Australia: Two good to be true? - if and when is a second job acceptable?

Running a digital application (app) side-business or working a second job, in addition to working a nine-to-five job, is becoming increasingly common.

However, workers holding down a second job can in some circumstances impact a primary employer's business, especially if the worker is fatigued and unable to work safely, or if the job directly competes with the employer's business.

In such situations, workers may find themselves in hot water, with employers potentially having the right to exercise performance management or terminate employment. This article looks at the rights of employers and workers, and the actions that can be taken when a second job may be negatively impacting the primary employment, with reference to important cases handed down by the Fair Work Commission (FWC).

Fitness for work – Jacob v WAN

In 2016, the FWC held that West Australian Newspapers Ltd (WAN) did not unfairly dismiss Mr Jacob, a night-shift press foreman, who worked a second job as an Uber driver.1

Mr Jacob's employment contract with WAN included an express term that he was not to engage in other work without WAN's permission, but that such permission would not be unreasonably held.2 WAN also had a fitness-for-work procedure in place, which required that employees attending work not be adversely affected for any reason, including fatigue.3

After hearing rumours that Mr Jacob may have had a second job, WAN became concerned that this was affecting his fitness for work on night shifts and was a cause behind performance issues and increased personal leave days.

WAN started an investigation and requested Mr Jacob to submit a formal request to hold a second job (noting the hours he expected to work as a driver), so WAN could determine if it was reasonable and safe. Mr Jacob failed to submit the request and repeatedly denied he was working as an Uber driver. Following a show-cause process, Mr Jacob was dismissed with pay in lieu of notice.

The FWC held that WAN had a valid reason for dismissing Mr Jacob as it had undertaken an investigation and given repeated warnings that he had to be open and honest about his Uber driving, as well as opportunities to respond. The dismissal was held not to be harsh, unjust or unreasonable in the circumstances.

What are the risks?

A worker with two jobs is not necessarily a cause for concern. Many workers, known or unbeknownst to their primary employer, successfully engage in additional work.

However, a second job can give rise to genuine problems or risks for businesses and workers, when:

  • safety is affected because a worker performing safety-critical work is fatigued or distracted
  • through fatigue or distraction there is a decline in performance or production and/or an increase in absenteeism or tardiness, or
  • conflicts of interest, breaches of confidentiality and the misuse of physical and intellectual property occur.

Can employers 'control' workers' external activities?

Courts, commissions and tribunals have historically been reluctant to allow an employer to unnecessarily intrude into a worker's private life outside of work hours.

In Hivac v Park Royal Scientific Instruments Ltd [1946] CH 1694 Lord Green MR said that the law would not look to impose an obligation on workers that would prevent them from making more income during their spare time.

With that said, there are some actions that a business can reasonably and legally take in circumstances in which a second job is creating a genuine safety risk or performance issues.

Health and safety

In circumstances such as those in Jacobs v WAN, when an employer becomes concerned about a worker's ability to perform their work safely, they have an obligation under work health and safety laws to manage this risk.

Under the Work Health and Safety Act 2011 (Qld) (WHS Act) a person conducting a business or undertaking (PCBU) has a duty to ensure, so far as reasonably practicable, that workers and other persons are not exposed to health and safety risks arising from the business or undertaking.5

Safe Work Australia advises that:

"The duty on the person conducting the business or undertaking is not removed by a worker's ... willingness to work extra hours or to come to work when fatigued. The person conducting the business or undertaking should adopt risk management strategies to manage the risks of fatigue in these circumstances".6

While a PCBU cannot necessarily or reasonably be expected to control what a worker does in their own time, when at work a PCBU cannot ignore the safety risk a fatigued or distracted worker may pose. The PCBU has an obligation to develop strategies, including policies and procedures, to identify risks and put in place controls to eliminate or minimise the likelihood of harm.

Workers also have a duty under the WHS Act to take reasonable care of their own health and safety, and not adversely affect the health and safety of others.7 This includes:

  • taking responsibility for their own fitness for work and, when affected, advising their employer and not undertaking safety-critical tasks
  • complying and cooperating with any reasonable instruction, policy or procedure, including those relating to fitness for work.

In practice, this means any business concerned about the risks arising from a worker undertaking two jobs can and should:

  • Implement strategies, such as fitness-for-duty policies and procedures, aimed at identifying and controlling the risk arising from a worker who is fatigued or unfit for work. In circumstances in which fatigue is a likely hazard, such as night-shift work, these policies should include a direct requirement to disclose and/or seek approval to perform other work.
  • Consult, investigate and take disciplinary action if a worker fails to follow these policies or procedures and/or attends work fatigued or unfit to perform their job.

