What?
When an employer terminates the employment relationship with an employee, he often releases the employee from work, either immediately or after a certain period of time. The garden leave is the release from the obligation to perform work. The employer’s obligation to pay wages continues.
Often the employee is instructed to compensate for overtime and take unused holidays during the time off. The employer assumes that the employee will, after all, receive a “gift” in the form of wages that continue to be paid and that the employee should then at least lose his or her entitlement to payment of overtime and of holiday credits.
This expectation is deceptive: the employer’s obligations continue throughout the period of leave and employment limits such instructions by the employer.
(a) The instruction to draw overtime during the leave period is not permissible against the employee’s will. This is because according to Art. 321c para. 2 CO the overtime can only be compensated with free time if the employee agrees. This applies even after notice has been given and the employee is released from work. Of course, the employee will normally refuse this consent, because then he has both: he does not have to work and he is also entitled to payment of the overtime (including a surcharge of 25%). If the employer wants to avoid the payment, he must ensure in an agreement with the employee that he agrees to the compensation of the overtime through the time off. Why should the employee agree at all? He most likely would agree if it is clear to him that he will not get the garden leave if he does not agree to the compensation of the overtime.
(b) The instruction to draw the remaining holiday credit during the period of leave is not completely excluded, but it is severely limited:
– It should be noted in advance that the period of leave also still counts as part of the duration of the employment relationship and therefore new holiday entitlements also accrue during this period. If, for example, the employee has a notice period of 6 months and is entitled to 6 weeks of holidays per year, then he or she is (in principle) entitled to 3 additional weeks of holidays even if he or she is released immediately after the termination. However, some courts restrict the employee’s entitlement to additional holiday credits for the period of leave in this case: According to this practice (which probably does not apply in all of Switzerland), half of the holiday entitlement accrued during the leave period is deemed to have been taken. Accordingly, the employee in the above example would only be entitled to 1 1/2 weeks of additional holiday.
– Also, the employer may not instruct the employee to take the holiday credit without further ado. The employee must have sufficient time to actually use the time off as holiday (i.e. for recreation). This is not the case if he must look for a new job. According to a rule of thumb often applied by the courts, in such a case the credited holiday days may amount to a maximum of one third of the leave period. The remaining holiday credit must then be paid out.
– If the employee becomes so ill that he or she is considered “unable to take holidays”, no holiday is possible and thus no compensation of the holiday entitlement with the time off either. Experience has shown that employees often take a medical certificate immediately after being dismissed, and that “holiday incapacity” is a regular occurrence.
– Holidays are not compensated by time off at all if the employee has to be on call for the employer during this time (e.g., in order to complete any work or to guarantee that the tasks are handed over to a successor). These are not holidays and as consequence no compensation can take place at all.
So What?
After the end of the leave period, the employer could be faced with additional claims from the employee.
Do What?
The employer who wants to avoid further payments on top of the regular wages to a dismissed and released employee should propose an agreement (usually a complete termination agreement) to the employee:
– the employee agrees to be compensated for any overwork through release time
– the employee agrees that he/she will first take all holidays (including those still accruing during the leave period) and that the actual leave will only begin afterwards. In other words: first the holidays are compensated during the “normal” working time and only afterwards the garden leave begins. Despite these “arranged holidays”, however, the employee must have enough time to look for a new job.
– the employee does not have to be at the employer’s disposal anymore, the leave is unconditional. Of course, it is advisable to let the garden leave begin only when the employee has completed all his or her pending tasks.
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