Moonlighting – employers and employees

Moonlighting is when a person earns extra money outside of working hours.

Can the employee do moonlighting?
Do employees have the right to have an additional job?
Can the employer dismiss the employee for moonlighting?
Is the employee accountable to the employer for income earning activities outside of working hours?

During strenuous financial times, employees are increasingly seeking additional sources of income. This may cause a decrease in productivity in the workplace as employees seek to supplement their income after hours, by way of second or even third job.

We were all employees at some stage in our working career.

The essence of being an employee is that you have an obligation to make your services available to the employer during the hours that have been agreed upon. As a general rule, the employee is free to pursue his or her own commercial interests outside of working hours, but…employees have the duty to act in good faith towards their employer and it is possible that certain employee activities after working hours could interfere with this faithful duty.

A couple background legal cases and definitions are given below to illustrate the essence of acting in good faith.

  1. The duty of good faith has been described by the Supreme Court of Appeal (SAC) in Ganes v Telecom Namibia Ltd (2004), as follows:

“As an employee of the (company) and in the absence of an agreement to the contrary the (employee) owed the (company) a duty of good faith. This duty entailed that he was obliged not to work against the (company’s) interests; not to place himself in a position where his interests conflicted with those of the (company); not to make a secret profit at the expense of the (company); and not to receive from a third party a bribe, secret profit or commission in the course of or by means of his position as employee of the (company).”

  1. The issue of moonlighting was considered by the Labour Court in the case of Martin & East (Pty) Ltd v Bulbring and others (2016). The employee was an operators’ manager. He also trained the company’s employees and had become an accredited assessor and moderator during his employment. It was common cause that the company had a rule against moonlighting. The company alleged that the employee had contravened the rule in that he “did not declare or obtain written approval to present training to an external company for remuneration over the period 27 February 2013 to 3 March 2013.” During this period the employee had presented training for his own account to another company in Beaufort West. He did not ask permission to do so.

In addition to moonlighting, the employer also alleged that the employee had been involved in dishonest and fraudulent activities, and that the employee had brought the company into disrepute. After a disciplinary hearing, the company dismissed the employee on the basis that he could no longer be trusted.

The CCMA Commissioner accepted that there was a rule in respect of moonlighting and that the employee was aware of it; yet she found that there was no strict application of the rule when it came to the employee. She found that the employee’s dismissal had been unfair and awarded him compensation. The Labour Court disagreed. According to the Court, the employee had clearly been dishonest, had committed fraud, had brought the company into disrepute, had breached the company’s rule in respect of moonlighting, and had acted to the prejudice of his employer for his own benefit. In the court’s view this destroyed the relationship of trust between him and his employer. The CCMA’s award was set aside and substituted with a finding that the dismissal of the employee had been fair.

In this case, the Court’s conclusion that the dismissal had been fair was not only due to the breach of the rule regarding moonlighting. Other serious forms of misconduct (dishonesty, fraud, bringing the company into disrepute) also had a bearing on the matter.

Employers may, for the sake of clarity, introduce a written rule or provision in the contract of employment that prohibits moonlighting without the employer’s written consent. This is not strictly necessary, though. The employee’s obligation to serve the employer in good faith (as described by the Supreme Court of Appeal above) is not dependent on the existence of such a rule or contractual provision. On the other hand, a rule or provision that restricts an employee UNREASONABLY would be unenforceable.

Pursuing a hobby that has no relation to the employer’s business, is unlikely to present any conflict of interest – hence there would be no breach of the duty but, if an employee does something which is in direct competition with the employer’s business, e.g. doing work for a client of the employer and depriving the employer of that income, it would be in conflict with the employer’s interests and, accordingly, a breach of the duty of good faith.

If a breach of the duty of good faith has been established, it would inevitably have a detrimental effect on the employment relationship. The breach would normally amount to serious misconduct.

There are several factors that could have a bearing on the gravity of the offence, e.g. nature of the position, seniority, whether there is an element of dishonesty, and actual or potential harm to the employer. Whether dismissal is justified, depends on whether the breach is serious enough to destroy the RELATIONSHIP OF TRUST.

