Garden Leave vs Severance: Which One Is Better for You?

They both mean you stop coming to work while money keeps arriving, which is why people confuse them. Legally they are opposites. Garden leave means you are still employed. Severance means you are no longer employed and have been paid to leave.

That single distinction drives everything else.

The differences that matter

	Garden leave	Severance
Employment status	Continues	Ended
What you receive	Normal salary, on the normal payroll cycle	A negotiated lump sum or continuation payments
Benefits and pension	Usually continue	Usually stop, unless separately agreed
Equity vesting	Often continues to termination date	Normally stops on the leaving date
Duties to the employer	Still owed — confidentiality, exclusivity, good faith	Only what the separation agreement imposes
Can you take another job?	Normally not	Yes, subject to surviving restrictions
Do you sign away claims?	No	Almost always yes — that is what is being bought
Non-compete clock	Usually starts after employment ends	Usually starts on the termination date
Negotiable?	Rarely — it is a contractual right	Frequently, and on more terms than people ask about

Why the status difference is the whole point

Because garden leave keeps you employed, everything attached to employment survives: pension contributions, health cover, life assurance, continuous service, and in many plans, continued share vesting. A three-month garden leave can be worth materially more than three months of salary paid as severance, because of what travels with it.

It also means you cannot start elsewhere. If your new employer is waiting, that is a cost.

Severance cuts the cord. You are free to work immediately — subject to any restrictive covenants that survive — but the benefits stop, the vesting usually stops, and you are being asked to sign a release of claims in exchange for the money.

Which is better for you

Garden leave is better when you have valuable unvested equity approaching a vesting date, you rely on the health cover, your notice period is long and fully paid, or you have no immediate next role.

Severance is better when you have a job offer in hand, your equity is worth little, or the payment on offer materially exceeds what your notice period would have paid.

Watch for the combination. Employers frequently offer garden leave for the notice period and then a severance agreement covering the termination itself. That is normal. What is not normal is a severance agreement that reaffirms or extends restrictive covenants without paying anything extra for them — you have already served the notice; the restrictions should not be reset.

The trap: restrictions that stack

Six months of garden leave followed by a twelve-month non-compete is eighteen months out of your industry, unless the contract sets one off against the other. Check for a set-off clause before you agree to anything.

In severance negotiations, the reverse opportunity exists: releasing you from an existing non-compete costs the employer nothing in cash and can be worth more to you than an extra month's pay. It is one of the most commonly conceded asks and one of the least commonly requested.

What to ask for in each

On garden leave: full benefits not just base salary, continued vesting, explicit day-for-day set-off against post-termination restrictions, and consent to take a genuinely non-competing role.

On severance: extended health cover, an extended option exercise window (a standard 90-day window frequently makes vested equity worthless), an agreed reference, mutual non-disparagement rather than one-way, and release from the non-compete.

FAQ

Is garden leave better than severance?

It depends on what is attached to your employment. If unvested equity, health cover or continuous service matter to you, garden leave is usually worth more than the same period paid as severance. If you have a job offer waiting, severance is worth more because it frees you to start.

Can I get both garden leave and severance?

Yes, and it is a common structure: the employer puts you on garden leave for the notice period, then offers a separation agreement covering the exit. Check that the separation agreement does not reset or extend restrictions you have already served through.

Do I have to sign a severance agreement?

No. It is an offer. Refuse it and you keep whatever your contract and local law already give you, including the right to bring a claim — you simply do not get the additional payment.

Does severance pay stop my non-compete?

Not by itself. The non-compete survives on its own terms unless the separation agreement releases it. Ask for release explicitly; it is a line of drafting and costs the employer nothing.

Is garden leave the same as being suspended?

No. Suspension is normally connected to an investigation or disciplinary process and does not imply the employment is ending. Garden leave follows notice having been given by one side or the other.

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