Second incomes

Recent reports suggest that higher utility bills, food and mortgage costs have created a huge growth in employees looking for second incomes to beat the credit crunch.

This has boosted the popularity of online sites like Peopleperhour.com, where skilled people can bid for work based on a job description supplied by the service buyer, which has seen its membership increase by as much as 150% in the past year. Many of the people registering are skilled professionals struggling to make ends meet. However, by taking up other employment they may inadvertently jeopardise their main source of income.

Q Does an employee have to inform an employer of a second source of income?

A There is no general legal obligation on an employee to inform an employer of the fact that they have a second income. However, employees should check to see if there is an express provision in the contract of employment that requires them to keep the employer informed of any other employment that they undertake during the course of their current work. In some cases, the contract may require the employee to obtain the employer’s approval before taking up secondary employment.

Q Can an employer stop the employee working elsewhere?

A Generally the employer will not be able to prevent an employee working for another employer. However, if by working for another employer the employee is breaching the terms of their contract of employment this may give grounds to make an application for an injunction to prevent the continuing breach. Such action is rare as it would be necessary to show that an award of damages would not be sufficient to compensate the employer. Also, breach of contract by an employee would be likely to amount to a fair ground for dismissal, should the employee refuse to give up the other work.

Q What if an employee is working for a competitor?

A If the employee is found to be working for a competitor this could be seen as a breach of the duty of fidelity or good faith. This is sometimes referred to as the employee’s part of the mutual duty of trust and confidence. The duty consists principally of several aspects of confidentiality and non-competition, some of which also apply after employment has ceased.

There may also be express terms in the contract that specifically prohibit the employee from working for a competitor both during and after the employment. It is not unusual to see such an express term, especially where the work involves confidential information. However, the enforcement of these ‘restrictive covenant’ or ‘restraint of trade’ clauses can be controversial.

Q In what circumstances could an employee work for another employer while on sick leave?

A Whether the employee would be expected not to carry out any work during a period of sickness absence will depend on the particular circumstances. The employee should check whether there is a provision in the contract that expressly prohibits them from working during sick leave. If there is then the employee will be bound by the prohibition.

If the employee wants to work during the sickness absence period, they should explain to the employer beforehand and seek consent. The nature of the illness and the differences between the two types of employment can be relevant. Potentially, the employee could be advised by their doctor that being in active employment would help the recovery process. It may be found to be reasonable for an office-based employee suffering from stress to find some manual work similarly it may be reasonable for a manual worker with a physical injury to find an office-based job.

Q Are board members with non-executive directorships of other companies classed as working for another company?

A It is normal practice for full-time executive directors of public companies to hold several other non-executive director appointments. This has been criticised because non-executive directors can encounter difficulties in carrying out their duties effectively and may find it difficult to identify or pursue issues because of competing claims on their time.

Q Are clauses in employee contracts saying staff must have permission to do a second job binding?

A Yes. It is not uncommon for the employer to include a clause in the contract requiring that the employee requests consent before starting work with any other business during the period of employment. There are a number of reasons why an employer may wish to restrict an employee’s options in this way, including the wish to ensure that there is no conflict of interest or that the employee complies with statutory restrictions on working hours under the Working Time Regulations 1998.

Guy Guinan is an employment partner in the London office of Halliwells

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