise be disputed by the employee. In practice, contracts for senior, client-facing or commercially sensitive roles commonly include a garden leave clause precisely so the employer does not need to negotiate one at the point someone resigns. An employee placed on garden leave should check their own contract for what it actually allows, since terms vary on points such as whether they may take on other paid work or must remain contactable during the period.

How Garden Leave Affects a Restrictive Covenant

Garden leave and a post-termination restrictive covenant can end up overlapping in effect, since both can keep a former employee away from clients and competitors for a period, one before employment ends and one after. Courts are alert to an employer trying to get the benefit of both restrictions in full: a court can set off time an employee has already spent on garden leave against the length of a later non-compete, treating the two together as one combined period of restriction rather than as separate periods added end to end. An employer that combines lengthy garden leave with a lengthy non-compete afterwards risks a court deciding the combined restriction goes further than reasonably necessary, which can result in the non-compete being cut short or struck out. Employers drafting both provisions typically account for this overlap when deciding how long each restriction should run.

Northern Ireland

Northern Ireland does not have separate garden leave, PILON or restrictive covenant legislation; these are matters of contract and common law, and the underlying legal principles closely mirror Great Britain. Where a dispute involving garden leave, PILON or a restrictive covenant reaches a tribunal in Northern Ireland, for example as part of a related unfair dismissal or breach of contract claim, it is heard by the Industrial Tribunal rather than the Employment Tribunal used in Great Britain, and the relevant conciliation and enforcement body is the Labour Relations Agency (LRA) rather than ACAS.

Related guides

For the wider notice-period rules that garden leave sits within, see notice periods. Garden leave and restrictive covenants often come up when negotiating an exit, covered in settlement agreements, and where a dismissal during a notice period is disputed, see unfair dismissal. For the full picture of UK employment rights, see the UK Employment Law hub and the United Kingdom hub.

This article is general information only, not legal advice, and does not cover every circumstance. Garden leave, PILON and restrictive covenant terms depend on the wording of an individual contract, so anyone facing a dispute should check their own contract and consider independent advice from ACAS, Citizens Advice, or a solicitor, or, in Northern Ireland, the Labour Relations Agency.