Garden Leave in Indonesia: Is It Allowed Under Employment Law?

When an employee resigns or is preparing to leave a company, employers often face a difficult question: how can they protect confidential information, client relationships, and business continuity during the transition period?

One practice that is common in countries such as the United Kingdom and Australia is garden leave. Under this arrangement, an employee remains officially employed and continues receiving salary and benefits but is instructed not to perform work until their employment formally ends.

As Indonesian companies become more active in hiring senior executives and highly specialized professionals, many employers are beginning to ask whether this practice can also be applied locally. The answer is yes—but with important legal considerations.

Although garden leave is not explicitly regulated under Indonesian employment law, companies may implement similar arrangements as long as they comply with employment agreements and continue fulfilling employees’ contractual and statutory rights during the employment period.

What Is Garden Leave?

Garden leave is an arrangement where an employee remains employed during their notice period but is temporarily relieved from performing their normal duties.

During garden leave, employees typically:

• Continue receiving their regular salary.
• Remain entitled to contractual benefits.
• Do not attend the workplace or perform daily responsibilities.
• Stay employed until their official last working day.

Unlike immediate termination, the employment relationship still exists throughout the garden leave period. This allows companies to manage the transition while reducing certain business risks.

Garden leave is particularly common for employees who have access to sensitive business information, strategic planning, customer relationships, or intellectual property.

Is Garden Leave Legal in Indonesia?

Indonesia’s Law No. 13 of 2003 on Manpower, as amended by the Job Creation Law and its implementing regulations, does not specifically mention the term “garden leave.”

However, the absence of the term does not automatically make the practice prohibited. Instead, Indonesian legal practitioners generally view garden leave as a contractual arrangement that may be used, provided it does not conflict with employees’ legal rights, particularly regarding wages and employment obligations during the active employment period.

In practical terms, employers cannot simply instruct employees to stay home without continuing their employment rights unless there is a lawful basis for doing so.

For that reason, companies considering garden leave should ensure the arrangement is supported by:

• The employment contract.
• Company regulations.
• A collective labor agreement, where applicable.
• Mutual agreement between employer and employee.

Having clear written documentation is essential to avoid future disputes.

Garden Leave vs Notice Period

Garden leave is often confused with a standard notice period, but they serve different purposes.

During a normal notice period, employees continue working while preparing for their departure. They remain involved in meetings, projects, and handovers until their last working day.

During garden leave, however, employees stop performing their regular duties even though they remain officially employed. Their salary continues, but their responsibilities are suspended.

This distinction is especially important when companies need to protect confidential information while maintaining a legally compliant employment relationship.

Why Do Companies Use Garden Leave?

Garden leave is generally used to reduce business risks during employee transitions rather than as a form of punishment.

Protecting Confidential Information

Employees in leadership, finance, technology, or product development often have access to confidential business strategies, pricing information, and future plans.

Allowing immediate separation from daily operations can reduce the risk of sensitive information being shared before employment officially ends.

Preserving Client Relationships

Sales professionals and account managers frequently maintain close relationships with customers.

Garden leave creates a buffer period before employees join another organization, helping companies manage client transitions more effectively.

Supporting Leadership Transitions

Senior executives often oversee major strategic decisions and internal communications.

Removing day-to-day responsibilities while keeping employment active can allow organizations to complete succession planning without creating unnecessary disruption.

Managing Recruitment Teams

Recruitment professionals, particularly those working for a headhunter company in Jakarta, often possess valuable candidate databases, hiring strategies, and market intelligence.

For businesses operating in competitive industries, protecting these assets during leadership or recruiter transitions can be an important consideration.

Employer Considerations Before Applying Garden Leave

While garden leave can offer practical advantages, employers should implement it carefully.

Continue Paying Salary and Benefits

Because the employee remains employed, companies generally continue fulfilling contractual obligations, including salary and applicable benefits throughout the agreed period.

Depending on the employment agreement, this may include fixed allowances and social security obligations.

Clearly Define Employee Obligations

Employers should specify what employees are—and are not—expected to do during garden leave.

Common provisions include:

• Remaining available if contacted.
• Returning company equipment.
• Protecting confidential information.
• Avoiding unauthorized access to company systems.

Clear expectations reduce confusion for both parties.

Review Existing Employment Contracts

Before implementing garden leave, employers should review existing contractual provisions.

If the employment agreement does not contain language supporting such an arrangement, obtaining mutual written agreement may be the most appropriate approach.

Can Employees Join Another Company During Garden Leave?

Because employees remain officially employed, whether they can begin working elsewhere depends largely on their contractual obligations.

Employment agreements may contain exclusivity provisions or other obligations that remain effective until the employment relationship officially ends.

For employers, drafting these provisions carefully is important to ensure they remain reasonable and consistent with applicable legal principles.

Why This Matters for Modern Hiring

As Indonesia’s job market becomes increasingly competitive, companies are paying greater attention not only to hiring the right talent but also to managing employee departures professionally.

Leadership transitions, confidential projects, and specialized recruitment functions all require thoughtful planning to minimize operational disruption.

This is one reason many organizations work with a headhunter company in Jakarta when planning executive recruitment or succession hiring. A proactive recruitment strategy allows businesses to identify qualified candidates before critical positions become vacant, reducing hiring delays and supporting smoother workforce transitions.

How RecruitFirst Indonesia Supports Business Transitions

Managing employee exits is only one part of building a resilient workforce. Replacing experienced professionals quickly and effectively requires access to strong talent networks and market insights.

RecruitFirst Indonesia helps companies recruit professionals across executive leadership, finance, technology, sales, operations, and other specialized functions. By supporting succession planning and strategic hiring, businesses can maintain continuity while navigating leadership changes or organizational growth.

As companies continue adapting to an increasingly competitive talent market, understanding practices such as garden leave can help employers balance legal compliance, business protection, and effective workforce planning during employee transitions.