The news coverage of the Greensill scandal and “double-hatting” in the Civil Service has raised serious questions around taking on second jobs.
At the same time, the Covid-19 pandemic will have driven many employees into taking on additional jobs, whether due to financial concerns around job uncertainty, furlough or perhaps even out of a sense of civic duty. In many cases, there will not be any issue where an employee takes on another role outside of their primary job. Readers may know someone who, in their spare time, acts as a magistrate, a school governor, or an army reservist. However, from time to time a second job may pose risks to an employer, including conflicts of interest – both real and apparent, performance and absence issues, leaks of confidential information and (as we have seen with the Greensill scandal) reputational damage. What legal issues arise?
Is it unlawful to take on a second job?
In general, no. Every employee in the UK has a term implied into their contract of employment to serve their employer with good faith and fidelity – that is to provide honest, loyal and faithful service during the employment relationship. However, this duty typically only becomes engaged in the context of second jobs where the activity in question is deemed as competitive and may cause serious harm to the employer’s legitimate business interests, as opposed to an employee taking on a second job (even at a competitor) where this secondary role’s responsibilities are completely unrelated to the responsibilities and activities that they perform for their primary employer.
Can employers restrict outside business activities?
Yes, in the private sector, it is common for an employer to prohibit outside activities, or to include an express term in the contract of employment requiring employees to seek the employer’s written consent.
In some roles, any outside activities are prejudicial and should be prohibited. In others, seeking consent can help protect the employer’s interests by flushing out potential issues.
The right of veto on the part of an employer is important in case the employee’s proposed outside activities may encroach on their ability to do their job, breach any regulatory codes, cause reputational harm or if the activities might involve working with close family members that conflict with the employee’s obligations to their employer.
Drafting issues
Case law has made clear that consideration should be given to the type of outside business activity involved, the position and seniority of the employee within the employer’s business, the employee’s normal working hours, and the scope for potential damage to the employer.
A widely drafted or blanket prohibition on outside business interests, whether during or outside normal working hours, may run the risk of unenforceability (although, such a complete ban on outside activity may be justified for senior full-time employees, taking full account of the circumstances).
A possible half-way house prohibition would be on outside activities where the second job is of a type that would be viewed as competitive with the employer’s business.
In order to ensure that such restrictions are not too wide and do not cause employee relations issues, such clauses should be moderated with an exception allowing for minor investments and shareholdings in listed companies.
Can you dismiss fairly even if permission was previously given?
Yes, depending on the circumstances. For example, where an employee has been working an additional job but has been dishonest about the details of their working arrangement or the employer’s reputation is at risk of damage because of an employee’s outside business activities, an employer will likely be able to take disciplinary action up to and including dismissal.
In order to dismiss lawfully, an employer must have a fair reason for dismissal and follow a fair procedure. This means that even where there appears to be clear evidence of wrongdoing to justify dismissal, a reasonable investigation should be conducted to help mitigate against the risk of claims.
Working Time
All time spent working counts towards the 48 hour working week limit. An employer risks infringing the Working Time Regulations 1998 if it does not have a handle on how many hours its employees are working outside of its business, and will need to collate and keep the appropriate records.
Takeaways for employers
The Greensill scandal highlights how important it is for employers to address the issue in the employment contract and to have clear rules and procedures in place to deal with how “double-hatting” will be addressed.
Such rules and procedures need to be applied in a consistent manner in order to maintain positive employee relations and reduce the risk of discrimination claims.
If there are concerns as to the number and the nature of additional jobs being taken on by employees, it is recommended that employers carry out an audit in order to review possible risk areas for the business.
In conjunction with ensuring there is a clear and up to date record of all outside business interests by the workforce, HR can help to ensure the organisation’s employment contracts and associated policies are compliant as the law stands now and are reflective of best practice.
Daniel Stander is an employment lawyer at Vedder Price LLP. Daniel is experienced in dealing with non-contentious and contentious matters for both employers and senior executives. In particular, he has experience in the following areas: day to day UK and international employment and multi-jurisdictional HR issues including unfair dismissal, discrimination and whistleblowing claims, and advising on, preparing and negotiating settlement agreements. He is a member of the Employment Lawyers Association.
