Side-by-side comparison
The non-compete arithmetic that matters most
For anyone moving to a competitor, the most important number is the total time between resignation and being free to start. That number is shaped by which exit mode you take.
Under PILON with a 6-month non-compete: employment ends on day 1, non-compete starts day 1, you’re clear on day 181. Total: 6 months.
Under garden leave with a 3-month notice and the same 6-month non-compete: employment continues for 3 months, then ends; non-compete then runs for a further 6 months; you’re clear in 9 months. Total: 9 months.
That’s a 50% increase in time out of the market for the same nominal non-compete. The garden leave calculator on this site computes both numbers automatically.
When PILON is better
Moving to a competitor with a long non-compete. Wanting to start a new job soon. Cash-flow preference for a lump sum rather than salary spread over months. The employer wants a clean immediate end and doesn’t care about knowledge-transfer windows. Restructure where the role is being absorbed and there’s no business reason to keep you on the books.
When garden leave is better
Pension contributions continue, which can be worth significant money over a 3-6 month garden leave. Medical cover continues through ongoing treatment. Share schemes continue to vest where the vesting rules allow. Bonus eligibility, in the unusual cases where the scheme rules accommodate it. You’d rather have full salary plus benefits for the period than the same gross PILON.
Garden leave is also often preferred where the relationship is amicable and both sides want a measured exit. A clean PILON can feel abrupt; a garden leave is more graceful.
Worked example: senior moving to a competitor
James is on a 3-month notice and has a 6-month post-termination non-compete. He’s been offered a role at a direct competitor and wants to start as soon as possible. His employer is willing to use either PILON or garden leave.
Under PILON, James is free in 6 months. Under garden leave, James is free in 9 months. The financial difference is modest (PILON taxes the lump sum in one month, which can push a slice into higher-rate territory; garden leave spreads it). The strategic difference is 3 months of competitor time. James should push for PILON.
Related calculators and guides
- PILON calculator
- Garden leave calculator
- Notice period calculator
- PILON explained
- Garden leave explained
Frequently asked questions
- Which is better, PILON or garden leave?
- It depends on what you care about. PILON gets you out immediately and lets your non-compete clock start running. Garden leave keeps you employed (and paid) but pushes your non-compete start date out, which means longer total time out of the market. For competitive moves PILON is usually better; for getting full salary plus benefits with no work, garden leave is usually better.
- Can I choose between PILON and garden leave?
- Sometimes. Where the contract has both clauses, the employer typically gets to choose. Where only one clause exists, that's the only option (apart from working notice). In practice, the choice can usually be negotiated as part of the exit conversation, particularly at senior level.
- How does tax differ between PILON and garden leave?
- Garden leave pay is just salary, taxed normally under PAYE plus NI. PILON is also taxed as earnings under PAYE plus NI, since the 2018 reforms (before then, non-contractual PILON could sometimes get the £30k tax-free allowance, but that loophole was closed). Net of tax, the figures are the same for the same gross amount.
- Which is better for restrictive covenants?
- PILON, almost always. Restrictive covenants run from the end of employment. Under PILON, employment ends immediately, so the covenants start running on day one. Under garden leave, employment continues to the end of the notice period, so the covenants start later. A 6-month non-compete after a 3-month garden leave keeps you out of the market for 9 months total; after PILON, just 6.
General information, not legal advice. Restrictive covenant enforceability is highly fact-specific. If you’re moving to a competitor, contact ACAS or an employment-law solicitor.