How not to get side-lined by employees' side-hustles

With the arrival of the gig economy, the opportunities for employees to earn some extra income to supplement their wages were expanded. Whether driving taxis or getting bicycles out to deliver food for the rapidly expanding home delivery market.

Postpandemic the traditional world of work has been turned upside down with hybrid working now very much the norm and, in many cases, employees moving completely to working from home.

But what is also starting to become apparent is that some employees working from home, may not be dedicating their whole working day to the best interests of their employer and they have set up their own businesses, or ‘side-hustles’. Or some people on full sick pay are using this time to launch their own business.

With new research revealing that four in ten of the workforce plan to set up a business or side hustle this year as the cost of living crisis continues at pace, for employers the growing number of employees already working side hustles - or planning to in the near future - could mean a lack of focus and time on the job they’re already being paid to do.

So what can employers do to protect the business if they suspect a side-hustle, or it’s impacting an employee’s day job? Or if an employee is on sick leave and is running their own business while on sick pay?

Getting the basics right

The contract of employment will be key – is the employee allowed a second job and if so, do they have to tell you about it or seek your permission?

The Working Time Regulations (WTR) say that employees must not work on average more than 48 hours a week and this includes from more than one job and so an employer needs to know what other work an employee is doing, unless they are opted out of the WTR. Also, the employer does not want an employee arriving every day incapable of keeping their eyes open if they have been delivering food all night.

So rather than rely on an implied duty of fidelity, employment contracts need to spell out the rules on second jobs and particularly that the employee must not do anything which would be a conflict with their employer – like working for a competitor or setting up their own business offering identical services, as one employer client recently encountered.

The contract should reserve the ability for you to ask them to stop any side-hustle if it appears in your reasonable opinion to be conflicting with the day job and to not harm your business reputationally. For instance, an accountant in a top five firm who was moonlighting as a party host where he cooked the food and wore nothing more than an apron, did not see his career progress further when one of the dinner guests turned out to be the firm’s senior partner.

If the contract spells it out and you discover an employee has a side-hustle and does not have your permission then this can be a disciplinary matter, especially if they are doing it when they should be working for you, as this could lead to them losing their job.

Sick leave

Even for those employees who are not working from home, the ability to run a side hustle whilst claiming to be too ill to work for their employer, is becoming too much of a temptation for some.

Unfortunately obtaining a sick certificate has never been easier due to the pressures on GPs and the range of organisations able to provide them.

So some employers with generous sick pay provisions are finding themselves as a form of start-up fund whilst their employee gets their new venture off the ground. There have been cases where employees have displayed admirable naivety when they have set up public websites which coincide with the start of their sick leave and have then been seen by colleagues, suited and booted, having business meetings in public, or they have advertised their beauty services on Facebook and the HR Manager has seen the advert and booked a treatment. In both instances the employee was dismissed.

However, employers must be careful to make a distinction between an employee working when on sick leave and doing pastimes designed to assist recover such as making cakes as in the case Ms V Lindsay v HBOS plc where Ms Lindsay was dismissed for making cakes when off sick and this was found to be unfair as it was therapeutic.

Other employees will report that sick employees appear to be having a great time whilst off sick judging by their posts on social media. But what is reasonable will depend on the nature of the illness – open water swimming, cake making and long walks in the countryside may be just what the doctor ordered for anxiety and depression. An employer who questions whether an employee is really sick without any evidence or making enquiries runs the risk of a claim for constructive dismissal as it shows there is no trust and confidence.

So regular contact both on the phone and via home visits and watching out for those who have limited availability to meet as well as following up on genuine concerns in a fair and proportionate manner is key. Follow all these steps and you’ll ensure your business doesn’t get side-lined by a side hustle.