German Federal Labour Court invalidates blanket garden leave clauses

The German Federal Labour Court has ruled that blanket garden leave clauses in employment contracts are invalid. In a decision dated March 25, 2025, the court determined that clauses allowing an employer to unilaterally release an employee from their duties while continuing to pay compensation during a notice period are invalid under § 307 Abs. 1 Satz 1 BGB.

The court found that such clauses unfairly disadvantage employees because they infringe upon the employee's fundamental interest in maintaining active employment. This ruling follows a case where an employer attempted to release an employee from work and simultaneously revoke the use of a company car, leading to a dispute over compensation for the loss of private vehicle use.