To ensure we are all on the same page. First let us dive into what Garden Leave and PILON is first.
Garden Leave
An employer will place an employee on garden leave, when an employee is leaving their job. Their employer will instruct them not to attend work or perform their duties, during the whole or part of their notice period. In effect the employee will not be required to carry out any work or communicate with clients, customers and colleagues.
The employee will remain employed by their employer, but will be kept away from the business meaning an employee will be entitled to their normal salary payments and contractual benefits.
This is a strategy used to protect the business interests of the employer and is typically used for senior employees’ or company directors who have access to sensitive information and client or customer databases.
However, you will only be able to impose Garden Leave on an employee, if it is set out in their contract of employment.
PILON
PILON stands for payment in lieu of notice, put simply, the employer will pay the employee their notice, but they will not be required to work their notice period.
Employer’s tend to use this option when they wish to terminate an employee’s employment and do not require them to work their notice period or when an employee resigns and they do not require them to work their notice.
This option is used when an employer is concerned about the employee’s continued presence at work during their notice period.
The employment contract should set out if an employee is entitled to PILON, if it does not then it will be difficult to impose unless the employee agrees to it. If they do not, the employer will be in breach of contract.
Why is it so important to include such clauses?
Recently an employee at B&Q was dismissed for vaping in a ‘no smoking’ area.
After he had been dismissed, the employee went on to launch a foul-mouthed rant over the store’s loudspeaker and recorded it on the social media platform TikTok, racking up a total of 2.5 million views before it was taken down.
An employee who is dismissed, is likely to be disgruntled by the actions of their employer, the B&Q’s scenario is a prime example of what can happen. For your business, it may not necessarily be that the employee will make an announcement over a loudspeaker, but they could very well send a scathing email to their colleagues or clients/customers.
That is why we advise all employers to insert a Garden Leave or PILON clause in their contracts of employment. Upon dismissal or an employee resigning from their role, you can enforce the clause – you do not have to enforce either of these clauses, but it is good to have the options available.
If you do not insert such a clause, then you will not be able to enforce PILON or Garden Leave on the employee unless they agree to it, which if the employee is disgruntled or angry may be unwilling to agree, meaning you run the risk of having an unhappy employee attending work during their notice and much like with B&Q could have a few choice words to say about their employer.
Be aware:
If you try to enforce PILON or Garden Leave and they are not contained within the contract of employment, it will bring rise to a breach of contract claim and as a result mean that any Restrictive Covenants in force at the time are no longer binding on the employee, which could then enable an employee to poach employees, clients and work for competitors.