Garden Leave in Singapore: When the Employer Pays You to Stay Away

Garden leave, sometimes called "gardening leave", is a contractual mechanism by which an employee who has given or received notice of termination is required to remain at home, away from the workplace and customers, while continuing to be paid in full. The employment contract subsists, the duties of fidelity and confidentiality continue, but the employee is removed from active duties.

The mechanism is widely used in financial services, professional services, sales, and senior executive roles. Its purposes are several:

• Cooling customer relationships before the employee can resume work at a competitor;
• Limiting access to evolving confidential information during the notice period;
• Permitting orderly handover and transition of accounts;
• Giving the employer time to reassign duties before the employee's actual departure.

Garden leave is distinct from a post-termination non-compete. During garden leave, the employee remains employed, is paid, and remains subject to the full duty of fidelity. A post-termination non-compete operates after employment has ended and is analysed under the restraint-of-trade doctrine (see our article on non-compete clauses in Singapore).

Garden leave is also distinct from a suspension during a disciplinary inquiry, which is undertaken to facilitate investigation of suspected misconduct and is typically shorter in duration.

Garden leave is enforceable in Singapore where it is supported by an express contractual term. In the absence of an express clause, the employer's ability to require garden leave is more constrained: it depends on whether the employee can show a legitimate interest in continuing to perform duties (often described as a "right to work") that the employer's instruction to stay home would frustrate.

Express clauses

A standard garden leave clause typically provides that during all or part of the notice period (whether given by the employee or the employer), the employer may at its discretion:

• Require the employee not to attend the workplace;
• Require the employee not to communicate with customers, suppliers, or employees of the company except as expressly authorised;
• Reassign the employee's duties or vary them temporarily;
• Withdraw access to systems and confidential information.

During the garden leave, salary and contractual benefits continue. Annual leave accrual continues. Restrictions on outside activities — typically a prohibition on working elsewhere — remain in force.

Implied right to send an employee on garden leave

Where the contract is silent, there is no automatic right to direct an employee onto garden leave. The position is fact-sensitive. Where the employee's role is one in which the right to work is important (such as a skilled craftsman who needs to maintain their skills, or a media personality whose reputation depends on continued visibility), an instruction to stay home without justification may be a breach of contract. For most office-based roles where pay and benefits are unaffected, the practical reality is that an employer's instruction is usually complied with, and the legal question rarely surfaces.

Prudent practice is to include an express garden leave clause in all employment contracts where the role has potential for sensitive customer information or competitive risk.

Garden leave and non-compete clauses serve similar purposes — protecting the employer during the period when the employee is transitioning to a new role — but operate at different times and on different legal foundations.

Sequential operation

A common contractual structure is: notice period of three months, of which the last two months may be served on garden leave at the employer's option, followed by a six-month post-termination non-compete in a defined geography and activity.

Singapore courts assessing the reasonableness of a non-compete will take account of the garden leave period when evaluating the cumulative restraint. The court's analysis is on the total duration of post-employment-effective constraint on the employee. Where the employer has already had three months of garden leave to manage customer transitions, a further twelve-month non-compete is harder to justify than where there has been no garden leave.

Set-off provisions

Some employment contracts expressly set off the garden leave period against the duration of the post-termination non-compete (for example, "the duration of any garden leave shall reduce the post-termination non-compete period day-for-day"). Courts have generally received such provisions favourably, treating them as a signal of reasonableness in the overall restraint package.

Pay during garden leave and the April 2025 Advisory

Because garden leave is paid, employers using it cumulatively with a post-termination non-compete are arguably providing partial consideration for the overall restraint, which is consistent with the April 2025 Tripartite Advisory on the Use of Non-Compete Clauses. The Advisory encourages employers to consider compensation for the restraint period, and a paid garden leave period is one form of compensation.

A combined design — moderate garden leave followed by a short, narrowly drafted non-compete — is generally more defensible in Singapore than a long, unpaid non-compete operating after employment has ended.

An employee on garden leave remains employed and remains subject to the full set of employment obligations.

Duty of fidelity

The implied duty of fidelity continues. The employee may not work for a competitor, may not solicit customers or colleagues, and may not use confidential information for any purpose other than the employer's business. Conducting business through a parallel company or a friend's account is a clear breach.

Confidentiality

The express and implied duties of confidentiality continue, both during and (subject to ordinary principles) after employment.

Reasonable instructions

The employee remains subject to reasonable instructions from the employer. This includes instructions to attend handover meetings, return company property, and cooperate with the orderly transition of duties.

