Garden Leave in Germany: Your Rights When You Are Released From Work

Garden leave (Freistellung) means that your employer releases you from the obligation to work while your employment continues. You stay at home but remain an employee, usually with full pay. In Germany, it is common after a dismissal, during notice periods and as part of a termination agreement.

For many employees, garden leave sounds like a gift. But the details matter: whether it can be revoked, whether your holiday is used up and whether you may start a new job during it. These points are worth negotiating.

When Can Your Employer Release You?

In Germany, employees have a right to actually be employed, not just paid. A unilateral release is therefore only allowed if:

• your contract contains a release clause, usually for the period after a dismissal, and the release is reasonable in the circumstances, or
• there is an overriding interest of the employer, for example a well-founded suspicion of serious misconduct, a risk of trade secrets being passed to a competitor or a breakdown of trust.

Release clauses in standard contracts that allow a release at any time without reason are often invalid. After a dismissal, however, courts usually accept a release during the notice period.

Revocable or Irrevocable?

If the release letter does not say which type it is, check it carefully and ask for clarification in writing.

Pay During Garden Leave

You keep your salary in full. This includes:

• your basic salary,
• regular variable pay such as commission or bonus, usually based on an average,
• benefits in kind, such as private use of a company car or phone, if these were part of your pay,
• employer contributions to social security and company pension.

You remain insured in the statutory social security systems, as your employment continues.

Holiday and Overtime

Your remaining holiday can only be offset against garden leave if the release is irrevocable and the employer makes clear that holiday is being granted. Otherwise, the holiday remains and must be paid out at the end of the employment. See holiday pay on termination.

Overtime credits can also be offset, again only if this is clearly stated.

Can You Work Elsewhere?

During garden leave, your employment continues. You may not work for a competitor. Other work is generally possible, but:

• during a revocable release, you must be available,
• earnings from another job can, in some cases, be offset against your salary,
• many termination agreements contain a sprinter clause allowing you to leave early and receive part of the saved salary as extra severance.

Agree on these points in writing before starting a new job.

Garden Leave and Unemployment Benefit

As your employment continues, you do not receive unemployment benefit during garden leave. But you must register as a jobseeker with the employment agency in time: three months before the end of the employment, or within three days if the end is closer. See unemployment benefit.

Negotiating Garden Leave

Garden leave is a standard part of settlements and termination agreements. A good agreement covers:

• irrevocable release with full pay until the end date,
• whether holiday and overtime are offset,
• continued use of the company car,
• permission to work for other employers, except competitors,
• a sprinter clause for an earlier exit with extra severance.

See severance pay in Germany and settlement agreements.

Points for Expats

• Residence permit. During garden leave, your employment continues, so your permit is unaffected until the end date. See losing your job and your residence permit.
• UK garden leave. In the UK, garden leave is often used to enforce non-compete periods. In Germany, a post-contractual non-compete requires separate compensation. See non-compete clauses.

Frequently Asked Questions