The cost of living crisis has driven many employees, particularly those at junior levels, to consider second sources of income. Women and younger individuals are likely to be disproportionately affected, even though their employers are paying the appropriate market rate for the roles available. However, whether an employee takes up a second job, or finds a secondary source of income through self employment (such as by way of a 'side hustle' Etsy business), this can present various challenges for employers.
Legal framework
It may surprise some to learn that English law does not automatically prohibit employees from engaging in secondary employment.  While the implied duties of fidelity and good faith will prevent employees from competing with their employer, if an employer wants the employee to be fully focused on their work, they may need to take additional steps to protect their interests.
Things to consider
When deciding on the correct policy position to adopt, employers should think about the following – particularly if they need to justify why they are reluctant to allow employees to take up second jobs:
Performance and absenteeism: Holding a second job may adversely affect an employee's performance due to the potential for overwork and fatigue, which can diminish engagement and productivity. Additionally, commitments to a secondary role could result in higher levels of absenteeism in their primary position.
Conflict of interest: Employees may inadvertently find themselves in a position where their second job conflicts with their primary job's interests. For example, being distracted by tasks or communications related to their other role during work hours.
Confidentiality: There is a risk that employees who run their own businesses might use their main employer's confidential information for their own benefit. For example, wanting to use their employer's template documents such as employment contracts or invoices to generate similar documents of their own.
Intellectual property ("IP"): Typically IP developed in the course of an employee's employment duties defaults to the employer. However, disputes can arise over works produced beyond the scope of the employee's designated role. It is essential to review the IP provisions within the employment contract to ascertain the extent of the employer's rights and to ensure that ownership of IP rights is clearly vested in the employer, unless otherwise negotiated.
Defining the extent of the restriction
Employers should also consider the level of restriction they are looking to impose when balancing the needs of their workforce with the needs of the business, and then make sure that their employment contracts explicitly reflect this. There are a variety of possible approaches, sketched out here from the most permissive to the most tightly regulated:
- allow employees outside interests or jobs elsewhere provided they do not conflict or interfere with their duties at their current employer;
- require employees to tell/notify their employer if they are working elsewhere;
- require employees to get permission from their employer before starting a second job, with the employer reserving the right to withdraw their permission for good reason to protect their position should the arrangement not be working out; or
- impose a blanket ban on employees engaging in any capacity in any other business.
Regulatory considerations
Even if an employer is relaxed about the extent to which an employee takes on additional work from elsewhere, they should bear in mind that they have a duty of care to all employees under the Health and Safety at Work Act 1974. If an employee's secondary job impacts their health or performance, employers should address it, potentially with a risk assessment. Additionally, the Working Time Regulations 1998 impose a maximum 48-hour workweek across all jobs held by an employee, not per job. Employers should verify whether their contracts contain opt-outs and, if not, consider asking employees to opt out to prevent breaching these regulations or to monitor the employees' working hours.
Practical steps for employers
- Review employment contracts: Ensure that contracts are clear about any restrictions or requirements regarding second jobs.
- Develop inclusive and clear policies: Formulate clear policies on secondary employment that prevent conflicts of interest and comply with working time laws.
- Provide support services: Offer services such as financial planning assistance or mental health support to help employees manage.
- Monitor working hours: For employees who have not opted out of working time regulations, it is best practice to record their hours to ensure compliance with these regulations.
- Conduct risk assessments: Regularly assess the impact of additional employment on health and safety.
- Foster an open culture: Create an environment where employees feel comfortable discussing their needs and any support they may require.
Conclusion
Employers must carefully balance the individual needs of employees seeking secondary employment with protecting the company's interests and legal responsibilities. Clear communication and policies are essential for managing this balance effectively and fairly.
If you would like more information on how best to manage these issues in your business, please get in touch with your usual Mishcon de Reya contact or with a member of the Employment team.