Navigating employee departures is never easy, especially when your company’s talent, client relationships, and sensitive information span international borders. Every HR leader, People Ops manager, and founder growing teams globally knows the stakes are high; one misstep can mean lost trust, IP leakage, or a disruption to business continuity.
At Borderless AI, we understand the unique challenges that come with building and managing global teams. That’s why it’s essential to have clear, compliant strategies for managing transitions, and a garden leave agreement is one of the most effective tools in your HR toolkit.
This guide will help you understand what a garden leave agreement is, why it matters for fast-growing companies, and how to use it to maintain trust, compliance, and business momentum, no matter where your team works.
What Is a Garden Leave Agreement?
A garden leave agreement is a clause you include in an employment contract that allows you to keep a departing employee on payroll during their notice period, but requires them to stay away from the workplace and not perform their usual duties.
Imagine a scenario: Your lead developer or top sales manager resigns to join a competitor. You want to protect your product roadmap, client list, and team morale, but you also want to treat your departing team member fairly. With a garden leave agreement, you can do both. The employee continues to receive salary and benefits and remains legally employed, but doesn’t come into the office, access company systems, or communicate with clients. It’s a respectful pause, not a punitive measure.
Originating in the UK and now common in Canada and other countries, this approach is especially popular in sectors where client trust or confidential information is at risk. Unlike a non-compete clause (which restricts post-employment activity without pay), garden leave is paid, active employment, making it more defensible under employment law in many jurisdictions.
Key Takeaway:
A garden leave agreement gives you time to protect your business while treating employees with dignity during transitions.
Why Use a Garden Leave Agreement? What’s at Stake for Employers and Employees
As HR professionals and founders, you’re not just protecting trade secrets, you’re safeguarding your company’s reputation and your people’s livelihoods. A well-structured garden leave agreement can:
Protect Confidential Information: Limits access to sensitive data during notice.
Preserve Client Relationships: Helps prevent clients from following a departing employee to a competitor.
Support Smooth Transitions: Gives you time to reassign duties and onboard replacements.
Deter Immediate Competition: Delays the employee from joining a competitor or starting a rival business.
For employees, garden leave offers:
Financial Security: Continued salary and benefits during the notice period.
Time for Transition: Space to plan the next move without daily workplace demands.
Clarity and Boundaries: A clear understanding of rights and responsibilities.
This balance builds trust, a core value at Borderless AI, and can prevent disputes or legal headaches later.
Key Legal Considerations and Compliance for Canadian and Global Teams
Garden leave agreements are subject to different laws depending on where your business, and your team are based. Here’s what Canadian HR leaders and global employers need to know:
Canada: What to Watch For
Garden leave provisions are generally enforceable in Canada if they’re:
Reasonable in Duration: Typically one to six months, depending on the role.
Clearly Outlined in the Contract: The clause must be explicit and agreed to.
Supported by Full Compensation: Salary and benefits must continue.
Connected to Legitimate Business Interests: Overly broad restrictions may not stand up in court.
Provincial employment standards can impact how garden leave is interpreted. For example, some provinces have specific rules about notice periods and continued employment.
Practical Compliance Checklist
Add a garden leave clause to employment contracts at the time of hiring
Specify the duration and compensation terms
Address confidentiality, non-compete, and non-solicitation expectations
Consult legal counsel if updating contracts for existing employees (as this may require new consideration)
Ensure the clause aligns with both federal and provincial standards
For more details on Canadian employment law, see key Canadian labour laws every employer and worker should know.
Global Perspective
If you’re hiring internationally, remember that enforcement varies:
The UK is generally favorable to garden leave.
The US varies by state.
Many European countries have statutory requirements like maximum durations.
For companies operating across borders, consider how local rules, tax implications, and work permit statuses affect your policies. Partnering with a global employment platform can help you remain compliant everywhere you hire.
Drafting an Effective Garden Leave Agreement: What to Include
A clear, enforceable garden leave agreement is essential for protecting your business and your employees’ rights. Here’s how to get it right:
Essential Elements
Duration: Define when the garden leave starts and ends.
Compensation: Detail salary, benefits, and any bonus eligibility.
Scope of Restrictions: Specify limits on competitive activity, client contact, and workplace access.
Confidentiality: Outline expectations for protecting company information.
Non-Solicitation: Prevent poaching of clients or colleagues (see non-solicitation agreements for independent contractors explained).
Return of Property: Require the return of company devices, files, or intellectual property.
Communication Protocols: Set rules for contacting clients, colleagues, and vendors.
Sample Clause:
“Upon notice of termination by either party, the Company may, at its discretion, place the Employee on garden leave for some or all of the notice period. During this time, the Employee will receive full salary and benefits but will not be required to perform work or attend the workplace. The Employee remains bound by all terms of this agreement, including confidentiality and non-solicitation provisions.”
