In the dynamic world of employment, the concept of “garden leave” has emerged as a critical tool for employers seeking to safeguard their interests during the transition period when an employee departs. This analysis delves into the legal underpinnings, enforceability, and practical implications of garden leave in the contrasting jurisdictions of England and Vietnam, shedding light on the nuances that shape this employment practice.

England’s Established Framework

In England, garden leave is firmly rooted within the well-developed body of employment law which was originated from the two leading cases namely Evening Standard Co Ltd v Henderson [1987] I.R.L.R. 64 and Provident Financial Group Plc v Hayward [1989] 3 All E.R. 298. The practice is widely accepted and commonly included in employment contracts, supported by a robust case law landscape. English courts have consistently recognized the enforceability of garden leave clauses, provided they serve to protect legitimate business interests and are deemed reasonable in scope.

Vietnam’s Contractual Reliance

In contrast, the Vietnamese legal system lacks explicit codification of garden leave provisions. The enforceability of this practice relies heavily on the specific terms agreed upon within individual employment contracts. While limited case law addresses garden leave directly, the absence of a dedicated statutory framework creates the potential for varying interpretations and a degree of uncertainty in enforcement.

Objectives and Purposes: Balancing Interests

In the business context, the primary aim of garden leave in both England and Vietnam is to safeguard the employer’s business interests, particularly concerning the preservation of confidential information and the continuity of client relationships. It serves as a transitional strategy, allowing for a smooth handover of duties and mitigating the risks associated with an employee’s departure. Indirectly, garden leave also functions as a non-compete measure, preventing the departing employee from immediately joining a competitor.

England’s Reasonableness Test

The enforceability of garden leave clauses in England is contingent on their reasonableness. These provisions must be proportionate and necessary to protect legitimate business interests, without being excessively restrictive. English courts scrutinize garden leave clauses to ensure a balance between the protection of the employer’s interests and the employee’s right to seek future employment. Factors considered include the duration of the leave, its impact on the employee’s future employment opportunities, and the necessity of the measure.

Vietnam’s Contractual Clarity and Alignment

There is no so called “reasonableness” test in Vietnam for the purposes of assessing the enforceability of a garden leave clause in the employment context. For garden leave to be enforceable in Vietnam, it must be explicitly stated in the employment contract without being contrary to the right to work of Vietnamese citizens under the Constitution of Vietnam and other provisions of the employment contract. Ambiguous terms may lead to disputes or difficulty in enforcement. Additionally, the arrangement must align with Vietnamese Labour Code, which mandate specific notice periods and compensation requirements to mitigate the risks of unlawful dismissal. The enforceability of garden leave provisions relies heavily on the mutual consent between the employer and the employee, as the absence of clear, mutual agreement can undermine their enforceability.

Drafting a Garden Leave Clause

Drafting a garden leave clause, an English law concept not explicitly recognized in Vietnamese jurisdiction, presents significant challenges for employers and legal counsels. On one hand, such clauses must be reasonable and justifiable to address the employer’s legitimate concerns without overly restricting the employee’s career opportunities. On the other hand, the clause must also respect the employees’ right to work as enshrined in the Vietnam Constitution, ensuring fairness and continuity of employment terms, even in the absence of active duties. Here are some suggested drafting points:

  1. Provide Clear Context and Justification: Clearly articulate the purpose and rationale for including a garden leave clause in the employment agreement. This will demonstrate that the clause addresses reasonable and legitimate interests from the employer’s perspective.
  2. Use Precise and Clear Language: Avoid ambiguous terms such as “whatsoever,” “howsoever,” or “catch-all” provisions that could be interpreted as overly restrictive for the employee.
  3. Protective Rather than Punitive Measure: Frame the garden leave clause as a protective measure within the employment contract, rather than viewing it as a punitive element within a mutual termination agreement.
  4. Define a Reasonable Job Scope: Provide a clear and comprehensive job description that allows the employer to manage the employee’s tasks effectively, including assigning “no task” if necessary.
  5. Limit the Duration of Garden Leave: Ensure the garden leave period is not excessively long, aligning it with the employer’s legitimate interests and maintaining reasonableness to avoid overreach.

Conclusion

While England and Vietnam approach the concept of garden leave from different legal and practical perspectives, the underlying considerations revolve around balancing the interests of employers and employees. England’s robust legal framework and judicial support provide greater certainty in the enforceability of garden leave clauses, whereas Vietnam’s reliance on contractual terms and adherence to broader labor laws presents a more nuanced landscape.

Employers and legal practitioners in both jurisdictions must exercise caution in drafting detailed and explicit garden leave provisions to ensure compliance with local legal requirements.