Garden leave in Germany: pay, holiday and obligations

Garden leave releases an employee from the obligation to perform work while the employment relationship continues. It may be ordered after a dismissal, agreed in a termination agreement or used during an ongoing employment conflict.

The precise legal and financial consequences depend on the wording of the notice, the employment contract and the practical implementation.

Check whether the release is revocable

A garden-leave notice may be revocable or irrevocable.

A revocable release generally allows the employer to require the employee to return to work. This may be relevant when assessing whether outstanding holiday can be treated as taken during the period of release.

An irrevocable release normally provides greater certainty that the employee will not be called back to work. The complete wording should nevertheless be reviewed.

Review continued remuneration

Garden leave does not automatically end the employee’s entitlement to remuneration.

The review may include:

• fixed salary
• variable remuneration
• bonuses and target-based payments
• commission
• company car arrangements
• allowances
• pension contributions
• other contractual benefits

It should also be clarified whether the employer intends to deduct income earned from other work.

Holiday is not automatically satisfied

A release from work does not necessarily use up outstanding holiday entitlement.

The relevant declaration should be examined to determine:

• whether holiday is expressly granted
• which period is allocated to holiday
• whether the release is irrevocable
• whether other obligations prevent genuine use of the holiday
• whether the employee remains subject to recall

If the legal requirements are not met, holiday entitlement or a later claim for payment in lieu of holiday may remain relevant.

Clarify working-time credits and overtime

Working-time accounts, overtime and time-off entitlements should be dealt with separately. A general garden-leave declaration does not always make clear which claims are intended to be satisfied.

Consider other work and competition duties

The employment relationship continues during garden leave. Contractual duties of loyalty and restrictions on competing activity may therefore remain in force.

Before beginning other employment, the employee should assess contractual notification requirements, competition restrictions and possible crediting of other earnings.

Document the return of company property

The employer may request the return of company property, including:

• laptops and mobile devices
• keys and access cards
• files and documents
• company vehicles
• payment cards
• storage media
• confidential information

The items returned and the date of return should be documented.

Review garden leave as part of the complete separation package

Garden leave should not be considered in isolation. It may affect the termination date, continued remuneration, holiday, bonuses, severance, references and the ability to begin new employment.

The dismissal letter, termination agreement, garden-leave notice and remuneration documents should therefore be assessed together.