Bosses are still in the dark over the extent to which employees are moonlighting to make a little extra money on the side. But is it a case of what you don’t know can’t hurt you? Louise Druce investigates.

With Christmas looming around the corner, many people will be tempted into taking on extra jobs to finance parties and presents. For the most-part, less Scrooge-like bosses probably wouldn’t begrudge you earning a few extra quid to keep staff sweet – it’s when you haven’t admitted what you’re up to that it will become a season to be far from jolly.

Moonlighting opens up a huge crater of problems for bosses and employees alike. Of course, there are the legal consequences of what furtive employees are up to, but it also begs the question of why staff feel the need to do it in the first place. And despite what you might think, it doesn’t always boil down to cash.

More than a third of people in Britain have additional jobs to their main employment, according to personal finance website Fool.co.uk, with 70 per cent of moonlighters putting in the extra hours in secret, mainly because it is forbidden in their firms. However, around one in five admitted to moonlighting to broaden their horizons, while a quarter do it because they feel their talents aren’t recognised in their regular job.

Findings such as these are forcing companies to look beyond pay packets to stop employees straying from the fold. “It comes down to working out what motivates your staff, responding to that and making sure the job is interesting and engaging, as well as what it delivers in terms of wages,” says Anne Fairweather, head of public policy at the Recruitment and Employment Confederation. Basically, it’s a classic case of getting your retention strategies right.

However, she adds that having two jobs isn’t automatically detrimental to the company. In fact, it can actually be an advantage. “It may not have a negative impact on the job, but support the fact that employees have other interests beyond the workplace,” says Fairweather. “It may be more beneficial than trying to crack down on it, if someone was taking a second job to earn more money, to stay in their main job during the week if they have a short-term financial need.”

For example, Andy, who works for a major financial firm during the day and also works shifts in a call centre in the evening, is saving up for deposit on a flat nearer to his city job, something he says would be currently impossible on the wages from his main job alone. “I don’t want to leave my main job as there are really good career prospects,” he adds. “The problem at the moment is that my wages cover the rent and bills on my current place but I am also paying out a small fortune in transport costs. There isn’t a lot left over at the end of the month so the extra shifts are really helping.”

Shedding light on the law

The problems arise when there is a clear conflict of interests such as an employee working for a direct competitor or flouting clauses in the contract of employment. “Most contracts will prescribe that employees can’t have second jobs at all or certainly without notifying their employer,” explains Graham Paul, partner at law firm Dundas and Wilson. “If someone is moonlighting, cash-in-hand, in a job that inherently competes with their employer, it is a breach of contract with potential for gross misconduct and dismissal.”

If there is nothing in the employee contract or in the policies outlining the rules on moonlighting it could be a different story, which is why Paul recommends literally spelling it out.

Some of the factors to be considered by the employer are whether the other job is in genuine competition or in the same line of business but relatively insignificant to what the firm is doing; if the employee is using confidential company information or equipment to carry out the other job, or whether the extra workload is impacting productivity because the employee is too tired to do the job, which could also make them a health and safety risk. “All these are factors towards gross misconduct rather than a rap across the knuckles,” says Paul.

The chances of workers getting caught out are higher if payroll is contacted regarding the employee’s tax code once he or she has taken on another role. If payment isn’t put through the books, however, there is the added risk of breaching PAYE and National Insurance regulations – the penalties for which are harsh.

Cash-in-hand employees are also vulnerable if they have an accident in the undeclared workplace as they won’t be covered by the employer’s liability and insurance policies, that would otherwise protect them, because they will not be classed as an employee.

“It is difficult to control,” Fairweather admits. “Workers should notify the company if they are working outside of hours during the week and companies should make employees aware of their working time rights. But, ultimately, if the employer has provided this and the employees choose to ignore that, there is little you can do in the long run.”

A common scenario in Paul’s line of work are where an employee is absent from work on sick leave, only to be discovered working somewhere else. “In most cases, working on sick leave constitutes gross misconduct, especially if they are receiving company sick pay, because they are claiming it fraudulently,” he adds. “Tribunals hate it and are usually receptive to the argument it is misconduct if there is an unfair dismissal claim.” There is also the chance employers might want to reclaim the payments they have made through the courts.

But Paul also backs up Fairweather’s beliefs that having two jobs isn’t the main issue if employees are open about it and work within the perimeters of the law. “Providing the employee is doing his job, quite frankly what he or she is doing in the evening or weekend isn’t such a problem,” he says. “The problem is working when they are not meant to be.”

Andy agrees. “I make sure that the work in my main role doesn’t suffer because I really want to be there. The call centre company is in a slightly different field to the one I am working in during the day,” he says. “The plus is the knowledge I already have comes in handy when talking to customers. It also means I have seen certain financial problems from the other side of the fence, even though I won’t be working two jobs forever.”

Further information

Click here to listen to a podcast by David Kuo, from Fool.co.uk, who discusses, along with Andrew Morris and HR guru Marisa Schlichting, why there are currently 11 million Brits who supplement their income through moonlighting and what this means for employers.