Garden Leave Means Full Pay at Home Until Your Notice Ends

Someone senior hands in their resignation, and you would rather they did not spend the notice period at their desk. Can you send them home on full pay and keep them from joining a rival?

Yes, and that is what garden leave is: the person stays employed for the notice period, on full pay, but does no work. In India it is legal during the notice period. Once employment ends, a court will not stop them taking a new job.

I searched the Supreme Court’s reported judgments for the words “garden leave” and found none that uses them. The rule comes from older cases about restrictions during and after a contract.

What Is Garden Leave?

Garden leave is when a leaving employee is told not to work during the notice period, but stays on the payroll and is paid in full. They usually cannot come into the office, contact clients or join another employer until the notice ends.

It sits between serving notice as normal and pay in lieu of notice, where you pay the notice salary and let the person go at once. The table shows how the three compare.

Not every employer uses the term “garden leave” the same way. In a January 2026 Karnataka High Court case, the court record described it as a month’s notice on full salary with no work. The month was given so the leaving employee could look for a new job.

So the contract has to say what the term means in your business.

Is Garden Leave Legal in India?

Yes, while the employee is still employed. The answer rests on section 27 of the Indian Contract Act, 1872, which makes void, meaning it cannot be enforced, any agreement that stops a person from carrying on a lawful profession, trade or business.

The courts have read that section in two parts, depending on when the restriction applies.

Garden Leave During the Notice Period

The Supreme Court has held since 1967 that limits which apply while a person is still employed are generally allowed. It first said so in Niranjan Shankar Golikari versus Century Spinning, and repeated it in May 2025 in Vijaya Bank versus Prashant Narnaware.

The employee is still yours during the notice, so keeping them away from a rival until the notice ends is usually safe.

Garden leave keeps the employee on your rolls. A non-compete clause, a promise not to join a rival, tries to bind them after they leave. That difference decides which one a court will enforce.

Restrictions After Employment Ends

After the job ends, the rule flips. In Percept D’Mark versus Zaheer Khan (2006), the Supreme Court held that a restriction which runs beyond the end of the contract cannot be enforced.

Calling the period after exit “garden leave” is unlikely to save the restriction. In Tapas Kanti Mandal versus Cosmo Films (2018), the Bombay High Court noted that even a garden leave clause running after the job ends would not be enforceable.

How Long Can Garden Leave Last?

As long as the notice period, and no longer. Garden leave is the notice period served at home, so it ends when the notice ends.

No central law fixes one notice period for everyone who resigns. It comes from the contract or, in industrial establishments with 300 or more workers, from the certified service rules (standing orders) made under the Industrial Relations Code. The notice period rules explain which applies to whom.

Take a contract that sets 90 days of notice (an example). Garden leave can then run for up to 90 days. You can also end it early by releasing the employee, but you cannot add days after the notice ends.

Is Garden Leave Paid?

Yes, it is paid. The employee is still employed, so their salary is paid in full for every day it runs.

That pay counts as wages. The Code on Wages, 2019 defines wages as pay due “in respect of his employment or of work done in such employment”, so pay without work still qualifies.

Because it is wages, provident fund (PF) and Employees’ State Insurance (ESI) contributions carry on where the employee is covered. The person is still employed, so the time also counts as continuous service for gratuity under the Code on Social Security, 2020.

It is also salary for tax. The Income-tax Act, 2025 treats wages as salary, so tax deducted at source (TDS) is cut from it as usual.

Annual Leave During Garden Leave

One grey area is annual leave. The Occupational Safety, Health and Working Conditions Code (OSH Code) counts layoff, maternity leave and annual leave towards the 180 days needed to earn leave. Garden leave is not on that list.

The Code only covers “workers”. That leaves out managers and administrators, and supervisors paid more than ₹18,000 a month. So most senior staff get their leave from the contract or the state shops and establishments law instead.

So say in the contract whether garden leave days earn leave, and record those days as paid leave, not absence.

Garden Leave Policy for HR and Owners

Because no central law sets the terms, the contract and your policy do the work. Settle these five points in writing:

1. Put it in the offer letter or contract. Say the employer may place an employee on garden leave during the notice period.
2. Keep it inside the notice period. Never let it run past the last day of employment.
3. Pay in full. Fixed salary and benefits continue as if the person were working. Say how bonus, incentives and leave are treated.
4. Say what they cannot do. No joining a rival, no client contact, no use of company systems until the notice ends.
5. Keep the right to call them back. You may need a handover call or two before they go.

Garden leave suits a sales head at a pharma distributor, an account manager at an IT services firm, a plant manager at a manufacturing unit or a senior doctor at a healthcare chain. These are roles where client contact or plans are worth protecting.

For a junior role, pay in lieu of notice is usually simpler. The notice period buyout template covers that route.

Sample Garden Leave Clause

Here is sample wording for a garden leave clause in an offer letter or a garden leave policy. Change it to fit your notice period, and have your lawyer check it before you use it.

During your notice period, the company may ask you to stay away from work and clients, and not to work for anyone else.

You stay an employee, on full salary and benefits, until your last day of employment.

The company may ask you to help with handover during this time, and may release you before the notice period ends.

However you word it, the garden leave days still have to land correctly in payroll.

So, When Does Garden Leave Work?

Garden leave works while the employee is still on your rolls: during the notice, with full pay. Write the terms into the contract before anyone resigns.

Once the last day passes, it stops working. A court will not keep the person from a new job, and calling that time garden leave is unlikely to change that.

To track garden leave days as paid leave, see how Attendo handles it.

Frequently Asked Questions