In recent years, second jobs or ‘side hustles’ have surged in popularity. According to a recent study, 68% of working Brits now have one, with 31% having launched their ventures during the first year of the pandemic. These endeavours range from podcasting to selling handmade products, often adding an average of £4,932 to annual incomes. Amid the cost-of-living crisis, it’s easy to understand why these ventures are so appealing.

For some, a side hustle is a way to monetise hobbies or pursue passions; for others, it’s a financial necessity to counter rising living costs. However, as these ventures grow, organisations face the challenge of balancing employee autonomy with business interests. Common concerns include conflicts of interest, productivity, and confidentiality breaches.

Below, we address 10 key questions HR leaders should consider to safeguard organisational interests, and support employees.

1. Are employees obligated to disclose side hustles?

Generally, employees are not required to inform their employer of a side hustle unless their employment contract explicitly states otherwise. Even so, the necessity for disclosure should be reasonable. For example, it may be justifiable for senior employees with demanding roles to disclose other commitments, but less so for junior, part-time staff.

Employers are not responsible for monitoring employees’ activities outside of work unless those activities interfere with the organisation’s legitimate interests. Policies should make clear what constitutes a conflict of interest.

2. Can employers ban side hustles?

An outright ban is rarely reasonable or enforceable. Instead, employers should focus on preventing conflicts of interest. Employment contracts and policies should specify that employees must avoid activities that conflict with their responsibilities or impair their ability to fulfil their role.

It’s also worth noting that under Section 27A of the Employment Rights Act 1996, employers cannot prevent workers on a zero-hours contract from accepting work under another contract or prohibit them from doing so without the employer’s consent. Any such provision within the contract will be unenforceable.

3. Can we retrospectively amend contracts to restrict side hustles?

To introduce new restrictions, you’ll need employee agreement in the first instance. If agreement cannot be reached, a “fire and rehire” process may be an option, but the circumstances in which this would be reasonable and fair would be very limited.

Whilst fire and rehire practices are currently legitimate in the right circumstances, there is growing hostility towards them, and this could attract negative attention. In addition, because they involve a dismissal, there’s the added risk of unfair dismissal claims.

4. How can conflicts of interest be prevented?

A well-drafted employment contract is essential. Include clauses requiring employees to disclose activities that may conflict with the organisation’s interests and to seek prior approval for any external business ventures.

5. How can intellectual property (IP) be protected?

Clearly state in employment contracts that IP created during the course of employment belongs to the organisation. Ensure employees assign relevant rights to the company and prohibit unauthorised use of the organisation’s brand or IP. Breaches can lead to disciplinary action or legal proceedings.

6. How can misuse of company resources be prevented?

Specify in IT and resource usage policies that company property – including hardware, software, and other equipment – must not be used for personal or business purposes unrelated to the employee’s role. Policies should distinguish between limited personal use and use with their other business interests.

7. How can employers address performance issues linked to side hustles?

It’s reasonable to expect employees to devote their full time and attention to their job during working hours, and working on a side hustle in work time can be addressed as misconduct.

The lines can become blurred at times – sending a few emails on a lunch break for example – so some common sense has to be exercised around how you deal with such issues.

If there is a noticeable deterioration in the employee’s performance and you have reasonable grounds to suspect that their side hustle is to blame, investigate. You may choose to discuss this informally with the employee in the first instance; however, formal action through your capability or disciplinary procedures might be appropriate if the problem persists.

Keep in mind that enforcing a ban via disciplinary action would usually be unreasonable and therefore unfair. Although if the employee’s performance at work with you is affected by their other interests, this would be something that could be taken into account in any performance management process that you might need to follow.

8. What about the impact on employee wellbeing?

Although side hustles can be a source of personal fulfilment, they may also lead to burnout. Regular one-to-one meetings can help gauge how employees are coping. Consider conducting risk assessments to identify and mitigate risks associated with overworking.

If financial pressures are driving employees to take on additional work, consider whether increased pay or other support measures could alleviate the strain, though there’s no legal obligation to do so beyond ensuring compliance with National Minimum Wage requirements.

9. How can organisations protect against employees setting up competing businesses?

Restrictive covenants in employment contracts can limit employees from poaching clients or staff and competing with the organisation after leaving. Ensure these clauses are reasonable and proportionate to your legitimate business interests to improve enforceability.

During notice periods, garden leave provisions can restrict employees’ activities and protect your interests.

10. Should employers embrace side hustles?

Rather than prohibiting side hustles, consider supporting them within clear boundaries, having clear policies and procedures in place to prevent conflicts of interest and monitor performance.

Employees who feel financially secure and personally fulfilled may be more engaged, innovative, and loyal. For example, Havas Media Group introduced a side hustle training programme to foster creativity and autonomy, resulting in higher employee satisfaction and retention.

Research indicates that 70% of side hustlers value the security of full-time employment. By embracing their entrepreneurial spirit, employers can cultivate a more dynamic and motivated workforce.