Garden Leave - What You Need to Know

Garden leave: opportunity and considerations

Garden leave (vrijstelling van werk) means your employer releases you from your obligation to work while your employment contract continues. In most cases, you retain your salary and employment conditions until the end date of your employment. This is common during reorganizations.

At first glance, garden leave seems attractive: you are paid without having to work. But there are important considerations. The terms of the garden leave determine whether holiday days are offset, whether you can apply for jobs or work elsewhere, and whether your non-compete clause still applies.

It is therefore essential that the terms of the garden leave are clearly documented in the settlement agreement before you agree. Ambiguity on these points can lead to disputes later.

Garden leave is generally distinguished legally from suspension or being placed on non-active status. A suspension typically involves a disciplinary measure. Garden leave during a reorganization is a neutral measure that forms part of the departure arrangement. Ensure the settlement agreement clearly states it concerns garden leave and not a disciplinary measure — this is relevant for your reputation and your file.

Check these points in your VSO

Are holiday days being offset against the garden leave?
Are you allowed to apply for jobs or work elsewhere?
Does the non-compete clause remain in force?
Do you retain use of company car, laptop and phone?
What about bonus accrual during garden leave?
Does your pension accrual continue?
What is the start date and duration of the garden leave?
Is it explicitly garden leave, not a suspension?

Your rights during garden leave

Salary and benefits

During garden leave, your employment contract remains fully in force. You are entitled to your full salary, including holiday allowance and fixed salary components. Your pension accrual continues in principle. If you have a company car, its use is typically continued unless otherwise agreed.

Holiday days

In principle, the employer cannot unilaterally deduct holiday days without the employee's consent. The settlement agreement often specifies that remaining holiday days are deemed taken during garden leave or paid out at the end of employment. Always document this in writing — if nothing is agreed, you are entitled to payment.

Applying and working elsewhere

During garden leave, you can in principle apply for other jobs. Whether working for another employer is permitted depends on your employment contract and the arrangements made. Include in the settlement agreement that you are free to apply elsewhere and, upon accepting a new position, can leave earlier.

Non-compete clause

The non-compete clause applies in principle during the garden leave period as well. This means you cannot start at a competitor, even when on garden leave. Negotiate the waiver or limitation of the non-compete clause as part of your departure arrangement — this is often an important part of the negotiations.

WW rights

Garden leave does not in principle negatively affect your unemployment benefit (WW) rights, provided the end date of employment is correctly set. UWV applies a fictitious notice period. If the end date is too early, your WW benefits may be delayed. Ensure the end date in the VSO accounts for this.

Bonus during garden leave

Whether you retain your bonus entitlement during garden leave depends on the bonus arrangement. If your bonus is linked to targets, the employer may argue you cannot meet them while not working. Address the bonus explicitly in the VSO — preferably as a pro rata payment — to avoid disputes.

Making the most of garden leave

Strategic considerations

A longer notice period with garden leave can be strategically more advantageous than a higher one-off severance payment. The advantages include:

More time to apply for jobs while still employed and receiving salary
Depending on your personal situation, this can be financially beneficial
Better alignment with your WW benefits
For expats: more time to find a new employer who can take over the 30% ruling

When negotiating the settlement agreement, it may be wise to choose a longer notice period with garden leave instead of a higher financial severance. We advise you on which option best fits your situation.

Unilateral garden leave

Your employer cannot simply place you on garden leave unilaterally. The right to perform work is recognized in case law as a protectable interest. The employer must have a reasonable ground, such as confidentiality or protection of client relationships.

In practice, garden leave during reorganizations is regularly accepted, provided employment conditions are maintained.

Expats: watch the 30% ruling

For international employees with a 30% ruling, garden leave may have implications for the application of the ruling. Seek tax advice on this matter in good time.

How ReorgLegal helps

We review the terms of your garden leave and ensure all arrangements are correctly documented in the settlement agreement. If desired, we negotiate on your behalf for better terms. Employers regularly offer a contribution towards legal costs as part of the VSO. We respond within 1 hour on business days.

The transition payment

In addition to garden leave, you are entitled to the statutory transition payment: one-third of a gross monthly salary per year of service. Garden leave does not replace the transition payment — they are two separate components of the departure arrangement. Depending on the circumstances, there may be room for a higher payment than the statutory minimum.

You have been placed on garden leave