Investment bankers are known to work hard. When you’ve been working crazy-long days and failing to take your assigned holidays, a period of enforced leave is no bad thing.
When they move from one job to another, it’s common for bankers in the City of London to have at least three months’ ‘gardening leave’ during which they’re still in the pay of a previous employer but not actually working. Thanks to a new court case, those three months could soon turn into 12.
Earlier this month, the UK High Court upheld a 12-month gardening leave restriction involving a British equity broker, Tom Holliday. In July, Holliday, a stockbroker at JM Finn, decided that he wanted to move to rival broker, Hargreaves Hale. However, Holliday’s 12 month gardening leave provision means he’s compelled to stay at JM Finn (on full pay, but not actually working) until July 4th 2014. Hale tried to persuade the British court to allow him to leave sooner. The court declined; Holliday has another seven months of lazing about still to go.
Lawyers predict that Holliday’s case will make long gardening leave provisions look appealing to UK-based financial services firms which want to stop their best staff leaving for competitors. At the moment, banks in the UK employ long restrictive covenants instead of long periods of gardening leave, says Richard Santy at law firm Shoosmiths. However, restrictive covenants (which prevent employees from contacting clients after leaving) can be difficult to enforce for a whole year, whereas long periods of gardening leave suddenly seem eminently feasible.
“If a bank wants to take an employee out of the market and protect its business for a whole year, gardening leave looks like the best way of going about it,” says Philip Landau at law firm Landau Zeffertt Weir.
Investment bankers in the U.S. may look at developments in the City of London with envy. Jason Kennedy of transatlantic search firm Kennedy Associates says all forms of gardening leave were unheard of on Wall Street until a few years ago. Now, he says that U.S. investment bankers get three months paid holiday max.