Performance

If a second job does not present a safety risk, fatigue or distraction may still affect a worker's performance or productivity.

If an employer suspects that performance is suffering as a result of a second job, the best course of action is to develop and implement performance management processes that include allowing the worker an opportunity to respond to allegations and improve, before taking disciplinary action or proceeding to termination.

Conflict of interest

In circumstances in which a worker's second job is for a direct competitor or within the same industry, it would be reasonable for an employer to be concerned about a conflict of interest.

However, if an employer wishes to address this issue through direction or termination, generally it must either establish a breach of an express clause of the employment agreement or a breach of an implied duty to act in good faith.

Implied duty

Whether a duty of good faith can be implied in an employment contract will depend on the specific facts and circumstances of each case.8 In considering whether having a second job breaches a worker's implied duty of good faith, it is not sufficient to merely establish that a worker is engaged in employment by a competitor.

The worker must be "guilty of some conduct in itself incompatible with his duty and the confidential relation between himself and his employer",9 and "an actual repugnance between his acts and his relationship must be found".10

In Bril v Rex Australia Ltd [2015] FWC 884,11 transport driver Mr Bril was forced to resign after his employer discovered he was working as a driver for another transport company during his annual leave. The FWC noted there was no actual conflict of interest arising from Mr Bril's work with a competitor, finding his dismissal was harsh, unjust and unreasonable. It said:

"Undertaking secondary employment which does not encroach on the primary employer's field of business does not contravene the implied contractual term of fidelity and good faith. Nor does the implied term impose any duty upon the employee to disclose secondary employment of this nature."

Express restraint clauses

A well-drafted non-compete clause in an employment agreement can be an effective way to prevent a worker from undertaking other work in direct competition with the employer's business.

In Pedley v IPMS Pty Ltd [2013] FWC 4282,12 Mr Pedley's contract of employment contained several express restraint clauses, including clauses preventing him from undertaking work, or providing advice or services to anybody that resulted in him competing with his primary employer (PVH). With the knowledge and consent of PVH, Mr Pedley was running his own business on the side, undertaking very similar work but on smaller projects (and not within the scope of PVH's business).

As part of advertising the expansion of his business to a full-time practice working on larger projects, he sent an email to a list of contacts, including some clients of PVH. Mr Pedley was immediately dismissed as a result of the email.

He subsequently commenced unfair dismissal proceedings in the FWC. The FWC upheld Mr Pedley's dismissal, stating he had breached the express terms of his employment contract, resulting in PVH losing confidence that he would promote their interests above his own.

It's about balance and communication

One of the best ways to balance business interests with the rights of workers is to ensure that everyone understands "if and when" a second job is acceptable. The most effective way to do this is through express contractual terms, policies and procedures tailored to the specific business and risk, and through ongoing consultation and disclosure between the worker and the business.

Strictly prohibiting secondary work is not always necessary and in some cases unlawful, so it is important to have risk management strategies in place that are appropriate to the business and its potential risks. Failure to identify and control risks that arise from fatigue or distraction (caused by a second job) can have catastrophic safety ramifications in high-risk workplaces. Strategies that encourage a worker to disclose when they are not fit for work—and provide controls, like rest areas— can be key in managing such consequences.

Footnotes

1 Jacob v West Australian Newspapers Ltd [2016] FWC 5382 (8 August 2016)

2Ibid at [8]

3Ibid at at [11]

4Hivac Limited v Park Royal Scientific Instruments limited [1946] CH 169 as cited by the Full Bench of the Fair Work Commission in Adidem Pty Ltd T/A The Body Shop v Nicole Suckling [2014] FWCFB 3611

5 WHS Act s19

6 Safe Work Australia, Guide for managing the risk of fatigue at work, page 3

7 WHS Act s28

8The question of whether a duty of good faith is generally implied by law into employment contracts is yet to be resolved. See Commonwealth Bank of Australia v Barker [2014] HCA 32 at [42]. See also Gramotnev v Queensland University of Technology [2015] QCA 127 and State of New South Wales v Shaw [2015] NSWCA 97 at [128-130]

9 Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 Starke and Evatt JJ at 74, as cited by the Full Bench of the Fair Work Commission in Adidem Pty Ltd T/A The Body Shop v Nicole Suckling [2014] FWCFB 3611 at [44]

10Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 Dixon and McTiernan JJ at 81-82, as cited by the Full Bench of the Fair Work Commission in Adidem Pty Ltd T/A The Body Shop v Nicole Suckling [2014] FWCFB 3611 at [44]

11 Jim Bril v Rex Australia Limited t/a K&K Glass [2015] FWC 884 at [56]

12 Bradford Pedley v IPMS Pty Ltd T/A Peckvonhartel [2013] FWC 4282

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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