Garden leave in a settlement agreement

Clearly record the date from which you no longer have to work and which employment terms continue until the termination date.

Garden leave must address more than simply staying at home

During garden leave, employment continues, but from an agreed date you will generally no longer be required to perform work. Salary will in principle continue in accordance with the settlement agreement.

Also record what happens to accrued holiday, any bonus, company car, pension, availability and handover duties. This helps prevent disputes during the period before the official termination date.

Please note

Garden leave is not automatically the same as taking paid holiday. State separately whether outstanding holiday is paid out, taken or deemed to have been settled.

What should the settlement agreement contain?

The agreement should make clear what changes from the start of garden leave and which rights continue until the termination date.

Start date

State the exact date on which work stops and whether a handover must take place first.

Salary and employment terms

Record that salary and the agreed employment terms continue until the termination date, including relevant fixed allowances.

Holiday and leave

Agree expressly what happens to accrued and future holiday entitlement. Avoid an unclear general set-off provision.

Availability and handover

Determine whether you must remain available, return company property or hand over information, and when this must happen.

Is garden leave always advantageous?

Garden leave provides time and space to look for new work, but the wording determines which obligations continue. Check, for example, whether you may start work elsewhere and what this means for salary and other employment terms.

Also consider confidentiality, non-compete and non-solicitation clauses. Garden leave does not automatically waive such provisions.

View the full negotiation guide

Review the garden-leave terms in four steps

1Check the period
Compare the start of garden leave with the official termination date.

2Check your income
Record salary, fixed allowances and relevant employment terms until the termination date.

3Deal with leave and property
Make separate arrangements for accrued holiday, the handover and company property.

4Read related clauses
Check whether other provisions restrict your freedom during garden leave.

Why a review before signing matters

A short sentence about garden leave can have significant consequences for salary, accrued holiday and the ability to start other work. The correct wording depends on your agreement and personal circumstances.

Have the provision reviewed to ensure that it is consistent with the termination date and the other terms of the settlement agreement.

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