In our article on the German Federal Labor Court’s press release of 25 March 2026 (5 AZR 108/25), we discussed why blanket garden leave clauses may be unenforceable. The Court’s published reasoning now provides further guidance on drafting garden leave clauses, placing employees on garden leave in individual cases, and revoking company car benefits during the notice period.
Garden Leave: Greater Clarity for Contract Drafting
We already discussed the key takeaway from the press release, namely that blanket garden leave clauses may be unenforceable, in our earlier article. The Court’s published reasoning now provides important additional clarification.
An Employee’s Resignation Does Not Automatically Reduce Their Interest in Continued Employment
The challenged clause permitted garden leave following any termination, regardless of which party had given notice. That element alone was not objectionable. Garden leave clauses may, in principle, continue to be linked to any termination.
However, Germany’s Federal Labor Court (Bundesarbeitsgericht, BAG) made clear that employees generally retain a legally protected right to continue working even after submitting their resignation. A resignation alone therefore does not justify garden leave. Employers must still demonstrate, in the individual case, that their reasons for placing the employee on garden leave outweigh the employee’s interest in continuing to work.
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