Thinking | 15 February 2021
Secondary employment – can it be banned?
The issue of employees having a second job has traditionally been, legally speaking, relatively uncontentious. But the COVID-19 pandemic has brought this issue into sharper focus, most recently in Western Australia when news that case 903, the security guard at the centre of the WA COVID lockdown, had also been working as an Uber driver. This has prompted the WA Government to consider banning hotel quarantine security staff and cleaners from having second jobs.
Where do employers stand in relation to employees having a gig on the side? Putting aside the ability of employees subject to a JobKeeper enabling stand down direction, the starting point will usually be the employment contract. Many employers include clauses within their employment contracts that require employees to act in the best interests of their employer and either not be engaged in any activities which competes with or conflicts with the interests of the business, or which require the employee to work exclusively for the employer. Where such clauses are breached, the employer will usually have valid basis for dismissal.
But what if the employment contract is silent on the employee’s right to take up secondary employment? In those cases, the employer’s rights are likely to depend on the nature of the employee’s activities. Generally an employee is not prohibited from undertaking other work provided that their activities don’t present a risk to the employer’s business.
A duty of fidelity is implied into all employment contracts, which precludes an employee from carrying out activities that are inconsistent with their employment. This typically means that an employee is precluded from establishing a competing business or, in some cases, working for a competitor. The extent of the duty is, however, imprecise and can depend on the nature of the role and seniority of the employee. For example, someone employed as an architect would not be precluded from running their own business selling face masks on a weekend, but could be precluded from performing design work in their spare time. Conversely, it is unlikely that a café worker would be precluded from working for more than one cafe, even if they are competing businesses.
This issue was recently considered in an unfair dismissal context in the recent case of Harris v Luka. The case concerned a financial planner who was dismissed when his employer discovered that he had been conducting a ‘side hustle’ carrying out contract paraplanning services.
The Fair Work Commission (FWC) found that, while there was no express term precluding secondary employment, the employment contract provided that the employee was not to engage in business or activities which may conflict or be harmful to the employer’s business interests. The staff handbook also stated that employees were expected to devote their full energies to the work of the employer and were discouraged from accepting other employment without prior written approval.
It was found that the employee had been undertaking 10 to 20 hours per week of work involving financial services similar to services provided by the employer and in direct conflict with its business interests. The employer was therefore entitled to treat his actions as misconduct.
But this will not always be the case. For example, in a contrasting decision, the FWC found that a transport driver who had been forced to resign when his employer discovered he had worked as a casual driver for a customer was constructively dismissed. There was no conflict of interest - the work performed for the client did not encroach on the employer’s area of business.
- increasing number of people that now have more than one job or business interest; and
- the lack of certainty over when an employee will be found to breach the implied duty;
employers are advised to review the terms of their employment contracts and policies to ensure any restrictions on secondary employment are clearly communicated.
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