When a senior employee leaves a business, employers often need to manage not just the departure itself, but also the risks and relationships that come with it. Two increasingly common tools used by employers to achieve this are garden leave and reaffirmation agreements.
At Scott Bailey LLP, our employment solicitors regularly advise both employers and employees on how and why these arrangements are used – and how to make sure they’re handled correctly.
What is garden leave?
Garden leave is when an employee remains employed during their notice period but is instructed not to work. The employee continues to receive their usual pay and benefits, but they do not attend work or carry out their usual duties.
This approach allows the employer to:
- Keep the individual bound by their employment contract and confidentiality obligations.
- Restrict access to clients, colleagues and sensitive information.
- Prevent the employee from immediately joining a competitor.
Essentially, garden leave keeps the employee “in the garden”, away from the business, while maintaining control and protecting commercial interests until their employment formally ends.
What is a reaffirmation agreement?
A reaffirmation agreement is a short follow-up document, usually signed at the end of garden leave or on the final termination date.
It confirms that:
- The employee still agrees to the terms of the original settlement agreement; and
- They have no new claims arising since signing the first agreement.
The reaffirmation is important because the first settlement agreement often covers events up to the date of signing, which may be several weeks before employment officially ends. The reaffirmation ensures that any new issues (such as unpaid bonuses or alleged breaches during garden leave) are also covered, giving both parties final certainty.
Both garden leave and reaffirmation agreements must be carefully drafted to remain enforceable. Poorly worded clauses can render restrictions invalid or leave gaps in the employer’s protection – which is why seeking legal advice is crucial.
Why employers use garden leave and reaffirmation agreements
Employers often prefer to use garden leave and reaffirmation agreements rather than simply paying a payment in lieu of notice (PILON).
Here’s why:
1. Control and protection
Garden leave allows the employer to retain control during the notice period. The employee remains subject to their contractual duties, such as confidentiality and fidelity, preventing them from taking sensitive information or approaching clients before leaving.
2. Risk management
Reaffirmation agreements reduce the risk of post-termination disputes. By having the employee re-sign a waiver of claims near their leaving date, the employer gains assurance that no new issues have arisen.
3. Financial and practical flexibility
Rather than paying everything upfront (as with a PILON), garden leave allows the employer to spread salary costs and withhold any final settlement payment until the reaffirmation is signed. This ensures compliance and cooperation throughout the notice period.
4. Professional closure
Handled properly, garden leave and reaffirmation agreements support a smooth, professional exit, protecting the employer’s reputation and maintaining goodwill.
Can you refuse garden leave?
It depends on whether your employment contract includes a garden leave clause.
If it does, your employer may have the right to place you on garden leave as soon as you’ve resigned or been given notice. Refusing to comply might be treated as misconduct or a breach of contract, since you’re both bound by the terms of employment until the notice period ends.
If your contract doesn’t include a garden leave clause, then your employer can’t legally force you to go on garden leave without your agreement. Doing so could amount to a breach of contract, but it may be that a period of garden leave can be agreed as part of a settlement.
If you are faced with either of these situations, as the employer or the employee, it would be wise to seek legal advice from an employment law solicitor.
Settlement agreement payments
Once garden leave has been completed, and a settlement agreement has been signed, the reaffirmation agreement will be signed to confirm the waiver of any future claims, and officially end the employment. It is generally at this point that any compensatory settlement payment will be made in accordance with the terms of the agreement. Settlement agreement payments can be an effective and amicable way to end employment, but understanding the tax position, payment breakdown, and legal implications is crucial before signing.
Do employers have to pay legal fees for settlement agreements?
Because of the benefit to the employer in having a settlement agreement in place, for a straightforward settlement agreement, employers typically contribute between £450 and £750 plus VAT.
Some employers unfortunately still try to only contribution £250 – 350. Whilst £350 may have been the going rate 10 – 15 years ago, times change (as does inflation). Employees should not be afraid to request an increase if that is the case, as the contribution should really cover the cost of a solicitor reviewing the agreement, explaining the terms, and confirming the employee’s understanding.
If the employer insists on only offering a small contribution, we can use that towards our costs, with the employee settling the balance. This is rarely required though, as most employers are perfectly reasonable (but may need reminding of the 21st century going rates!).
Where a reaffirmation agreement is required, it is also reasonable for employers to increase their contribution towards the employee’s legal fees. The reaffirmation requires a further independent legal advice certificate, meaning the employee must return to their solicitor to review and sign the second document. As this obviously adds extra time and cost for the solicitor, many employers now make an additional contribution – often a smaller, fixed amount (for example, £250–£350 plus VAT) on top of their original contribution. This approach is widely regarded as fair and good practice, helping to ensure the reaffirmation process is completed efficiently and without dispute. In some cases, where there is an enhanced payment package, an employer may seek to wrap up that contribution in the additional compensation. It is simply a negotiation point for the parties.
At Scott Bailey LLP, our employment law team regularly advises on:
- Drafting and enforcing garden leave clauses.
- Preparing and negotiating reaffirmation agreements.
- Ensuring settlement agreements meet all legal requirements.
Whether you are an employer managing a senior departure or an employee navigating a proposed agreement, it’s vital to take specialist legal advice before signing anything.
Contact our employment law solicitors
Our experienced settlement agreement solicitors situated between Bournemouth and Southampton advise both employers and employees across Dorset, Hampshire and beyond.
If you need practical, commercial advice on garden leave, settlement agreements, and reaffirmation agreements, contact our Hampshire employment law solicitors in Lymington today. We’ll help you protect your interests, and move forward with confidence.
