What remedy or recourse does an employer have when an employee is involved in another job?
The current economic climate in the country with frequent or continuous increases in the cost of living, force many employees to seek second jobs or even establish their own outside businesses to make ends meet. In short, many employees are employed in permanent jobs at a primary employer but also engage in a second job at another or secondary employer.
The second job may be at another employer or it may be an own business, or both.
Terms and Conditions of Employment
The employment relationship between an employer and employee is agreed, confirmed and regulated in a contract of employment between the parties. Both parties entering into such a contract undertake to comply with the terms and conditions of employment as described therein. Should any one party breach the provisions of the contract or fail to comply with those provisions, the other party may lawfully terminate the contract or consider other possible remedies in order to force the breaching party to comply with the terms and conditions.
Contracts of employment normally include the conditions whereby either party may terminate the contract by giving the required notice period, dismissal (or due to misconduct, poor work performance, retrenchment) and normal retirement.
Many employees perform their second job or run their own business outside the normal hours of work at the primary employer, and sometimes, or inevitably, the extra job impact directly or indirectly on the primary job.
Conflict of Interest
Most, if not all, contracts of employment provide provisions relating to conflict of interest, which may include all or any of the following:
- The expectation that the employee will refrain from any conflict of interest with the employer and will not engage in a similar business than that of the employer during or after working hours.
- That the employee must not engage in any outside work or activity for remuneration without obtaining prior consent from the employer.
- That the employee must not engage in any work or activity, with or without remuneration, if that work or activity can reasonably be seen to be in conflict with the interests of the employer.
- That the employee must disclose any interest in any other business or undertaking or institution or participation in any other activity that may result in a conflict or potential conflict of interest with the interests of the employer.
- That the employee is not permitted to be employed by any other employer or engaged in any other business activity, whether competitive or not, without obtaining prior written approval from the employer.
Should the employee then fail to comply with any of the aforementioned terms and conditions, it is considered to be a breach of contract and the employer may lawfully terminate the employment relationship after due process in terms of labour legislation.
However, what if the contract of employment does not make provision for conflict of interest?
Absence of Conflict of Interest
If there is no provision in the contract of employment for conflict of interest, it does not necessarily mean that the employee is free or at liberty to start an own business or engage in a secondary job, for whatever reason.
In the case of Bakenrug Meat (Pty) t/a Joostenberg Meat v CCMA and Others (LAC) (Unreported, CA8/2020) it was ruled that an employee who runs a side-line business (or ‘side-hustle’) and fails to disclose this to their employer acts in violation of the duty of good faith owed to their employer. What is also important to highlight from this case is that the Labour Appeal Court (LAC) also ruled that no real competition between the employer and employee need to exist. Any suggestion that there is no direct competition between businesses will not absolve the employee of their gross misconduct.
Employees with a second or side-line job, and employers for that matter, have been under the wrong impression that as long as the second job is not in direct competition with the primary employer, it is in order to be involved in such a second or side-line job. The afore-mentioned LAC ruling has created case law precedent which contradicts the mentioned impression by employees and/or employers.
The first principle of the Bakenburg case is that employees have a duty of good faith to their employers, by disclosing material activities, like outside business activities that may result in a conflict of interest. The employee omitted or deliberately ignored to act according to this principle.
The second principle of the Bakenburg case is that the LAC found that employees act in bad faith if conflict of interest may arise even though no real competition actually results.
All employees have a fiduciary duty to act in good faith towards their employer. This implies that employees must further protect and enhance their employer’s interests. Employees would normally argue that they have been loyal and performed their duties above expectation. However, this does not mean that an employee has cart blanche to involve him or herself in the establishment of an outside business, whether it impacts directly or indirectly on the employee’s fiduciary duties towards the employer, without informing the employer thereof.