Non Compete Agreements and Garden Leave in Quant Finance

Garden leave keeps a departing quant paid and employed but unable to work, and it directly controls when they can start at a new firm.

Garden leave keeps a departing quant on payroll and formally employed for a fixed period after they resign, during which they are barred from working anywhere else, including a new employer, and this single mechanism is what most directly controls the timing of a move between firms in this industry. A non-compete clause, by contrast, restricts where someone can work after they leave entirely, and the two terms are often confused even though they operate differently and are usually enforced differently.

When a quant resigns from a firm that enforces garden leave, the firm can require the employee to stay away from the office and stop performing job duties for a specified period, commonly ranging from a few months up to six months or occasionally longer for senior researchers and portfolio managers, while continuing to pay their salary. The employee remains contractually employed during this period, cannot start work at a new firm, and in most cases cannot contact clients or colleagues about business matters, even though they are not actively doing the old job either.

The length of garden leave typically scales with seniority and with how sensitive the individual's knowledge is considered, so a junior quant developer often has a shorter or no garden leave period at all, while a senior portfolio manager with visibility into a fund's live positions and strategy can face a considerably longer one. The specific length is set by contract, and it varies enough between firms that a candidate should treat their own agreement as the only reliable source rather than a general industry figure.

Base salary generally continues during garden leave, since the individual remains formally employed, but bonus treatment is far less consistent and depends heavily on the specific contract and on whether the departure falls before or after the firm's bonus determination date. Some contracts pay a pro-rated bonus for time worked before the leave began, others do not, and this is one of the areas where reading the actual contract, rather than assuming a standard treatment, matters most.

Health benefits and other employment terms typically continue through garden leave as well, since the individual has not technically left the firm, though equity or deferred compensation vesting during the leave period is handled differently across firms and should be checked directly rather than assumed.