Garden Leave Guide for Employers in New Zealand

Garden leave, sometimes called gardening leave, happens when an employee is asked not to work during their notice period. They remain employed and get paid, but they cannot start a new role until the notice ends.

This practice is common in New Zealand when employers want to protect business interests. For example, it’s often used if an employee has access to sensitive information, or if there’s a risk they might join a competitor. Garden leave allows employers to manage risks while still meeting legal obligations.

Transition:
In this guide you’ll learn:

• Garden leave meaning and how it works in New Zealand
• The difference between garden leave vs notice period
• Employee rights and employer obligations
• Payment in lieu of notice and how it compares
• Practical tips for employers handling garden leave

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What Is Garden Leave?

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Garden leave means an employee is told to stay away from work during their notice period. They stay on payroll, continue to receive benefits, and are still bound by their employment agreement.

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The employee cannot start a new job while on garden leave unless the employer agrees. This helps businesses protect client relationships, company data, and intellectual property.

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Some employers in Auckland have shared that garden leave gives them peace of mind when senior staff resign. It gives space for a smooth handover without the risk of disruption.

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Garden Leave vs Notice Period

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Notice period law requires employees or employers to give notice when ending employment. During a normal notice period, the employee keeps working.

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Garden leave is different. The current notice period meaning stays the same, but the employee does not actively work. They remain paid until the end date.

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Employers sometimes choose garden leave if there’s a risk of conflict, if the employee has a competing job lined up, or if there are commercial interests to protect.

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Gardening Leave Employee Rights

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Employees on gardening leave in New Zealand have clear rights:

• They must be paid their full salary and benefits.
• They keep accruing annual leave, unless their contract states otherwise.
• They remain bound by duties of good faith and confidentiality.
• They may still have access to tools like a garden leave company car if the agreement allows.

Employers should be careful. If the employment agreement does not include a garden leave clause, enforcing it can be challenged.

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Payment In Lieu of Notice vs Garden Leave

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Payment in lieu of notice is when an employer pays out notice without requiring the employee to work. This is different from garden leaves.

• Garden leave: Employee stays on payroll, still employed, but not working.
• Payment in lieu of notice: Employment ends immediately, and the employee is free to start a new job.

Knowing the difference is important. For example, if a business wants to stop an employee from joining a competitor straight away, garden leave is the safer option.

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Practical Tips for Employers

• Include a garden leave clause in employment agreements to avoid legal risk.
• Decide if you want to offer time off in lieu or payment in lieu of notice instead.
• Be clear about access to company property, such as laptops or company cars.
• Communicate expectations so the employee knows their rights and duties.

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Key Takeaways for Employers

• Garden leave is when an employee stays employed and paid during notice but does not work.
• It helps protect business interests and ensures a smooth transition.
• Employers must pay salary, benefits, and usually allow annual leave to accrue.
• Always check employment agreements before enforcing garden leave.
• Understand the difference between garden leave, payment in lieu of notice, and normal notice periods.

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