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Garden Leave in Canada: Everything Employees Need to Know
Garden leave is a complex concept that more Canadian employers are starting to adopt. As an employee, it’s essential to understand what garden leave means for your rights and responsibilities.
Our guide here will examine garden leave from the employee perspective, outlining everything you need to know about this transitional leave. By the end, we’ll answer key questions on the legality of garden leave, your obligations while on leave, whether you can find new employment, and steps to take if your employer pressures you to agree to garden leave terms.
What Exactly is Garden Leave?
Garden leave refers to a paid leave of absence during an employee’s notice period. It essentially restricts what employees can do during their last weeks or months of employment after resignation or termination.
Employers often use garden leave to protect business interests, such as confidential data and client relationships when an employee transitions out of the company. The term comes from the idea that employees are “tending their garden” instead of working during this transitional leave.
Is Garden Leave Legal in Canada?
Yes, garden leave is legal in Canada as long as the employment contract contains an enforceable garden leave clause outlining its terms.
The garden leave restrictions must also be reasonable to be legally valid. Excessively long garden leave periods or highly restrictive covenants may be challenged as unfair or unenforceable. However, garden leave is entirely legal in Canada when implemented properly through a signed employment contract.
When Do Employers Use Garden Leave?
There are several scenarios where companies typically use garden leave for departing staff:
- To prevent employees from disrupting the workplace: Employees who have quit or been terminated may behave unprofessionally or damage team morale during their notice period. Garden leave removes them from the workspace.
- To protect confidential data and client relationships: Departing staff with inside knowledge of strategies, clients, or IP could damage the business by giving this information to a competitor. Garden leave blocks access to sensitive systems and contacts.
- To restrict competitor advantage: Preventing employees from starting work with a competitor through a garden leave clause delays their ability to use inside knowledge to the rival’s advantage.
- To take an employee “off the market”: Rather than an immediate severance payment, garden leave keeps the employee bound to their current contract for a set period before their departure.
According to legal experts, larger companies and senior executives are most likely to face garden leave restrictions due to having greater access to sensitive information. However, garden leave can apply to any employee with a valid clause in their work contract.
Can My Employer Force Me to Go On Garden Leave?
If your employment contract contains a garden leave provision, your employer can compel you to take garden leave instead of working through the notice period. However, if your contract does not mention garden leave, your employer cannot unilaterally impose it.
In essence, both parties must agree upon garden leave through a signed contract to be enforceable. If your employer pressures you to go on garden leave without a clause in your contract, you have grounds to refuse.
What Are My Rights and Responsibilities on Garden Leave?
If you are placed on garden leave, you remain employed and are entitled to the same compensation and benefits. This includes your regular salary, health insurance, vacation accrual, and contractually obligated bonuses or commissions.
However, your employer can prohibit you from performing your regular work duties during the garden leave period.
While on garden leave, you are expected to remain available to assist with queries, transition duties, or provide information as needed. You’ll also be required to return any company property, such as laptops, security passes, or documents.
While on paid garden leave, you are still employed, but you relinquish many rights to actively work or perform your normal duties.
Can I Find a New Job While on Garden Leave?
In most cases, you are allowed to search and apply for new jobs while on garden leave in Canada. You can also attend interviews with other employers.
However, your garden leave contract can prohibit you from actually starting work with a competitor or any other company during the leave period. Breaching this requirement by starting external employment early is grounds for a lawsuit.
What If I Refuse to Consent to a Garden Leave Agreement?
If your current employment contract does not contain a garden leave clause, your employer cannot force you to sign a new contract with one without your consent. However, they may apply pressure by threatening discipline or termination.
If your employer tries to coerce you into signing a garden leave agreement, refuse to sign until you have the contract reviewed by legal counsel. You also have grounds for constructive dismissal if you face retaliation or termination for failing to consent.
What Happens If I Breach Garden Leave Restrictions?
If you violate the terms of your garden leave agreement, such as soliciting clients or starting external employment, you are at risk of litigation and termination.
Some shared garden leave restrictions employees might breach include:
- Contacting clients or suppliers
- Accessing company systems and confidential data
- Attempting to solicit coworkers or poach clients
- Starting employment with a competitor
Be sure to carefully review and adhere to all garden leave restrictions outlined in your employment contract to avoid potentially serious legal and career consequences.
Key Takeaways on Garden Leave for Canadian Employees
- Garden leave is legal in Canada if a contract contains enforceable terms and reasonable restrictions.
- Without consent via a contract, employers cannot unilaterally impose garden leave on staff.
- Employees on garden leave remain employed and are entitled to compensation but may be heavily restricted.
- While you can job hunt, garden leave bars you from commencing external employment during the leave.
- Refusing to agree to a garden leave clause is grounds for discipline or termination.
- Breaching garden leave terms can enable litigation or firing for cause.
The Bottom Line
While garden leave is a legal transitional measure in Canada, it significantly restricts employees. Before agreeing to any employment contract with a garden leave clause, be sure to carefully review the agreement by legal counsel to ensure your rights are protected.
If you are faced with discipline or termination for refusing garden leave without consent or have been coerced into breaching leave terms, be sure to contact an employment lawyer right away. With proper guidance, you can avoid any negative impacts from garden leave.
FAQs related to garden leave in Canada
How long can garden leave last in Canada?
Garden leave periods are typically 1-3 months but can be longer depending on the seniority of the role. Courts may deem excessively long garden leave as unreasonable.
What compensation is paid during garden leave?
Employees on garden leave in Canada continue receiving their full salary, benefits, bonuses and commissions per their employment contract.
Why would an employer use garden leave?
To protect confidential data, maintain workplace stability, restrict employees from aiding competitors, and retain talent for a transition period rather than immediate severance.
When does garden leave take effect?
Garden leave typically takes effect after an employee gives or receives notice of resignation or termination, continuing through the mandated notice period.
Do I have to agree to garden leave?
If your contract doesn't contain a garden leave clause, you cannot be forced to agree to new terms. But refusing if the contract allows it could enable discipline or firing.
Is garden leave enforceable without consent?
No, garden leave requires consent through a contractual clause. Without agreement an employer cannot legally impose garden leave unilaterally.
Article Sources
Garden Leave in Canada: Everything Employees Need to Know
Ben Nguyen