What Is Garden Leave in an Executive Employment Contract?

Garden leave is a period — usually the notice period after a resignation or termination notice — during which an employee stays on the payroll and remains employed, but the employer tells them not to work, not to come in, and often not to contact clients or colleagues. The UK's workplace adviser Acas describes it as an employer telling an employee "not to work either part or all of their notice period," usually so they no longer have access to confidential information they could take to a new job, while the employee is "paid as usual … including for any work benefits in their contract." The term comes from UK employment practice, but U.S. executive employment agreements increasingly include garden-leave clauses as a paid alternative or complement to a post-employment non-compete. In the United States there is no single federal garden-leave law: whether you can be placed on garden leave, for how long, and on what pay depends on your contract and your state's law. This is general information, not legal advice.

At a glance

How garden leave works

A garden-leave clause typically does three things (Weil, Gotshal & Manges partners, *New York Law Journal*, 2009):

1. Lets the employer place you on leave for part or all of your notice period.
2. Excludes you from the office, company systems, customers, clients, and confidential information.
3. Bars you from working for another employer until the period ends, because you are still employed.

Meanwhile the employer uses the time to move your accounts and client relationships to someone else, and whatever confidential information you hold becomes less current. GOV.UK adds that an employer may instead ask you to work from home or another location during the notice period and still call it garden leave.

Practice varies. In SHRM's coverage of resignation notice, a Duane Morris employment lawyer described a form of garden leave in which the departing worker is relieved of day-to-day duties and access to confidential information but must still answer limited transition questions about their projects and accounts. Some executive agreements spell out that "available for transition" duty; others say expressly that no services are required. Read which kind you signed.

Garden leave vs. other ways an exit can be handled

Garden leave is sometimes paired with these. An executive might serve 90 days of garden leave and then sign a separation agreement, or a contract might combine a notice-period garden leave with a shorter post-employment non-solicit. See What Is a Non-Compete Agreement and Is It Enforceable? and What Is a Non-Solicitation Agreement?.

Why U.S. employers use garden leave instead of (or with) a non-compete

The Weil/NYLJ analysis gives several reasons. Garden-leave clauses offer "some of the same benefits as non-competition agreements," but courts are generally more willing to control what a *current* employee does than a *former* one. The employee keeps salary and usually benefit-plan coverage. Employees may also see a paid garden leave as fairer than an unpaid post-employment restriction. The same analysis noted that very few U.S. courts had addressed garden-leave clauses directly, and that New York decisions on paid non-competes offer some guidance. Treat enforceability as unsettled and state-specific.

Non-compete law itself is set by the states. Cornell LII's Wex summary says legality "differs from state to state": most states allow reasonable restrictions, while a minority, such as California, bar them in nearly all circumstances. The FTC's 2024 rule that would have banned most non-competes nationwide was set aside in *Ryan, LLC v. FTC* (N.D. Tex. 2024). The Commission voted on September 5, 2025 to dismiss its appeals, and a Federal Register notice removed the rule from the Code of Federal Regulations effective February 12, 2026.

Massachusetts uses "garden leave clause" differently

Massachusetts' Noncompetition Agreement Act (M.G.L. c. 149 § 24L) defines a "garden leave clause" as a provision in a non-compete under which the employer agrees to pay the employee during the post-employment restricted period. To count, the clause must pay, pro rata across the whole restricted period, at least 50 percent of the employee's highest annualized base salary paid by the employer in the two years before termination, and the employer generally cannot stop paying on its own. The non-compete must be supported by that garden-leave clause or by other mutually agreed consideration spelled out in the agreement. The statute generally caps the restricted period at 12 months, and it makes non-competes unenforceable against certain workers, including employees classified as non-exempt under the Fair Labor Standards Act. If you work in Massachusetts, read "garden leave" in your agreement against that statute. It may mean paid post-employment restriction, not notice-period leave.

What executives should check in a garden-leave clause

1. Trigger: does it apply only when you resign, or also when the company terminates you?
2. Length: how many days or months, and can the company shorten or waive it (and stop paying)?
3. Pay and benefits: base salary only, or bonus eligibility, equity vesting, health coverage, and allowances too? Confirm in writing what continues and what stops when garden leave begins.
4. Equity: does vesting continue while you are still employed on leave? Cross-check your plan documents (see What Is an Employment Contract?).
5. Duties: "no services required," or "available for transition"?
6. Interaction with restrictive covenants: does garden-leave time count toward, or add to, any post-employment non-compete or non-solicit?
7. Good reason / cause: can being placed on garden leave count as "good reason" to resign under your agreement, or does the clause say it doesn't?
8. Governing law: which state's law applies, and does that state restrict non-competes or define garden leave (as Massachusetts does)?

Executives negotiating or exiting under one of these clauses should have an employment lawyer review the agreement before resigning or signing anything new. Timing affects pay, equity, and your start date at a new employer.

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• Sarah Jewell — owner and attorney at law, River Valley Law, P.A., Waite Park, Minnesota; profile lists labor and employment, business and commercial litigation, real estate, and business law, and says she is licensed in Minnesota and North Dakota state and federal courts. This page does not claim garden-leave case results.

Haute Lawyer membership is a paid editorial program; inclusion is not a ranking or recommendation. Ask any lawyer about their experience with executive agreements in your state.

Related Haute Lawyer pages

• What Is an Employment Contract and Do I Have One?
• What Is a Severance Agreement and Should I Sign It?
• What Is a Non-Compete Agreement and Is It Enforceable?
• What Is a Non-Solicitation Agreement?
• What Is At-Will Employment?
• Employment Law Questions