Moonlighting and Side Hustles – are they impacting your business?


Moonlighting and Side Hustles – are they impacting your business?


These side hustles have become increasingly common especially during the pandemic, driven by reasons such as the need to secure more income/income insecurity, people following a passion or a hobby and also people working from home. According to research undertaken by ING in Australia in 2021, nearly 48% of Australians were either already working or planning to work on a side hustle for the purpose of gaining extra income. Given that statistic, it is not surprising then that a number of employers are experiencing issues with managing the impact.

At HR Central we have noticed an increase in queries from our clients related to managing issues associated with employees outside employment. Once this was coined as “moonlighting”, a term that first appeared in the 1950’s to describe the practice where employees often took on a secret job (usually conducted at night), in addition to their fulltime employment. Now with the advent and accessibility of technology and flexible working arrangements, there has been a rise in what is termed “employee side hustles”, an avenue for employees to earn additional income.

Side Hustles – What could go wrong?

You may be thinking, if employees are willingly taking on a side hustle why does this create any problems? One of the main concerns stems from employees working longer hours throughout the week in trying to balance their primary job and their side hustle. Having reduced rest, recovery and down time can lead to burn out, fatigue and reduced productivity. This can contribute to workplace health and safety problems such as accidents, stress and overall distraction from job tasks and requirements. If employees do not manage this well it can also see a rise in workplace absenteeism where employees take unplanned personal/sick leave to rest or focus on their side hustle.

Some of the negative impacts of employee side hustles have the potential to create foreseeable and risky impacts. For example if your company employs truck drivers where the industry has heavily regulated fatigue management processes and you are aware some employees are juggling a side hustle where they are regularly working a considerable number of additional hours per week. It is reasonably foreseeable given the nature of the work and the industry that this may present a risk to health and safety of other road users and your employee. If as their employer you were aware of their side hustle and did nothing, you could be open to claims of vicarious liability for any damage or injury that occurs if an accident occurs.

Whilst that example may seem on the surface as extreme, the rise of Uber, Door Dash and other delivery driving IT applications,  have given people greater access to money making side hustles. Working additional hours into the evening and on weekends in side hustles will impact employee rest and recovery time and sleeping patterns. Behaviours such as increased sick leave to rest, falling asleep at work, decreased focus and concentration are commonly demonstrated when the balance between work and life is out of sync.

There are occasions where an employee’s side hustle may cross boundaries and present a conflict of interest with their primary employment. For example, if your business is a client based business selling particular products or services to clients and an employee seeks to use same client base to sell their own service or products. That service or product could be in direct competition with your business. Many employment contracts have conflict of interest clauses within them to act as a deterrence for employees to engage in such activity. However, applying the remedy to this after it has occurred may mean employee receives written warnings leading to potential loss of employment. By then is it too late?  Have the clients left your business and gone with the former employee?

Have you ever walked past an employee’s computer, accidentally picked up some photocopying or printing and what you have observed has nothing to do with current workplace? On occasions we all use work resources for minor personal reasons. But if employees are using the resources and clearly working on their side hustle during their primary employment work hours, it means they are not attending to their primary work responsibilities and tasks. Neglecting work in favour of completing side hustle work damages trust in the employment relationship. It basically represents stealing of resources and time from your main employer. If it is blatantly and openly done it also sets a bad example to other employees and can place other employees in an uncomfortable position of whether they should “dob in” their co-worker.

In addition, if the behaviour goes unchecked, it gives the employee a default type of approval, to continue undertaking their side hustle work leading to distractions from their day to day work. In turn important work can be missed and deprioritised, resulting in unhappy clients, unachieved milestones and extra work for other team members for completion. That situation can contribute to an unhappy and unhealthy workplace culture if not addressed.

What can I do about it?

As an employer the best place to start is to think proactively on how to manage this. With blended arrangements of working from home and office on the rise following Covid pandemic, this is a good time to focus on whether this needs to be addressed and given your business and team what is the best way to manage this.

Do you have a Policy Statement on approvals for employees wanting to engage in outside employment/side hustles? At HR Central we can help you make a start with this policy. Your policy should spell out why this process is important for your company . It should also summarise the process for employees seeking approval. Your process may provide time limitations for approvals and other conditional arrangements for approval of the outside employment arrangement.

Having an open and frank general discussion with all team members in a staff meeting helps in introducing the topic and clarifying expectations whilst people are at work. As opposed to  employees thinking “it is none of their employer’s business”, you need  your team members to understand how the health and safety of all employees is an employer responsibility and how side hustles can negatively impact this. An approval process is providing the opportunity for discussion and agreement on how to accommodate going forward.

Where issues do arise and you believe an employee’s side hustle either has the potential to or  is having a negative impact on work, then you need to have a discussion with your employee. In that discussion you need to give the employee the context for the discussion, share with them the observable/demonstrated behaviour and ask them for an explanation. The purpose is to resolve any negative impact in their employment and to work cooperatively together. Hopefully the discussion facilitates an amicable resolution. Where it does not, more formal discussions following disciplinary procedures and written warnings may need to occur. At HR Central we can assist you in your preparation for these difficult conversations.

The bright side

There are occasions where employees have had discussions with their employer about their side hustle and their managers have realised that the employees have greater skills to offer in their primary employment. Where that potential is realised, encouraged and invested in, better outcomes for both the employee and the employer result. Some of these brighter outcomes are increased employee morale, retention of talented staff and more productivity.

Furthermore, a Harvard Business Review study undertaken in 2021, found that many US employees were able to draw on positive resources they gained from their side hustle,  bringing in new energy, enthusiasm and inspiration into their primary employment the next day. This helped them feel more empowered to manage any negative emotions and gave them more motivation to take on less stimulating work in their primary job.

At the end of the day if the balance between work, the side hustle and life is in sync, in all likelihood will mean happier and motivated employees. Every piece of research supports that happy employees result in greater productivity for employers and can also act as a magnet for attracting talent. In a competitive employment market, employers will only benefit from managing this aspect confidently and supportively.

Mel Hay

Melissa Hay is part of the HR Specialist Team at HR Central. With over 25 years of experience working in Human Resources across the not for profit sector, aged and disability services, manufacturing, telecommunications, and state and local government including WorkSafe Victoria.

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