Follow up

Square Global Ltd v Leonard

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Garden leave didn’t have to be offset against covenant

No set-off clause

In Square Global Ltd v Leonard 2020 (see Follow up ) (L), a senior broker, resigned without notice to work for a competitor. His employment contract included a six-month notice period as well as a six-month non-compete covenant. It also included a garden leave clause, but with no set-off against the covenant. L’s employer brought a claim to enforce his notice period and the covenant. L argued that it had committed repudiatory breaches of his contract, releasing him from these provisions.

High Court decision

The High Court declared that L should remain an employee for his notice period and it rejected his repudiatory breach claims. It also upheld the covenant, finding that the six-month period was reasonable and went no further than necessary to protect the employer’s legitimate interests. The absence of a set-off clause, which would have reduced the period of the covenant by time spent on garden leave, wasn’t fatal to the covenant’s enforceability.

Pro advice. This case confirms that a garden leave set-off clause isn’t an absolute requirement, but the combined period of the restrictions must go no further than reasonably necessary to protect the employer’s legitimate interests.

Square Global Ltd v Leonard