The Nuanced Ins and Outs of Legally Engaging in a Side Hustle

With the pandemic, socio-economic upheavals and rising unemployment, there has been an ever-growing need to turn to additional means of earning an income. Since 2020, remote working has enabled employees to more easily seek and take on secondary job opportunities – the so-called ‘side hustle’ – to supplement their income (Mahomed & Arends, 2022). According to a Henley Business School report, as many as 27% of South African employees engage in side hustles (Wessels, 2022).

Unfortunately, juggling two jobs can lead to difficulties in finding the right balance in terms of dedicating certain amounts of time, energy and output into the respective jobs. The lines can easily get blurred between the primary and secondary employment of an employee, and this could lead to serious legal consequences like disciplinary action or even dismissal.

The law in South Africa does not explicitly preclude an employee from earning an additional income; it is a general principle that an employee cannot unreasonably be withheld or prohibited from supplementing their income (Mahomed & Arends, 2022).

Nevertheless, under certain circumstances, such work can be expressly forbidden:

• According to the Labour Appeal Court, an employer can effectively prohibit second occupations under a collective agreement, employment contract or a workplace policy, provided this is known to all employees (Mahomed & Arends, 2022).
• Side hustling can be limited by an employer setting the condition that an employee is required to disclose any secondary job to the employer who thereupon reserves the discretion as to whether the employee ought to continue with their secondary job or not (Mahomed & Arends, 2022). The onus is therefore placed on the employee to inform the employer should the former be embarking on moonlighting or side hustling (Wessels, 2022).

Should no such work policy or employment clause exist, the secondary job may be pursued, provided it does not interfere with or negatively impact the primary employment relationship or the employee’s work capacity (Wessels, 2022). It follows that no conflict of interest may exist, nor any prejudice arise between the primary and secondary employment in the sense that the latter could cause the employee to bring reduced output or performance to the former (Mahomed & Arends, 2022).

An employee is required by law to be honest, loyal and promote the business of his or her employer so as to enable a trusted employment relationship. Should an employee sideline the primary place of business (e.g. taking sick leave to focus on the secondary job or using their particular skill set to charge clients for services outside of the workplace), upon a fair investigation, this could be seen as grounds for dismissal based on dishonesty or fraud. Conflict of interest could also be a cause for dismissal in cases where the side hustle is in direct competition with the employer (Wessels, 2022).  

The hustle and bustle around substantively unfair dismissal: a conflict of interest and the employee’s duty of good faith

Bakenrug Meat (Pty) Ltd t/a Joostenberg Meat v CCMA and Others recently covered the question as to whether there is an obligation on the employee to disclose their side hustle when a conflict of interest could potentially arise. In this case, the employee did marketing for her primary occupation as well as for her own private business. When the employer became aware of this, the employee was dismissed for taking employment “while working in another capacity”. The aggrieved employee referred the matter to the CCMA on the grounds that her dismissal was substantively unfair.

The CCMA commissioner found the dismissal to be substantively fair as both occupations were in the same business of selling meat products and as the employee operated in the same capacity as a salesperson. The commissioner held that the employer should have been made aware of this conflict of interest and stated that the failure to inform the employer amounted to dishonesty.

While the Labour Court (LC), upon review, found the employee’s dismissal to be substantively unfair, the Labour Appeal Court (LAC) overturned the LC’s judgment. It was reiterated that the dismissal was substantively fair based on the fact that the employee was independently operating a business with the same products as the employer, and that this was not disclosed to the employer. The LAC underlined that the employee’s failure to inform the employer of this material fact led to dishonesty and a violation of her duty of good faith.

Bibliography

I. Mohamed & S. Arends (2022): Side hustles – working towards workplace discipline, CDH Employment Law Alert, https://www.cliffedekkerhofmeyr.com/en/news/publications/2022/Practice/Employment/employment-law-alert-17-january-side-hustles-working-towards-workplace-discipline-.html.

T. Wessels (2022): Side hustles are permitted but check with your employer first, IOL Financial Planning, https://www.iol.co.za/personal-finance/financial-planning/side-hustles-are-permitted-but-check-with-your-employer-first-add720e4-292b-4b32-89a7-b32524e07725.

(2022): New legal case deals with moonlighting and side hustles in South Africa, BusinessTech, https://businesstech.co.za/news/business/579972/new-legal-case-deals-with-moonlighting-and-side-hustles-in-south-africa/.