There are various circumstances where an employe may need to temporarily restrict an employee’s access to the workplace, for example, to investigate misconduct, complaints, or protect confidential information. In Hong Kong, three are three commonly used approaches to manage such situations: statutory suspension under section 11 of the Employment Ordinance (“EO”), administrative leave, and garden leave. A clear understanding of these options is essential for minimising exposure to constructive dismissal claims, termination payment disputes and reputational harm. 

Statutory suspension: a narrow, high-risk tool

Section 11 of the EO permits an employer to suspend an employee without notice or payment in lieu, but only in strictly defined circumstances: (1) as a disciplinary measure for employee misconduct that would justify summary dismissal, (2) while the employer decides whether to summarily dismiss an employee, or (3) pending the outcome of criminal proceedings against an employee related to employment. 

In Lengler Werner v Hong Kong Express Airways Ltd [2021] HKCFI 1333, the Court of First Instance clarified that “suspension from employment” under section 11 means a complete cessation of all duties and obligations—partial suspension from job duties while continuing to pay salary is distinct from suspension from employment. Section 11 is not concerned with partial suspension from duties, but rather with a full suspension of the employment relationship, where the employee is not required to work and the employer is not required to pay. 

Statutory suspension pursuant to section 11 of the EO is strictly regulated: the maximum period is 14 days unless criminal proceedings are involved, in which case the suspension may be extended until those proceedings conclude. During a suspension, the employee may terminate the employment contract without notice or payment in lieu. If an employer purports to suspend under section 11 without meeting the statutory requirements—such as where the alleged misconduct is not sufficiently serious, or where only partial duties are suspended—this may expose the employer to claims of constructive dismissal. Employers therefore need to carefully assess whether the facts justify invoking statutory suspension. 

Administrative leave: contractual flexibility with continued pay

Given the rigidity of section 11, most employers prefer to rely on an express contractual right to place employees on “administrative leave”, that is, to temporarily remove an employee from part of his/her duties only. As administrative leave is grounded in contract, the parties can tailor its scope, length and financial consequences to suit commercial realities. Administrative leave can be triggered for a broader range of contexts than statutory suspension, such as internal investigations into client complaints, misconduct, or conflicts of interests.  

It is prudent to incorporate a clearly drafted administrative leave clause into an employment contract. Typical provisions state that the employer may require the employee to stay away from the office, remain contactable during normal working hours, and continue to observe confidentiality and restrictive covenants. As the employment contract remains in force, wages and benefits generally continue unless the contract dictates otherwise. While that cost may seem unattractive, the arrangement is less likely to attract litigation than a statutory suspension without pay. 

Employers should nonetheless exercise contractual rights reasonably. Decisions should be evidence-based, duration should be no longer than necessary, and the employee should be kept informed of the progress in the underlying investigation. Transparency and proportionate action reduce the risk that a court will characterise the leave as a repudiatory breach which amounts to constructive dismissal. 

Garden leave: post-termination protection of business interests

Garden leave is also a form of administrative leave, but is deployed after either the employer or the employee has given notice of termination.  Originated in the British Civil Service in the 1980s, where employees could request paid leave to stay home and tend to their garden while waiting for a new post, the principal objective of garden leave nowadays is mainly to keep employees away from the workplace to protect confidential information, prevent solicitation of clients and employees, and mitigate potential disruptions to business. During garden leave, the employee would remain bound by all contractual duties except the active performance of work and, again, continue to receive full remuneration and benefits. The garden leave provision should also clarify whether any period spent on garden leave counts towards any non-compete period to avoid the argument that the employee’s total time out of the market is excessive. 

Practical tips for employers

Whether an employer opts for statutory suspension, administrative leave or garden leave, the overarching legal risk is that of constructive dismissal. To mitigate such risk:-

(i) Employment contracts should clearly set out when administrative or garden leave can be used, the employee’s obligations during leave, and how pay and benefits are handled. Senior executive contracts should address handover and post-departure cooperation. 

(ii) Staff handbooks and policies should align with employment contracts, and HR should be trained to apply the correct mechanism (i.e. suspension/administrative/garden leave) depending on the circumstances of each case.

(iii) Employers should ensure that the statutory or contractual right relied upon is invoked for a legitimate purpose, and exercised in good faith. Documentation is critical: contemporaneous notes of the reasons for the suspension/administrative/garden leave, the steps taken to investigate, and the communications with the employee create a defensible trail should a dispute later arise. 

Employers should avoid constructive dismissal claims as they can damage reputation, disrupt operations, and lead to costly legal liabilities. 

Authors