What happens if an employee sets up a side hustle?

Do your employees have secondary jobs and if so how do you manage them? Kate Palmer explores the pros and cons of the side hustle.

As we forever adapt to socio-economic changes, more workers are now choosing to take up secondary jobs – or side hustles. The age-old tradition of the ‘nine-to-five’ is being abandoned, and employees are engaging in modern working practices.

As freelance gigs and side hustles become economically normalised, employers are left evaluating newly found effects on their business and workforce.

But how do employers exactly manage employees who have side hustles – morally and legally.

What is a side hustle?

In simple terms, a side hustle is a secondary job/s used to provide extra income.

They became increasingly popular in recent times, particularly during the Covid 19-induced lockdown. Where people turned to profiting from their newly pursued hobbies and pastimes. Alternative but common reasons for seeking secondary jobs derive from unsatisfactory salaries and benefits from primary employment

Have open talks about flexible work schedules or contractual changes, as this is a more proactive approach than sanctioning penalties

It’s criminal to deny the viral effects brought about by millennials and generation Z side hustlers – who added to the £72 billion economic input. With their ‘on the grind’ attitude, rapid acclimatation to economy disruptions and technological changes allowed them to self-promote and profit from their crafts.

Some of the most recent side hustle ecommerce and services range from:

  • Drop-shipping
  • Upcycling
  • Online tutoring
  • Graphic designing
  • Food delivery.

Finding a work-life balance

1 in 4 British adults have a secondary job alongside their main careers, according to academic research by Henley Business School. Defining side hustlers as:

Those who are underwhelmed and underfinanced by their work, but have an appetite, if not the confidence, to go it all alone as an entrepreneur, will not let the chance slip – Professor Bernd Vogel – Founding Director of the Henley Centre for Leadership, Henley Business School.

Employees with side hustles are evidently more happier and content; gaining psychological and physical fulfilment from their craft. And employers can only benefit from encouraging the practise, right?


How to manage employees with side hustles

Employers will naturally wonder how workers with side hustles will affect their own business. Ideally, workers who show entrepreneurial acumen can be channelled into your business. Bringing fresh perception, work ethos, and worthwhile investment.  

However, problems can generate if side hustles start to bleed into regular work. Leading to the same age-old issue of conflicts of interest.

Welcoming workers with a second job are morally reasonable. But your business shouldn’t be in the direct line of potential collateral damage. Good business practice can be personified by means of a business policy. Which can protect you from foreboding business ramifications.

Here are some business practices to include in your policy for managing side hustles:

Working performance

Your policy should clearly outline the contractual obligations that workers have agreed upon. Their conduct and performance for your business should not be substituted.

However, implementing stern regulations isn’t productive or professional. Have open talks about flexible work schedules or contractual changes, as this is a more proactive approach than sanctioning penalties.

However, any signs of exploitation or a lack of compliance should be dealt with effectively. Disciplinary procedures should follow situations where workers are increasingly distracted. Or where they unable to perform their basic contractual tasks.

Having a middle ground regarding secondary jobs is the best trajectory for protecting employee wellbeing and business productivity.

Working time legislations  

Under the Working Time Regulations 1998, employees can only work for a set number of hours per day. And are legally entitled to receive efficient rest breaks and time off between shifts.

Side hustlers are effectively taking on an additional job (and its own working hours) by their own accord. However, employers should still take reasonable steps for protecting their health and wellbeing. Failing this could result in monetary penalties and business impacts. Especially if the second job was already acknowledged.


Employees should primarily seek permission and advice before taking on outside work. Allowing you to comply with their work choices, as well as health, safety, and welfare legislations.

In accordance to this, employers could request workers to opt out of the Working Time Regulations. Provided by in writing (and signed) as evidence for legal agreement.

Open culture of communication

Having open and honest talks about side hustles and other work projects will effectively strengthen rapports with employees.

Take an interest in their interests. And see if their distinct talent and skill set can be utilised and further developed within your business.

Your honesty and acceptance will transform into business productivity and employee loyalty. It could even nip any wandering thoughts for alternative employment (with flexible working conditions) if they feel like a valuable member of your company.

Protecting your business assets

Employers shouldn’t be so onerous in an employee’s life outside of work. Especially if it brings detrimental business impacts. From client information to confidential materials – a data breach (even on a hairline scale) can bring serious damage in its wake. Restrict any external use for company hardware and software.

Through your policy, you can imminently protect your business assets and avoid potential legal actions. In the end, investing time and effort into developing workers with strong entrepreneurial ethics can only enhance beneficial outcomes. But there is a fine line between eliminating disruptions and supporting employee morale and engagement.

Concentrate on keeping openness with side hustlers and manage potential work conflicts. Stick to your policy rules – and watch your business and workforce blossom.


About the author

Kate Palmer is the Associate Director at Peninsula UK.


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