City lawyers expect gardening leave to replace non-competes as the government moves to curb them

Gardening leave is the clause lawyers expect to replace non-competes. It is a contract term covering the notice period: the employee stays on the payroll after resigning or being dismissed, is told to stay away from the workplace and performs no duties ^[7]. David Palmer, a partner at Addleshaw Goddard, said "most companies will just find another way to restrict employee movement" and suggested that firms using non-competes as standard will lean more on gardening leave because "it has largely the same effect" ^[14].

City AM's own headline calls the ban "a hollow victory" ^[12]. The substitute costs money, though, because gardening leave keeps the employee on salary ^[7]. Google DeepMind's reported extension for departing UK staff went from six months to 12 ^[8], which is a doubling of the period ^[13]. Palmer pointed out that "long notice periods more often than not benefit employees, as they get paid longer" ^[9].

Palmer's other remark is where the forecast is least settled. He said: "We could see the government seek to restrict long notice periods too, to try and close that gap, but I don't think it would get rid of every way employers can stop or postpone staff from moving to competitors" ^[9]. That sits oddly beside City AM's account that Burnham's speech already named lengthy notice periods ^[1]. The article does not report the bill's text, a cap on notice length or a timetable, so the size of the gap is unknown.

The two lawyers quoted also differ on how much protection a ban removes. "Many employers in the City view non-compete provisions as essential protection to ensure that key individuals are not able to 'jump ship' quickly, taking with them key relationships, knowledge and business strategy," said Mark Callaghan, senior associate at Littler ^[4]. Palmer said: "There are already safeguards in place to protect against unreasonable non-compete clauses; there is a very long body of case law that restricts how they can be used" ^[5]. The first view implies a large loss for employers who use non-competes as standard. The second implies a small one.

Two clocks run at once. The Employment Rights Act has further stages due next January ^[11], so any gardening-leave redraft will be handled alongside those changes. For gardening leave itself, the evidence is Palmer's forecast and the DeepMind extension. If the notice-period limit arrives below the clause lengths firms choose this quarter, we would expect the second redraft to fall in the same period as the January stage.