Gardening Leave

There was a great write up by Ashurst recently on Gardening leave.

Focusing on the case of Actrol Parts Pty Ltd v Coppi (No 2) [2015] VSC 694, this explores a case which I imagine would be common across many organisations. Here a Sales Manager leaves for a competitor and is placed on gardening leave during his notice period. The employer attempts to enforce their contractual provisions when the Sales Manager begins employment with the competitor within the notice period.

Here i'll point out a few items of Ashurst's analysis I found particularly interesting.

Impact of the employer asking the employee to return their material benefits

Justice Bell J accepted the employee's argument that by removing the company car, iPhone and iPod the employer had repudiated the contract by unilaterally reducing the employee's remuneration. It's important to remember that employees are still entitled to all of the benefits of their employment contracts while on gardening leave and this may mean access to tools and perks normally associated with performing their roles.

Businesses need to also be aware that there is a "quid pro quo" in gardening leave. For the business to receive the person's loyalty and fidelity, the employee must remain "on the books" as an employee and, critically, must continue to receive all contractual entitlements, such as a company car or technology. 

The right to place employees on gardening leave

The Fair Work Act 2009 is silent on the issue of gardening leave, or more specifically the ability for an employer to direct an employee not to perform work. Given this an employee's contract needs to be worded appropriately to provide these options. If a contract doesn't allow for such an action an employee could also argue that the employer has repudiated the contract.

Dealing with confidential information 

Again, this case acts as a clear example demonstrating the importance of contacts filling in gaps of law. While generally there are protections for employers dealing with misuse of confidential information, these protections probably stop short of the prescription most employers would like.

In the Actrol case, the employer had no redress against the employee in relation to the emails because the employee had not breached any contractual term or any policy by sending information outside the employer's IT system to his personal email address. The fact that he had a legitimate business purpose for doing so, and had not otherwise used or misused the emails was sufficient. It did not matter that it was not management's preference that documents be transferred as the employee transferred them.