Introduction to this document

Letter to competitor about employee on garden leave

If you think an employee on garden leave is working elsewhere during their notice period, as well as pulling them up on this, also consider writing to the third party employer, particularly if it’s a competitor, to warn them that they can be liable for inducing the employee to breach their contract of employment.

Garden leave

Where you’ve placed an employee on garden leave during their notice period under the terms of a garden leave clause in their contract of employment, they’re still your employee and they’re still fully bound by all of the terms of their contract of employment, except that they’re not required to turn up for work. Hopefully, their garden leave clause should make this position clear (our Garden Leave Clause does). In particular, they’re still bound by their duties of fidelity/loyalty and confidentiality. This means they can’t perform any work or activity for any other employer, or for themselves, until their notice period has expired and their employment has formally terminated, and neither must they make any preparations during this time to compete with you later. When you replied to their resignation, if you used our Response to Resignation letter, in placing them on garden leave you will have reminded them of their obligations during this time.

Competitor risk

However, what if they’ve accepted a job with one of your competitors and you’re concerned or believe they’re going to breach their contract of employment by working for this competitor early, i.e. during their garden leave period, or by providing the competitor with your confidential information? What you do here really depends on how critical a threat the employee working for someone else would pose. In many cases, it will be sufficient for you to simply prohibit your employee from undertaking such work during garden leave - hopefully, our Response to Resignation will have done the trick but if it hasn’t, get your employee in for a meeting and point out the position clearly to them. If your concerns are more serious, i.e. the employee has accepted a job for a major competitor and you’ve heard rumours to the effect that the employee is acting in breach of their contract, or intends to do so, by working for that competitor during their notice period, if you know the identity of the competitor, you might wish to write a letter reminding that organisation of your employee’s contractual obligations. Use our Letter to Competitor about Employee on Garden Leave. It advises the competitor that the employee is on garden leave until their termination date and warns it that working for anyone else in this period, or passing on confidential information, constitutes a serious breach of their contract of employment.

Inducing a breach of contract

If the competitor induces your employee to breach their contract - for example, by permitting or persuading the employee to work for it during the garden leave period - that is, in itself, actionable and the competitor may be liable to pay you damages. Therefore, our letter goes on to set out the legal position here and it makes clear that you’re prepared to enforce your rights. Hopefully, this will have a sufficient deterrent effect.  If it doesn’t, then you have to decide whether to issue legal proceedings (for an injunction and/or damages) against your employee and/or the competitor - be aware that you’ll need sufficient evidence to support your case that there’s been a breach of contract.