Posted by: the3rdi | March 3, 2010

Warning to business owners over missed gardening leave clause

Business owners could land themselves in hot water by putting employees on garden leave.

Garden leave is routinely used by companies as a way of keeping staff who are leaving a job – through choice or otherwise – away from work during their notice period.

This paid absence is used to ensure staff are not aware of commercially sensitive information which could be shared with a potential new employer.

But practices could face action for sending employees on garden leave if their employment contracts do not include guidance on this.

Mark Briegal, head of Ralli Partnership Law, said this breach of contract could have disastrous results.

He added: “It is commonplace in businesses for departing staff to be put on garden leave but often employers act in haste, without checking out the employment law issues they could be facing.

“Garden leave provisions must be written into partnership or LLP agreements to ensure businesses are protected from future actions.

“Putting a partner or member on garden leave without precautions in place is unlawful exclusion and can result in anything from a damages claim to a winding-up order.”

Briegal said extreme conclusions can be avoided if employers check their contracts from the outset.

He added: “Garden leave is only an option if the employment contract makes reference to it. We have already worked on cases where a departing member has contested garden leave because it was not referred to in his contract.

“Employers need to ensure they have relevant and accurately drafted clauses to cover all eventualities.

“In times of economic uncertainty, making sure your partnership agreements are watertight can save a lot of
legal and financial heartache in the long term.”

Ralli Partnership Law was launched in 2009 in response to a year-on-year increase in registered Limited Liability Partnerships. The legal experts advise on all aspects of partnership law, from traditional partnerships to joint ventures, LLPs and Limited Partnerships.

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