Garden leave, a common practice in Singapore, allows employers to manage the departure of employees while safeguarding their interests. This article clarifies the legal framework, rights, obligations, and key considerations surrounding garden leave in Singapore.

What is Garden Leave?

Garden leave is a period where an employee, though still employed, is not required to work. It typically occurs during the notice period following resignation or termination. The employee remains on the payroll and receives full benefits but is prohibited from working for competitors or accessing sensitive company information.

Legal Framework in Singapore

Singapore's Employment Act doesn't explicitly address garden leave. Instead, it's governed by contract law and common law principles. The Ministry of Manpower (MOM) acknowledges its legitimacy when clearly defined in employment contracts.

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Garden leave in Singapore is not explicitly addressed by the Employment Act and is instead governed by contract law and common law principles. Its enforceability is contingent upon a clearly defined clause within the employment contract, as without it, an employer cannot unilaterally impose garden leave, and doing so may constitute a breach of contract.

Employer's Rights and Obligations

• Express Clause: This leave clause must be explicitly stated in the employment contract. Without this, an employer cannot unilaterally impose garden leave.
• Protection of Interests: Garden leave protects the employer from potential harm caused by departing employees accessing sensitive information or working for competitors.
• Continuation of Pay and Benefits: Employers must continue paying full salary and providing all contractual benefits during the leave.
• Reasonable Duration: The garden leave period must be reasonable, typically aligning with the notice period in the contract. Excessive durations may be challenged.

Employee's Rights and Obligations

• Remain Employed: Employees remain employed and subject to their contract's terms.
• Duties and Obligations: Employees might be required to assist in handing over duties and must maintain confidentiality. They cannot engage in competitive activities.
• Pay and Benefits: Employees receive full pay and benefits as per their contract.
• Restrictions: Working for another employer or starting a competing business is generally prohibited during garden leave. However, employees are free to engage in non-work-related activities.

Garden Leave vs. Normal Notice Periods

Key Differences from Normal Notice Periods

• Employment Status: During garden leave, the employee remains employed and receives full pay and benefits. During a normal notice period, the employee typically continues working.
• Work Obligations: Employees on garden leave are not expected to work, though handover assistance may be required. During a normal notice period, employees continue fulfilling their job responsibilities.
• Contractual Requirement: Garden leave requires an express clause in the contract; a normal notice period is implied unless otherwise specified.
• Restrictions: Garden leave often includes restrictions on competitive activities, while normal notice periods generally don't.
• Duration: Garden leave typically matches the notice period, while normal notice periods can be shorter. Employers can refer to this MOM official guideline about notice period duration.

Can an Employer Force Garden Leave?

An employer can force garden leave only if:

• Express Clause Exists: The employment contract explicitly includes a garden leave clause.
• Legitimate Interests and Reasonableness: Even without an express clause, the employer must demonstrate legitimate business interests are at stake and the duration is reasonable. This may require court intervention.

Salary and Benefits During Garden Leave

Employees are generally entitled to their full salary and benefits during garden leave, provided the contract includes a properly worded garden leave clause. This includes bonuses and other contractual benefits.

Working for Another Company or Starting a Business During Garden Leave

Generally prohibited. The employment contract should explicitly state this restriction. Breaching this can lead to legal action.

Duration of Garden Leave

Typically aligns with the notice period in the contract. The duration must be reasonable and not excessive.

Consequences of Breaching Garden Leave Terms

Breaching garden leave terms is a breach of contract and can lead to:

• Legal action by the employer.
• Injunctions to enforce garden leave terms.
• Potential termination of employment.

Terminating Garden Leave Early

Early termination requires either an express clause in the contract permitting it or mutual agreement between employer and employee. Unilateral early termination by the employer may be legally challenged.

Essential Components of a Garden Leave Clause

• Express Entitlement: Clearly state the employer's right to impose garden leave.
• Trigger Circumstances: Specify when garden leave applies (e.g., resignation, termination).
• Duration: Define the length (usually the notice period).
• Terms and Conditions: Detail salary, benefits, allowed activities, and restrictions.
• Legitimate Business Interests: Explain why garden leave is necessary.
• Right to Exclude from Premises: State that the employee can be excluded from the workplace.
• Compliance with Contractual Obligations: Specify continued obligations, like confidentiality.
• Enforceability: Ensure the clause is legally sound and reasonable.

Garden Leave and Bonus Payments

Bonuses and other incentives are typically paid during garden leave if they're part of the employment contract. The contract's specific terms determine the treatment of these incentives.

Conclusion

Garden leave in Singapore is a powerful tool for employers, but it must be implemented carefully and legally. Both employers and employees need to understand their rights and obligations to ensure a smooth and legally compliant transition.