Home Legal Services Employment Settlement Agreements for Employees
Written by:Â Owen John, Employment Law Partner, Darwin Gray | Last updated: 24/10/2026 | Reviewed by: Owen John
Garden leave is a period during your notice when your employer asks you to stop coming in, stop working, and stay away from clients, colleagues, and systems, while they keep paying you as normal. You’re still employed. You’re just not working. The name comes from the idea that you’re at home tending the garden instead of sitting at your desk.
Employers use it when they want someone out of the business quickly but don’t want them working for a competitor, taking clients, or seeing sensitive information while their notice runs down. It’s common for senior people, sales staff, and anyone with access to confidential material or valuable relationships.
If you’re reading this because garden leave has come up in a settlement agreement, you’re in the right place. It’s one of the terms we’re asked about most, and getting it right can matter for your next move.
The basics are straightforward. You hand in your notice (or your employer gives you notice), and instead of working through it, you spend some or all of that period away from work on full pay. Your employment carries on until the end of the notice period, so nothing about your status changes. You’re an employee right up to your last day.
Because you’re still employed, a few things follow:
Usually, yes. To place you on garden leave, your employer normally needs an express garden leave clause in your employment contract. Without one, forcing you to stay home while stopping you working could itself be a breach of contract, because some employees (particularly those who rely on being seen to work, like senior specialists) have a right to actually do their job.
There are two common exceptions. First, if you agree to it, the clause matters less. Second, garden leave often forms part of a settlement agreement, where both sides sign up to the terms, so the contractual question falls away. That’s why you’ll frequently see garden leave and settlement agreements going hand in hand.
This is the part that catches people out. Because you stay employed throughout garden leave, you generally can’t start a new job until it ends, you’d be working for two employers at once, which breaches your duties to the first.
On top of that, any restrictive covenants in your contract still apply, and will usually continue after your employment finally ends. The small comfort is that time spent on garden leave is sometimes set off against the length of a post-termination restriction, so a well-advised exit can shorten how long you’re tied up overall. It depends on the wording, and it’s one of the things we look at closely.
People often mix these up. Both get you out of the workplace, but they’re not the same.
The difference affects tax, when your restrictions start running, and when you’re free to move on. If you’re weighing one against the other in a settlement, it’s worth taking advice, the better option depends on your plans and your contract.
If garden leave is on the table as part of your exit, these are usually the real questions underneath it: can they actually make me do this, will I be paid properly, and when am I free to take the next job? We’ll give you straight answers on all three, and if garden leave is bundled into a settlement agreement, we’ll look at how it fits with everything else you’re being offered.
Usually only if your contract has a garden leave clause, or you agree to it (for example, as part of a settlement agreement). Without a clause, requiring you to stay away while stopping you working can be a breach of contract, especially for roles where being seen to work matters. If you’ve been put on garden leave and you’re not sure your employer is entitled to do it, it’s worth getting advice quickly, because how you respond early on affects your options.
Yes. Garden leave is full-pay. Because you stay employed throughout, your normal salary and contractual benefits continue, pension, any company car, private medical cover, and so on. You also keep accruing holiday, although your employer can often require you to use some of it during the garden leave period. If your pay or benefits stop or change during garden leave, that’s a red flag worth checking.
Generally no. You’re still employed by your current employer during garden leave, so starting work elsewhere would breach your duties to them, and that’s before any restrictive covenants are taken into account. If a new role is waiting, the timing matters. We can look at when you’re genuinely free to start, and whether garden leave time counts towards reducing any post-termination restrictions.
Usually no longer than your notice period, whatever that is in your contract, a month, three months, sometimes six or twelve for senior roles. It can’t normally be extended beyond your notice. If your notice is long and you want out sooner, that’s often something we can negotiate in a settlement agreement, along with how garden leave interacts with your restrictions.
Garden leave happens during your notice period, when you’re leaving anyway. Suspension usually happens while you’re still employed with no end in sight, often during an investigation or disciplinary process. Both mean staying away on full pay, but they arise in very different situations and carry different implications. If you’ve been “suspended” but you’re actually on your way out, it’s worth clarifying which one you’re really in.
If garden leave has come up as part of your exit, or you’ve been placed on it and something doesn’t feel right, we’ll tell you where you stand. We’re Darwin Gray, one of Wales’ leading employment law firms, and we advise on hundreds of settlement agreements every year. You’ll speak directly to the solicitor handling your case, and as the only firm in Wales offering full Welsh language employment advice at every level, we can help in Welsh or English, whichever you’d prefer.
Get a free, no obligation chat with our employment team. Call 02920 829 100 or use our contact form.
Settlement agreements for employees
Negotiating a settlement agreement
Disclaimer: This guide is general information, not legal advice, and employment law changes. For advice on your situation, please speak to a qualified employment solicitor.
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