Firm makes employee spend 12 months on garden leave

An investment company has upheld its legal right to make an employee spend 12 months on garden leave before taking up a post with a rival firm.

An investment company has upheld its legal right to make an employee spend 12 months on garden leave before taking up a post with a rival firm.

The issue arose when the employee said he was resigning after working for the company as an investment adviser for 14 years. During that time, he had built up a list of valuable contacts.

The company feared that he would take those contacts to one of its competitors and invoked a clause in his contract preventing him taking up a new post with another organisation offering a similar set of services within 12 months of resigning.

The employee was therefore put on 12 months’ garden leave on full salary.

However, within a month he resigned with immediate effect, saying the employer had breached its contract with him by failing to send him daily summaries of information relating to the company. He claimed this breach invalidated the contract and left him free to begin his new employment.

The company took legal action in the High Court and was successful in obtaining an injunction preventing him joining a rival firm for 12 months.

The court held that the employee had overstated the importance of the daily summaries and was using them as a means of claiming constructive dismissal to avoid the garden leave.

The company had a legitimate interest to protect. On the evidence, 12 months was the minimum period required to prevent the company’s business being affected.

The employee had agreed to the 12-month period in his contract and would not suffer any loss as the company was still paying his salary.

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