Garden Leave is Valid Under Philippine Law
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Garden leave is the practice of the employer directing an employee not to attend work during the period of notice of resignation or termination of the employment is colloquially known as “garden leave” or “gardening leave.”
The employee might be given no work or limited duties, or be required to be available during the notice period to, for example, assist with the completion of work or ensure the smooth transition of work to their successor.
Otherwise, the employee is given no work and is directed to have no contact with clients or continuing employees. During the period of garden leave, employees continue to be paid their salary and any other contractual benefits as if they were rendering their services to the employer.
This is the ruling of the Supreme Court in the case of Mejila vs. Wringley Philippines, Inc., G.R. No. 199469/G.R. No. 199505, September 11, 2019.
See the full digest of Atty. Villanueva here: https://ebvlaw.com/2020/05/06/garden-leave-is-not-prohibited-under-the-philippine-labor-laws/
In said case, the memorandum served on the employee affected by the redundancy stated that she is no longer required to work beginning the same day although her salary will be paid until the effectivity of separation. It also required her to turn over all company properties no later than said effectivity.
WPI granted her separation pay at the rate of 1.5 months every year of service, cash conversion of unused leaves, one-year extension of medical insurance, and pro rata 13th month pay, New Year pay, and mid-year pay, which shall be released upon return of all properties and completion of the exit clearance process. On the same date, WPI notified the Department of Labor and Employment’s (DOLE) Rizal Field Office of its decision to terminate Mejila and two others due to redundancy. 
The SC held that the practice of the employer directing an employee not to attend work during the period of notice of resignation or termination of the employment is colloquially known as “garden leave” or “gardening leave.” The employee might be given no work or limited duties, or be required to be available during the notice period to, for example, assist with the completion of work or ensure the smooth transition of work to their successor.
Otherwise, the employee is given no work and is directed to have no contact with clients or continuing employees. During the period of garden leave, employees continue to be paid their salary and any other contractual benefits as if they were rendering their services to the employer.
In the United Kingdom (UK), where the practice originated, the garden leave clause has been used as an alternative to post-employment non-competition covenants. The employee remains employed for the period of the leave but is expected to do no work; he could, then, “stay home and tend the garden.” The provision is typically in place to prevent departing employees from having access to confidential and commercially sensitive information, business contacts, and intellectual property, which can be used by a new employer.
Since the employee remains an “employee,” he remains bound by a duty of loyalty and, thus, cannot go to work for a competitor or do anything else to harm the employer. This arrangement provides employers with the protection they need, is fair to employees, and has been generally accepted and enforced by the UK courts. The practice has been adopted by employers in the United States., and their courts have generally upheld garden leave clauses.
In the Philippines, garden leave has been more commonly used in relation to the 30-day notice period for authorized causes of termination. There is no prohibition under our labor laws against a garden leave clause in an employment contract.
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