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Side hustles – what employers need to consider

Despite last week’s announcements that inflation fell to 8.7% in April and energy prices will fall from July, many people continue to face financial difficulties and a recent survey showed more people of working age (around 60%) are taking up side hustles (or second jobs) to cope with the increased costs of living. As a general rule there is nothing to prevent employees from doing so provided it does not breach their contract of employment and the additional work is completed outside of their normal working hours for their principal employer. However, for employers there are a number of potential risks and concerns and steps that should be taken to address these.

Contractual obligations and exclusivity clauses

Some contracts of employment prohibit employees from taking on any other roles without the express written permission of the employer. Where this is the case, an employee who does not obtain that prior permission may face disciplinary action (see below).

Even where there is no express prohibition or requirement to seek permission, all employees have implied duties of good faith and trust and confidence. These require employees not to work for a competitor or to misuse confidential information (see below) and not to make a secret profit for example by redirecting work that the employer could have completed.

Requiring employees to obtain permission before taking on additional employment or work is a useful contractual provision for employers as it gives advance notice of the employee’s intention to do so which enables them to consider the impact of this on their business. Employers should therefore consider amending their contracts of employment to include the requirement for employees to notify them and obtain express permission before taking on any additional work. However, you should bear in mind that employees who are employed on zero hours contracts cannot be subject to exclusivity obligations (including a requirement to obtain permission before taking on other work) and any provision which seeks to do so will be unenforceable against them.

When permission is requested, as well as considering the issues set out below, employers are advised to seek assurances from the employee about the likely impact of the second job on their employment and their ability to work their normal hours of work.

Where an employee breaches either express contractual obligations or implied duties, the employer may consider taking disciplinary action. This should be considered on a case by case basis depending on the contractual terms, the extent of the breach and whether the nature of the side hustle itself raises any other concerns (see below).

Competitive activities and confidentiality

When considering whether to permit an employee to take a second job or to take action where there has been no request for permission, employers should consider the nature of that employment and who they will be working for to assess the risks of competitive activities and breaches of confidentiality.

The employee’s contract of employment may provide some protections, but all employees owe limited implied duties of confidentiality in any event. Where the employee is not already subject to confidentiality provisions, employers will be wise to insist upon these in exchange for granting permission to carry out the additional work in order to protect their business.

Employees who breach their express or implied duties of confidentiality or who work for a competitor at the same time can be disciplined and depending on the circumstances, doing so will usually be a fair reason to dismiss. Employers may also be able to take steps to protect any further misuse of their confidential information and to recover any information that has been shared.

However prevention is always better than the cure and employers should always be alive to the risks of misuse of their confidential and sensitive information by their employees and take appropriate steps to protect this such as limiting access to it and monitoring the activities (in accordance with their GDPR obligations and contractual rights) of their employees’ use of it.

Reputational risk

The nature of the employee’s proposed second employment in comparison to their principal employment may be of concern particularly where that second employment is in the public domain such as on social media or other web-based platforms. Whilst employers may have concerns about this, dismissing an employee due to reputational risk is a relatively high hurdle to overcome in the absence of any allegations of misconduct. Employers who are concerned about the nature of their employee’s side hustles should tread carefully and avoid knee-jerk reactions. It will be important to establish the facts, the potential links to the business and carry out a critical assessment of the risk before taking disciplinary action.

Working Time Regulations and health and safety

Unless there is a valid opt out in place, employees are subject to a maximum working week of 48 hours. Where a person works for more than one employer, the total number of hours they work must be taken into account. This means that until the law changes (which the Government has indicated it will) employers must ensure that their records of employees’ working time includes records of the time they work in second roles and that a valid opt out is in place when the employee is working more than 48 hours per week.

Linked to this are the wider health and safety implications of employees working long hours. Employers have a duty to take care for the health and safety of their employees. To comply with this depending on the role the employee is undertaking, employers should consider carrying out specific risk assessments to ensure that any risks are minimised and follow this up with discussions with the employee (and potential further action) where the employer is not satisfied that the risks can be appropriately managed.

Sickness absence

Subject to the roles being undertaken and the reasons for the absence, employees who are too ill to carry out one job may still be fit to carry out their side hustle. In circumstances where the employee reports as unfit for work, unless the employer can demonstrate that is not correct and they are in fact fit or that they are working in the second job when they would ordinarily be working for their principal employer, dismissing them for doing so is unlikely to be fair but this will depend on the particular circumstances.

Even if the employee is still working in their second job, unless that is a breach of the employment contract or the employer’s policies, the employee will usually retain their entitlement to sick pay.

Maternity, paternity, adoption and shared parental leave

Employees who qualify for statutory payments when taking family leave will not usually lose their entitlement to these if they continue to work for a second employer during their leave period. Where the employee is employed in the second role (and not a worker or self employed) they may (subject to satisfying the qualifying criteria) be entitled to statutory payments from the second employer as well.

If you require advice about employees with second jobs or making amendments to your contracts of employment to increase your protection, please contact Claire Hollins on 0161 912 6148 or clairehollins@kuits.com.