Almost one million Australians now hold more than one job. But what if an employee’s second job interferes with their work or their employer’s interests? Here are two FWC cases that clarify how far employers can go to restrict secondary employment.

Employers generally accept that what their employees do in their own time is their own business. But when an employee takes on a second job that begins to affect their work, the situation can become legally complex.

The latest ABS data shows there are currently 978,000 multiple job-holders in Australia, making up 6.5 per cent of employed people. This marks an increase of 0.3 per cent since the previous quarter.

According to Emma Lutwyche, Partner at Pinsent Masons, secondary employment is a common issue arising in employment law disputes.

“[It comes up] relatively frequently, often in the case of performance management, where employers find that poor performance has been connected to performing work for another employer or personal business,” she says.

Employers can restrict employees from taking on other work to an extent through contracts and policies, she says. More on this later. 

A policy prohibiting secondary employment without consent will likely weigh in an employer’s favour in a legal dispute involving misconduct allegations. However, it will not give employers a blanket right to dismiss employees for taking on another role.

“It will always come down to the facts of a case as to whether relying on a breach of such a term to terminate employment is reasonable or harsh,” she says.

“At a high level, considerations such as use of the employer’s resources or intellectual property, the scope of time theft and conflict or competition with the employer’s business and employee’s role will all be relevant. Other matters such as the employer’s reputation as well as the employee’s honesty about the secondary employment will also be relevant.”

Previous rulings from the Fair Work Commission (FWC) have helped clarify how much power employers really have to restrict employees from taking a second job. Below, Lutwyche unpacks two decisions that shed light on where the legal boundaries lie.

Case one: Employee worked a second job while on annual leave

One landmark FWC case demonstrated the risks employers face when they react too quickly to an employee working elsewhere.

While on a period of approved annual leave, the plaintiff in this case, a delivery driver, accepted casual delivery work for a different business to ease some personal financial struggles. 

When his primary employer discovered him working there, it accused him of creating a conflict of interest, and forced him to choose between resigning or being dismissed. The employee signed a resignation letter, but subsequently lodged an unfair dismissal claim.

The FWC ultimately ruled that he was constructively dismissed, and that there was nothing about his secondary role that created a conflict of interest.

“The Commission said undertaking secondary employment which does not encroach on the primary employer’s field of business does not contravene the implied contractual term of fidelity and good faith,” says Lutwyche.

“It’s not enough that the employee simply has a second job… there has to be something more that means they either have breached an express term of their employment, have been dishonest or have created a real conflict of interest between their two roles.”

The employer also failed to carry out a procedurally fair dismissal process, meaning its defence was essentially doomed from the outset, she adds.

How should HR approach this situation?

This ruling reinforces that employers should assess secondary employment on a case-by-case basis rather than treating it as inherently problematic.

To differentiate between a harmless side hustle and a genuine conflict in a scenario like this, employers must look closely at the scope and nature of the secondary work, says Lutwyche.

“[For example], if the employee is an accountant and they have a side job on the weekends as a makeup artist, there is unlikely to be any basis for disciplinary action or dismissal, unless the employee starts using work time or resources to do the second job.”

Other factors HR should look at include: 

• Whether the secondary role affects working hours or performance
• Whether the employee is using company resources
• Whether there is any overlap with clients or competitors
• Whether confidential information or intellectual property could be at risk
• Whether the employee has been transparent about their secondary employment.

In circumstances where any of these issues arise, HR should always gather evidence and clarify the facts with the employee before proceeding with disciplinary action, says Lutwyche.

“It’s not enough that the employee simply has a second job… there has to be something more that means they either have breached an express term of their employment, have been dishonest or have created a real conflict of interest between their two roles.” – Emma Lutwyche, Partner at Pinsent Masons

Case two: Employee took a job while on workers’ compensation for an injury

Earlier this year, the FWC heard a case involving a plumber who conducted an external job while receiving workers’ compensation from his employer.

He had been placed on restricted duties after reporting an injury, but the employer later discovered he had completed a private plumbing job while claiming he did not have the physical capacity to perform his normal full-time work.

What’s more, he signed off on the regulatory compliance certificate at the private job using his primary employer’s business details, tying the job to the company’s public liability insurance without their knowledge or consent. 

“The dishonesty here is damning, and a fundamental breach of the employer’s trust and confidence in the employee,” says Lutwyche. “He was essentially defrauding the workers’ compensation regime, which is the real issue here.”

As a result, the FWC backed the employer’s decision to summarily dismiss him for serious misconduct.

How should HR approach this situation?

If HR finds that an employee’s outside activities are inconsistent with the restrictions they have reported, Lutwyche suggests investigating thoroughly before making any decisions.

“[Employers should be] putting the allegations to the employee, obtaining their response and commencing a show cause process,” she says.

If the employee is on workers’ compensation, she suggests working with the insurer to gather the relevant information, but then addressing the matter directly with the employee.

“You don’t have to leave it up to the insurer to handle if there are serious concerns about the employee engaging in secondary employment while allegedly incapacitated.”

Key contractual terms to protect your business

A clear employment contract is one of the most effective ways for employers to manage the risks associated with secondary employment, says Lutwyche.

For employers who are concerned about side hustles interfering with their employees’ work, she suggests putting the following contractual terms in place:

• A clause that employees cannot engage in secondary employment without the employer’s prior written consent
• A clause requiring the employee to not act in conflict with their obligations and duties during the employment 
• A clause prohibiting the misuse of the employer’s confidential information and intellectual property
• An express clause can also be included prohibiting the employee from engaging in employment or activities which compete with the employer during employment.

The standard duties clause should also include the provision that employees dedicate their full time and attention to their job during work hours, she adds.

Even with strong contractual terms in place, employers still need to assess each situation on its facts, including the nature of the secondary work, its impact on the primary role and whether any actual breach has occurred before taking action.

“[For example], working on your side hustle or second job during the hours you are expected to be performing work could objectively be a breach,” says Lutwyche.  

“However, flexible working can make this difficult. If an employee has a lunch break and posts on their side hustle Instagram account, that might not be a breach. Ultimately, all the factors would need to be considered together.”

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