How to manage employees with "side gigs"

A “side gig” or “side hustle” is a way for employees to generate income in addition to their main employment. Ever since the COVID-19 pandemic, the number of employees seeking out alternative streams of income has increased. According to a study carried out by Aviva, 19% (one in five) of adults in the UK have started one since March 2020.

With the introduction of flexible working or hybrid working arrangements, employees are seeing opportunities to pursue activities outside of their main employment which can generate this additional income. With the cost of living crisis looming, some employees are coming to find this additional income as a necessity while others are choosing to use these activities as creative outlets. The most popular of these side gigs include selling handcrafted products (23%), followed by freelancing (12%).

Some employers may decide to allow employees to pursue side gigs with their permission – for example, where it improves their mental health or wellbeing, or brings additional beneficial skills into their main employment – while others may take the view that side gigs will not be acceptable as a general rule. Employers should consider the following risks when forming their view.

Reputational issues

If an employee is considering taking on a side gig alongside their main employment, ensure you are informed as to what type of additional work they are taking on. Inappropriate side gigs could cause serious reputational issues for the employer and their business. For example, actress Sarah Jayne Dunn left the soap Hollyoaks last year after launching an OnlyFans account, a content-sharing platform known for sexual material. The show put out a statement relating to her departure saying that, as a series with young viewers, they had to consider their audience. This highlights problems where people are undertaking activities outside work that are not consistent with the image of their employer.

Working Time Regulations

Even if employees carry out their side gigs outside of their working hours for their main job, they may struggle to be able to enjoy sufficient rest time. In addition, where employees are unable to take sufficient rest breaks, employers may be concerned about breaching the Working Time Regulations 1998, which require employees not to work more than 48 hours per week on average. If the employee is exceeding the limit because of undisclosed work, their primary employer could still be held responsible. 

Employers also have a responsibility to ensure so far as is reasonably practicable the health and safety of their staff and to ensure that excessive working hours are not causing a risk to employees or other members of staff. If it comes to light that employees are putting themselves or others at risk, one option could be for employers to ask the employee to reduce their working time on the side gig or agree that the employee will reduce their working hours.

Performance

If an employee is working long hours on an additional income stream, it is possible that their energy reserves and concentration span may decline, leading to performance issues. One study from Stanford University found that productivity per hour declines sharply when a person works more than 50 hours per week. The possibility of a side gig should also be considered when investigating performance issues, but do not assume that an employee's performance will be negatively affected by them undertaking a side gig.

Problems may arise if an employee is not forthcoming with information regarding a side gig and denies they have other interests outside of work. In this scenario, capability and disciplinary procedures should be followed where appropriate.

Confidentiality and Competition

If an employee's side gig is within the same sector as their main employment, employers could become concerned about whether their employee is profiting from information they receive from their main employment or directly competing with their employer. The implied duties of confidentiality and restrictive covenants are often reinforced by express contractual provisions. Consider reminding employees that they must comply with these obligations (and not bring your business into disrepute) while doing additional work, making it clear that a breach might lead to disciplinary action.

Employers may want to consider implementing policies on side gigs that protect their legitimate business interests, without adversely impacting on an employee’s private life or wellbeing. Where appropriate, encouraging open discussions about side gigs and employees’ reasoning for wanting to pursue further work will foster better understanding and trust between employer and employee, and may prevent problems arising in the first place.

Legal Obligations

Legally, there is nothing to prevent an employee from engaging in a side gig if they are doing it outside of their normal working hours and it is not in breach of their contract of employment. However, employers should keep their employment contracts and policies under regular review to ensure they contain provisions that, if necessary, prohibit an employee from carrying out secondary employment, or require permission to be sought before any competing work is undertaken.

Employers may wish to update or impose restrictive covenants to ensure employees are not able to set up businesses in direct competition with them. While restrictive covenants can be difficult to enforce, they can act as a deterrent.

If it is clear employees are taking on side gigs to make ends meet, employers should consider reviewing pay to ensure that they are paying market rates and ultimately make a more appealing case for employees to consolidate their working hours and commitment to a singular role.

If you have concerns about employees in your workplace, or questions about how to handle employees’ side gigs they have notified to you, contract our Employment Team by emailing employment@warnegoodman.co.uk or calling 023 8071 7717.