South Africa’s Constitution states that everyone has the right to work. In essence, employers can therefore not prohibit an employee form working. This does not mean that the main employer should just accept a possible negative impact on an employee’s work performance as a result of a second job. Employers can take proactive measures to manage the situation.

To manage their risk such as “moonlighting”, employers can do the following:

  1. Include a clause in their employment contracts to the effect that employees are required to request permission to take up additional employment and to disclose any conflict of interest that may arise from such additional employment.
  2. Implement clear rules relating to additional work that address the following: 2.1 The additional employment should not: 2.1.1 be in contradiction with the employment contract; 2.1.2 harm or potentially harm the employer’s business; 2.1.3 affect the employee’s capacity to work for the main employer.

Moonlighting scenarios may also arise where the employee’s honesty is taken into question. Some employees on long-term sick leave supplement their income during the period of incapacity. In this instance, disciplinary measures may be taken. Employers should however note that the nature of the illness may have a genuine effect on the work they do for you, but may not prevent the employee form performing other work of a less strenuous nature. An investigation should therefore be conducted prior to disciplinary steps being taken.

Employees have the duty to act in good faith towards their employer. Should it appear that an employee is for instance diverting customers or work away form the main employer to the additional employer or to do the work on his/her own account in his/her spare time, this conduct may be construed as a breach of such duty. Instances such as these should be listed as serious misconduct in terms of the employer’s disciplinary code and dealt with accordingly.

Fiduciary duty refers to the employee’s obligation to behave in a trustworthy manner and this should be catered for in the employment contract.

This means that the employee may not:

• Place him/herself in a position where his/her interests conflict with those of the employer
• Make a secret profit at the expense of the employer
• Receive a bribe or commission from a third party
• Misuse the employer’s trade secrets
• Give a third party the employer’s confidential information
• Lie to the employer.

In order to protect itself from employees acting against the employer’s interests every employer should:

• Build in checks and balances that prevent the abuse of power
• Inform all employees of their fiduciary duties in relation to their positions of trust
• Make sure employees at all levels know the seriousness of breach of their fiduciary duties
• Take swift, fair and consistent action against employees who breach their fiduciary duties
• Obtain expert legal advice before acting against suspects.

Keep in mind that both the employee and employer have duties and obligations to each other. Below is a basic snapshot for each.

The Employee’s Duties:

  1. Services: An employee must make his/her services available to the employer within an agreed period of time. The actual services rendered will often be specifically described within the employment contract and the job specifications and requirements, however, often times an employee’s services will include those duties that aren’t specifically described but are within the best interest of the business.
  2. Competence: An employee must act in accordance with their skills for which they were hired for. When undertaking to exercise that skill, an employee must do so with due diligence, and if not, that employee will be considered incompetent for the job.
  3. Good Faith: So much of the employer-employee relationship is based on the moral character of the employee. That relationship is built on honesty and moral conduct. An employee must act in accordance with what is in the best interests of the business instead of that of his/her own interests and for that reason misappropriation, misconduct and dishonesty cannot be tolerated.
  4. Subordination: This is an employee’s obligation to obey the employer’s commands. These commands, however, must be lawful and morally sound. An employee shouldn’t accept an order that makes him/her go against their moral character.

The Employers Duties:

  1. Remuneration: As discussed above, an employee will provide the employer with services in exchange for remuneration. This give and take relationship will continue in accordance with the employment contract and only in very rare circumstances will remuneration be withheld which will usually be due to a breach of the employment contract. However, even after summarily dismissing an employee an employer needs to follow the correct procedure according to the Code of Good Practice, Basic Conditions of Employment Act and the Labour Relations Act.
  2. Safe Working Environment: An employer must provide a reasonably safe working environment for his/her employees and according to Common Law, the employer is liable for any damages and injuries of an on-site or work-related accident.
  3. Provisions for Leave: According to the Labour Relations Act as well as the Basic Conditions of Employment Act an employer must grant his/her employee with vocational leave, family responsibility leave and sick leave (this may vary from contract to contract between the parties).

In closing, all parties must act in good faith at all times and protect the interests of each other.

Author Craig Tonkin

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