Common Pitfalls to Avoid
Vague or overly broad restrictions
Insufficient detail on compensation
Ignoring global or provincial differences
Failing to update contracts as laws change
Pro tip: Consult with legal counsel and regularly review your template to ensure compliance across all jurisdictions where you operate.
Pros and Cons of Garden Leave Agreements: At a Glance
Before adding a garden leave clause to your contracts, weigh these practical benefits and drawbacks:
Benefits for Employers
Shields confidential information and trade secrets
Maintains client relationships and business continuity
Buys time for knowledge transfer and replacement onboarding
Reduces risk of immediate competition
Benefits for Employees
Ensures financial stability during transition
Provides breathing room for career planning
Maintains benefits and seniority for the duration
Potential Drawbacks
Cost: Paying salary and benefits without receiving services
Skill Degradation: Employees may become disconnected from fast-moving industries
Relationship Strain: Can create awkwardness with colleagues or clients
Delayed Start: May postpone new employment opportunities for the employee
Key Takeaway:
Use garden leave strategically, where the stakes are highest, and when both business and people will benefit.
Employee Rights and Responsibilities During Garden Leave
Understanding what’s expected during garden leave is essential for preventing disputes and maintaining trust.
Employee Rights
Full salary payments and benefits (including health, pension, and vacation accrual)
Potential eligibility for bonuses (if specified in contract)
Continued employment status, which may affect immigration or visa standing for global hires
Employee Obligations
Maintain confidentiality and protect company IP
Do not work for competitors or solicit company clients
Return all company property as requested
Avoid unauthorized contact with clients or colleagues
Remain reasonably available for transition questions
A well-written garden leave agreement spells out these rights and duties, reducing ambiguity and fostering trust.
Starting a New Role During Garden Leave: What You Need to Know
A frequent question from both HR managers and departing employees: “Can someone start a new job while on garden leave?”
Short answer: Usually not, if the new role is with a competitor. Most garden leave agreements prohibit taking up competitive employment during the notice period. Breaking this term could result in:
Immediate termination of garden leave (and salary)
Legal claims for damages or breach of contract
What’s usually permitted:
Taking a job in a non-competing industry
Searching and interviewing for future roles
Engaging in professional education or upskilling, as long as confidentiality is maintained
Scenario:
A senior engineer in Toronto gives notice to join a competitor in Vancouver. The garden leave agreement specifies a three-month leave. If the engineer tries to start the new job early, the company can withhold remaining salary and pursue legal remedies.
Employees and employers should always review the contract details and seek legal advice if there’s any uncertainty.
Garden Leave Agreements for Global Teams: What Canadian and International Employers Need to Know
If your company operates in multiple countries or hires internationally, garden leave practices can differ:
Jurisdiction: Some countries require specific notice or garden leave durations.
Tax and Currency: Payments may be subject to different tax rules or made in different currencies.
Work Permits: Garden leave can impact visa or immigration status for international employees.
Employment Standards: Local laws may override contract clauses.
Action Steps:
Align your garden leave policies with local rules in every country of operation.
Use global HR platforms or local legal counsel to ensure compliance.
Communicate clearly with employees about how garden leave will work based on their location.
For more on managing transitions globally, see records of employment: when and how to issue them.
Moving Forward: Make Garden Leave Work for Your Team
Garden leave agreements are more than a legal safeguard—they’re a strategic tool for building trust, protecting your business, and supporting people through change. When implemented thoughtfully, they help you transition talent smoothly, maintain compliance, and keep your company’s reputation strong across borders.
Key Takeaways for HR Leaders and Founders:
Always define garden leave terms clearly in contracts up front, especially for key roles.
Regularly review durations, compensation, and restrictions for fairness and compliance.
Communicate expectations to departing employees with empathy and transparency.
Leverage legal and HR tech partners to keep your global policies up to date.
At Borderless AI, we believe that opportunity should be borderless—and that starts with empowering HR leaders to support talent transitions with confidence, compliance, and care.
Frequently Asked Questions About Garden Leave Agreements
What’s the difference between a garden leave agreement and a non-compete clause?
A garden leave agreement keeps the employee on payroll and restricts work during the notice period, while a non-compete clause applies after employment ends (usually without pay).
How long does a typical garden leave period last?
Usually one to six months, depending on the employee’s role, access to sensitive information, and industry norms.
Can an employer require an employee to take garden leave?
Only if the original employment contract includes a garden leave clause that the employee agreed to at the time of hiring or through a valid amendment.
Is garden leave paid at full salary?
Yes, employees typically receive full salary and benefits during the garden leave period, as they remain legally employed.
Can garden leave agreements be added after employment has started?
Yes, but amending an existing contract usually requires new consideration (such as additional compensation or benefits) to be valid in most jurisdictions.
By understanding and implementing garden leave agreements thoughtfully, you can protect your company while empowering your people to thrive—wherever in the world you build your team.
