In wake of the Hindenburg Report that caused a roller-coaster ride for the shares of listed entities of Adani Group, the group head of investor relations proceeded on leave beginning December 2022; he was due to retire in June 2023. The Group Heads of Adani Listed companies, was on ‘gardening’ leave. He had joined Adani Group in March 2016, and has a three-decade experience in investor relations. In the world of Human resource, gardening leave implies an employee’s absence from work while being fully paid for the duration.
Retaining high potential talent through monetary incentives is a regular practice, gardening leave is used to discourage the key talent to quit from the firm. This is seen mainly in banking, financial services and insurance sector in India. Garden leave clauses can be a disincentive for prospective employers.
Wipro’s subsidiary Capco India has sent employees on garden leave with a 2-3 month pay out because HSBC, one of Capco India’s key clients, reduced its work with the company in the second half of 2022. In addition to working on Basel III reform, financial reporting, and accounting, Capco India also conducts data remediation projects as well as analyses financial risk management frameworks. Garden leave is a period during which an employee is required to stay away from work. During this time, the employee remains on payroll of the company but is not expected to perform any work. Capco added two accounts during the period of gardening leave of the employees.
Often, garden leave is a type of absence where an employee, upon giving notice of resignation, is requested not to return to the workplace but continues to receive pay. This period is taken in anticipation of the employee’s departure from the company. in general, most garden leave laws require advanced notice of resignation and last between 30 and 90 days. During this time, the employee remains on the company’s payroll but are generally relieved of most of their duties.
There are both pros and cons to garden leave. It can help to protect the employer’s business by preventing the employee from contacting clients or accessing confidential information, but it can be costly as the employee still need to be paid. While on garden leave, the employee no longer works for the employer and does not have access to the employer’s clientele or their fellow employees. However, the employee continues to receive remuneration and, generally, remains on the rolls of the employer until the expiry of the garden leave period.
Important point to note is garden leave is generally given to senior employees who have access to sensitive and strategic information such as pricing policies, IPR, important and sensitive data of the company, high-level technical knowledge, important customer contacts etc.
The term made its way into the dictionary in the mid-1980s and started being used by the public after it was used on an episode of the BBC sitcom ‘Yes, Prime Minister’ and in ‘Silent Witness’. From that point, it entered more everyday use.
Garden leave in the UK is a far different term than in the United States, which commonly uses the term ‘administrative leave.’ Some suggest that it’s given that name since people can’t work for their old employer or their new one during this time. As a result, all they can do with their time is work in the garden! Whatever, you choose to call it, it’s a tool that companies in the UK can use once an employee has handed in his resignation and want to work in notice period, to prevent such employees from coming into work or working from home or another location for a defined period.
The ‘garden leave’ clause in an employment contract is most often used when an employee leaves to go and work for a competitor. This effectively provides a ‘buffer time’ between their current job and their future one. Essentially, this prevents them from learning any confidential business information, so as not to share it with a competitor. Putting an employee on gardening leave also helps someone taking on their previous role to do so without interference. When on leave, employees are excluded from receiving futuristic information that could potentially be valuable to another company, such as future business strategies.
When a senior partner at one of the Big Four consulting accounting firms got an offer from a rival firm with a huge jump in pay and perks, he considered it a lifetime opportunity and wanted to make the shift without any delay. What he hadn’t expected was that his firm would make him serve a six-month notice period, or gardening leave, when he had to sit at home and do nothing. Usually, the big four firms often waived off the notice period in the past. One of them, PwC has decided not to change it.
Conclusion
To protect company assets and preserve business interests during an employee departure, a company may place an outgoing worker on a garden leave.
