Starting a business while still employed full-time is a common aspiration, but it raises questions about an employee's rights and potential employer restrictions. Employment law partner Glenn Hayes of Hill Dickinson advises that while there is no universal prohibition, the permissibility of a side venture depends on several factors.
Hayes recommends that employees always discuss their plans with their employer before investing significant time or money. This proactive approach allows employees to understand their employer's stance early, enabling informed decisions about their current employment and future ventures.
Contractual and Policy Considerations
The first point of reference should be the employment contract and any relevant workplace policies. Many employers require employees to disclose external business interests, directorships, or secondary employment. Some policies may even mandate prior approval for such activities. Failure to comply with these stipulations could lead to disciplinary action.
Conflicts of Interest and Fidelity
Even if a new business does not directly compete with the employer's core operations, potential conflicts of interest can still arise. Employees owe their employers duties of good faith and fidelity. Legitimate concerns may exist if the side business has any potential overlap with the employer's customers, suppliers, commercial opportunities, or future strategic plans.
Confidentiality and Resource Usage
Employees are prohibited from using or disclosing confidential information obtained during their employment for the benefit of a separate business. Similarly, misusing personal data acquired through employment would violate data protection laws. Furthermore, employees must not use their employer's resources for their new venture. This includes company equipment, IT systems, software licenses, email accounts, databases, or paid working time.
Intellectual Property Ownership
Intellectual property law can be complex in employment contexts. Ideas, inventions, products, or software developed during employment, or with the use of employer resources, may not automatically belong to the employee. This is a critical aspect that is often overlooked.
Performance and Working Hours
Even if a side business is permitted, an employer may take action if it negatively impacts an employee's performance, attendance, or productivity. The Working Time Regulations may also be a consideration if the combined working hours become substantial, particularly if the employee has not opted out of the 48-hour average working week limit. Employers also have health and safety obligations concerning long working hours and potential fatigue. MOBILE_INLINE_IMAGE: