Many people encourage South Africans to start a side-line business, also known as a side hustle, which they can run outside working hours.
However, they are seldom warned that they can be fired for moonlighting if it harms the relationship with the employer.
Law firm Wright Rose-Innes said in any employment relationship, the employee has a duty of good faith and confidence to the employer.
An employer must be able to place unfettered trust and confidence in the employee and expect that the employee must advance the employer’s business interests at all times.
It includes employees conducting themselves in a manner which is not destructive to the employment relationship.
Fundamental to this is the requirement that an employee must at all times disclose any circumstances which may result in a conflict of interest with their employer.
Moonlighting, which essentially entails an employee working for another employer outside of working hours, may amount to a conflict of interest with the employer.
It is, therefore, normally required that an employee disclose any of their outside commercial activities that may conflict with their employer’s business.
However, for moonlighting to constitute a disciplinary offence, there must have been a rule against it, and the employee must have been aware of that rule.
Labour Appeal Court case
The Labour Appeal Court (LAC) recently had to determine the scope of the duty of good faith owed by an employee to the employer.
In this case, the LAC held that the employee had failed to disclose an essential and important fact – she had been running a ‘side-line business’.
She was selling meat products, which was the same business as that of her employer, though they were not identical meat products.
The LAC also found that it did not matter that the employee was able to discharge her duties to her employer.
The fact that she failed to disclose her side-line business, she had acted in violation of her duty of good faith to her employer and thus her dismissal for dishonesty was justified.
This case sets out important considerations when it comes to moonlighting.
It makes it clear that where a conflict of interest may arise, it is not material that an employee continues to render satisfactory service to the employer.
It also does not matter that it will not result in real competition with the employer.
The employee should avoid activities that could create a conflict of interest or obtain prior permission from the employer before continuing.
Conflict of interest consideration
Whether there is a conflict of interest will always be a factual consideration which will depend on:
- The nature of the business of the employer.
- The terms of the employee’s contract of employment.
- The nature of the moonlighting activity.
It means not all moonlighting will automatically be a dismissible offence.
Employers should ensure that they address their views regarding moonlighting clearly in their terms and conditions of employment.
They should also make employees aware of these to avoid any misperceptions by employees as to what they are or are not allowed to do.