Workers who want to launch their own business in their spare time while keeping a full-time job do not face a blanket ban, but what they are allowed to do depends on their contract, their employer's policies and the nature of the venture, according to employment lawyer Glenn Hayes.
Hayes, a partner at commercial law firm Hill Dickinson in Liverpool, was responding to a reader who asked whether they needed to tell their boss about a side business that would not directly compete with their employer's work, and whether their employer could stop them.
Hayes said his advice would always be to speak to an employer first, before investing too much time or money in a new venture. If the employer's response is that it is not acceptable, he said, that is something the employee will want to know early so they can weigh their options and make an informed decision about their current job.
Check your employment contract
Hayes said the starting point should always be the employee's contract and any relevant workplace policies. Many employers require staff to disclose external business interests, directorships or secondary employment, and some require prior approval before taking them on. Failing to do so, he said, could result in disciplinary action.
Conflicts of interest with an employer
According to Hayes, problems can arise even when a side business is not competing directly with an employer. Employees owe their employer duties of good faith and fidelity, which extend to actual or perceived conflicts of interest. Employers may have legitimate concerns if a side venture has the potential to overlap with their customers, suppliers, commercial opportunities or future plans, he said, even if there is no overlap right now.
Confidentiality and data protection
Hayes said employees must not use or disclose confidential information gained through their job for the benefit of a separate business, and that using personal data obtained through employment would breach data protection laws. He added that staff must also avoid using work resources for a new business, including equipment, IT systems, software licences, emails, databases or paid working time.
Who owns the idea?
Ownership of a new idea, invention, product or piece of software can be a point that is easily overlooked, Hayes said. Under intellectual property law, where something is developed during employment or using an employer's resources, ownership may not automatically pass to the employee who created it.
Performance and working hours
Even where a side business is permitted, Hayes said employers may still take action if it affects an employee's performance, attendance, productivity or standards. He said the Working Time Regulations may need to be considered if an employee's combined working hours become significant, particularly where there is no opt-out from the 48-hour average working week limit. Employers also carry health and safety obligations relating to long working hours and fatigue, he said.
Hill Dickinson is a commercial law firm with an office in Liverpool. The Working Time Regulations set legal limits on how many hours employees in the UK can be required to work each week, including an average 48-hour cap that workers can choose to opt out of.