What the employee may do

• Engage in personal activities not in breach of contract — taking holidays, attending to family matters, undertaking training;
• Engage with the prospective new employer on non-competing matters and on administrative onboarding;
• Seek legal advice and respond to enquiries from the new employer about the timing of availability.

What the employee may not do

• Commence work for a competitor before the end of the employed period;
• Solicit customers or colleagues, even informally;
• Use or disclose confidential information acquired during employment;
• Disparage the employer.

Breach during garden leave is a serious matter. The employer can terminate summarily for misconduct, claim damages for losses, and (in clear cases) obtain an injunction restraining further breach. Where the employee has accepted continuing pay, the equities favour the employer in any subsequent application.

Garden leave ends when the notice period expires, when the employer recalls the employee to active duties, or when the employment is otherwise terminated.

Recall to duties

Standard garden leave clauses preserve the employer's option to recall the employee at any time during the leave. The employee must then return to work. The reality, however, is that recall is unusual once garden leave has been initiated — typically the employer has reassigned duties and the rationale for restoring the employee has passed.

Expiry of notice period

At the expiry of the notice period, employment ends. The employee receives a final pay statement including outstanding salary, leave encashment, and any contractual final payments. Post-termination obligations under restrictive covenants (non-compete, non-solicitation, non-dealing, confidentiality) then take effect.

Payment in lieu

An employer who has placed an employee on garden leave generally cannot then switch to payment in lieu of notice in order to bring forward the employment-end date and start the non-compete period earlier, unless the contract expressly preserves that option. Sequencing matters and is worth clarifying at the contracting stage.

Outstanding bonuses and equity

Garden leave can interact awkwardly with bonus and equity vesting. Where bonus eligibility requires "active employment on the payment date", a garden leave employee may still be in active employment for vesting purposes — but specific contractual definitions govern. Disputes about bonus and equity entitlement after notice has been given are a frequent source of litigation in the State Courts and the High Court.

References and announcements

Employers should issue references factually and in line with usual practice. Internal and external announcements about the departure should be neutrally worded. Disparagement during or after garden leave is a frequent flashpoint in subsequent disputes.

For employers

• Include an express garden leave clause in employment contracts for roles where competitive sensitivity is real. Define the duration, the employer's discretion, and the continuing duties.
• Consider set-off provisions between garden leave and post-termination non-compete. Courts view these favourably, and the April 2025 Tripartite Advisory aligns with this approach.
• Continue full pay and benefits during garden leave. Reducing pay or withdrawing benefits during garden leave converts a reasonable restraint into a contested one.
• Treat the recall option as real. If you preserve the right to recall, exercise it consistently where appropriate.
• Manage announcements and references neutrally. Disparagement during the garden leave period invites counterclaim.

For employees

• Read the garden leave clause before signing. Check the duration, whether the employer's discretion is broad or constrained, and whether continuing pay and benefits are preserved in full.
• Respect the duty of fidelity during garden leave. Breaches expose you to summary termination and damages claims, and undermine your position in any post-termination dispute.
• Coordinate with the new employer on availability. The new employer should understand that you cannot commence work or take steps that breach your continuing obligations until the notice period has ended.
• If you are concerned that the garden leave is being used to circumvent the contractual notice period or to prejudice a bonus or equity entitlement, obtain advice.

This page is general information, not legal advice. Always consult a Singapore-qualified lawyer holding a current Practising Certificate before acting. See Singapore employment lawyers for the directory, or browse find a lawyer for other practice areas.

Most garden leave disputes are resolved within the employment relationship without external proceedings, but where they do escalate, the choice of forum depends on the nature and value of the claim.

Salary claims

Where the dispute concerns whether salary or contractual benefits were withheld during garden leave, the claim is a salary claim under the Employment Act 1968. The pathway runs through TADM mediation followed, if needed, by the Employment Claims Tribunals (cap S$20,000, or S$30,000 after TADM mediation) under the Employment Claims Act 2016.

Bonus and equity claims

Disputes about bonus, commission, or equity vesting during garden leave are typically pursued in the State Courts (up to S$250,000) or the General Division of the High Court, where the values commonly exceed the ECT cap and the issues require deeper documentary and expert analysis.

Injunction proceedings

Where the employer seeks to enforce restrictions during garden leave (for example, to prevent the employee starting work elsewhere before the notice ends), proceedings are in the General Division of the High Court under the Rules of Court 2021. Speed is critical: an interim injunction is the standard initial remedy.

Limitation

The general limitation period under the Limitation Act 1959 is six years for contractual claims. ECT-specific time limits are shorter — typically one year from the cause of action. Employees and employers should not delay obtaining advice.