Employee side hustles - What you need to know as an employer

A ‘side hustle’ is paid work that is separate from one’s main employment. Side hustles are becoming more common throughout the UK, and data suggests that the rise in secondary employment won’t stop anytime soon. In our latest blog, HR consultant Helen Russell and paralegal Ethan Jayne from our employment team look at why side hustles are on the rise.

Research from Utility Warehouse and the Centre for Economics and Business Research shows that “almost half of the UK’s adult population (47%) could be earning an extra income by 2025 – up from less than 10% in 2017”. Currently, more than one in three adults in the UK, roughly 20 million individuals, have more than one revenue stream, according to the report.

The study highlights the cost-of-living crisis (35%) and the impact of rising household bills (34%) as the two most cited reasons why people are looking to earn multiple incomes. Therefore, as people continue to experience the current economic pressure, more people are turning to side hustles to alleviate their financial concerns.

Additionally, side hustles can enable employees to pursue a passion project or hobby they enjoy but would not be able to pursue full-time. In some cases, individuals have simply monetised their pre-existing favourite hobbies.

Further, the COVID-19 pandemic forced society to adapt at speed, and this has made digital and social media marketing much more accessible. This has enabled those undertaking side hustles to reach a greater customer base.

What does this mean for employers?

Potential benefits

• Undertaking a side hustle could help employees learn and develop transferable skills which could assist them and their work in their main employment.
• A side hustle could help to facilitate improved employee mental health, especially if it is something that they enjoy.

Potential risks

• Unless an employee has specifically opted out of the maximum working week, employers need to be wary that employees undertaking side hustles could be breaching Working Time Regulations. Specifically, as an employer, you need to make sure that over a 17-week period, employees do not work over 48 hours a week on average, unless they have opted-out, including work they do away from their main employment.
• In cases where an employee undertakes a side hustle in the same sector or industry as their main employment, there could be a potential conflict of interest to consider.
• If an employee was to use contracted hours to work on their side hustle, this could adversely affect their work and the business of the main employer. A case like this might be more likely if an employee works remotely or in a hybrid way.
• Potential reputational risks for the business might arise if an employee undertakes a side hustle in a taboo industry, especially if it can be linked to the business in some way.
• If an employee was to work on their side hustle when off on paid sick leave, it could be argued that this could hinder their recovery and prolong their absence from their main employment. Alternatively, a side hustle could prove therapeutic and serve to aid an employee’s recovery, which was the case in Lindsay v HBOS Plc. In this case, the claimant’s baking side hustle was found to be therapeutic and reduce her anxiety.

What does the law say?

Provided an employee’s side hustle satisfies the following rules, the employee is entitled to pursue the venture:

• The employee is not breaching their contract of employment, or staff handbook policies.
• The employee is undertaking the side hustle outside of contracted working hours.
• The employee is not bringing the company into disrepute.
• The employee is not breaching the Working Time Regulations by undertaking their side hustle alongside their main employment.

How to mitigate these risks

Review contracts of employment and staff handbooks to ensure your policies are up to date. They should protect the interests of the business while maintaining clear and consistent messages around what is allowed and expected from employees. As an employer, you could include the following:

• Clauses to require employer permission for an employee to undertake a side hustle.
• Clauses that prohibit employees from undertaking side hustles entirely.
• Use restrictive covenant clauses if you are worried that employee side hustles could compete with your business.

You should always clearly outline what is allowed and expected from employees in respect of any external work they might undertake.

Keep open lines of communication with employees about any potential approved or proposed side hustles.

Provide improved employee support packages to ease the financial pressures facing employees, therefore minimising the need for employees to seek a secondary income source in the first place.

How we can help

Our team of employment law specialists can assist by reviewing and advising on your existing employment policies or drafting new policies to best protect the needs of your business as requirements change.

Further, the team can help support your business by providing tailored legal advice to navigate complex situations involving employees.

If you would like to discuss any employment business matters, contact our team of experts at Harrison Drury on 01772 258321.