Why is "Garden Leave" so called?

"Garden Leave" is a fairly common British term.

According to wikipedia:

Garden leave describes the practice whereby an employee who is leaving a job (having resigned or otherwise had his or her employment terminated) is instructed to stay away from work during the notice period, while still remaining on the payroll.

The article goes on to state a brief explanation of its origin...

The term originated in the British Civil Service where employees had the right to request special leave for exceptional purposes.

and that it came into common usage in 1986 (although ngrams suggests a little earlier)...

The term came to widespread public attention in 1986 when it was used in the BBC sitcom Yes, Prime Minister, episode "One Of Us".

... but fails to fully explain its name. What does special leave have to do with gardens?

Is it because the employee has been "kicked out of the house" and must wait in the garden like a dog?

Or perhaps it is because an employee not allowed in work is expected to go home and sit in their garden?

It's gardening leave in British English, and yes, it's because that's all the employee is allowed to do.

The employee's contract of employment will state that they can't work for a competitor — either concurrently with their employment or subsequently for a certain period — and this leave ensures that they remain on the payroll for a certain time.

The employee cannot work for a competitor while they are on the payroll, and it extends the time until they can do so.

The reason for doing this is so that any information they have about clients or practices ages while they are away from the workplace and eventually becomes worthless to competitors.

The leave is called gardening leave because that's all the employee can do: they can't come in to work and they can't work for anyone else. All they can do is work in or sit in their garden.

In Australian usage the term is "gardening leave" which makes clearer that the person (often a senior executive with major responsibilities) now has nothing to do but weeding and pruning his garden.

In fact, the employer does not care what the person on gardening leave does, so long as he is nowhere near his office.

This contrasts with the situation of a failed senior manager assigned to Special Projects in the Office of the Director-General where there is quite literally nothing to do, but it must be done under eagle eye of the D-G.

During and after WW1 and other conflicts, soldiers suffering from shell shock (PTSD) would be sent home on medical leave. As part of their rehabilitation, their therapy would include engaging in simple but productive tasks such as growing vegetables to compensate for wartime food shortages and do other stress free gardening activities. They would still be on the military payroll but played no active part in the war. Hence the meaning of gardening leave has now a secondary meaning that someone is paid not to participate in the work they were originally paid to do. Go to gardeningleave.org for further information.