Loyalty - Garden Leave

    > See generally: Severance

The Basics of Garden Leave.  When it comes to employee terminations, employers have several alternatives by which to structure any severance-related pay that they desire to provide.  A “terminal leave” approach may appeal to employers who want to delay an employee’s termination date, perhaps to allow for further vesting of stock awards or retirement benefits – or to extend the period when COBRA health insurance coverage will begin.  Terminal leaves come with some baggage, however, because ... continue reading fromBNA article.

Applicable Law by Country
United Kingdom

United States

  • Illinois: Credit Suisse v Vendor (ND Ill. 12/2/2004); note the following text quoted from the court's decision: 
    • See, e.g., Sheehy v. Sheehy, 299 Ill. App. 3d 996, 1007, 702 N.E.2d 200 (1st Dist. 1998) ("Although defendant is not ... competing with [plaintiff], plaintiff still seeks to restrain his employment. In our view, such restriction is unreasonable and a violation of public policy."). Therefore, the court finds that, while CSFB has some likelihood of success in enforcing the 60 day non-solicitation provision and the prohibition on going to work for a competing firm, it has failed to meet that burden with respect to the broad non-affiliation portion of the non-compete restriction.
  • New York: American Broadcasting Company v. Warner Wolf (52 N.Y. 2d 394, 402) 1981), stating that:
    • "where an employee refuses to render services to an employer in violation of an existing contract, and the services are unique or extraordinary, an injunction may issue to prevent the employee from furnishing those services to another person for the duration of the contract."

Relevant Articles:

  • (2007) Will Garden Leaves Blossom in the States? (Rubin and Gilman, Employee Relations Law Journal. vol. 33, no. 2, Autumn 2007).
  • (2002) Garden Leave:  A Possible Solution to the Uncertain Enforceability of Restrictive Employment Covenants (Lembrich, Note, 102 Columbia Law Review 2291:
    • @ 2292: “Restrictions such as non-competition and non-solicitation agreements have long been present in many American employment contracts.  Courts, however, have historically been skeptical of such provisions and often refused to issue injunctions to enforce them.  The resulting uncertainty has proven to be a major problem for employers in many industries, who are left with no reliable means of keeping their key employees from joining a competitor or competing themselves.”