Preventing or Restricting Employees from Secondary Employment

Preventing or Restricting Employees from Secondary Employment
Thursday January 23, 2020

For some employees, working two different jobs during the same period of time (secondary employment) is attractive, possibly for financial reasons or to provide more variety to their work experience.

However, the risks to employers when an employee works for another party as well can be significant.  The employee may, inadvertently or intentionally, share confidential, and/or commercially sensitive information belonging to the employer with their other party/colleagues, jeopardise the employer’s reputation, or become dangerously fatigued and create a health and safety risk for the employer. 

Employees who do engage in secondary employment have obligations to each of their employers to meet their agreed responsibilities, act in good faith including refraining from acting in any way that could mislead or deceive each employer or in a way that could damage either employer’s business, and keep themselves and others in the workplace safe. 

However, managing such employees, and ensuring that they are not using their working time or other resources from one employer for the benefit of another, can be tricky.  As such, many employers seek to prevent or restrict their employees from engaging in secondary employment. 

While there is no law against employees having more than one job at any one time, s 67H of the Employment Relations Act 2000 (“the Act”) provides that when an employer has genuine reasons, based on reasonable grounds, the employer may include a clause in an employee’s employment agreement that prevents or restricts the employee from performing work for another party, either at all, or without the prior consent of the employer. 

Any such clause in an employment agreement must specify the genuine reasons held by the employer for the prevention/restriction on secondary employment.  The Act does not limit what an employer’s “genuine reasons” could be but does confirm that the following will be acceptable as “genuine reasons:”

  1. To protect an employer’s commercially sensitive information;
  2. To protect an employer’s intellectual property rights;
  3. To protect an employer’s commercial reputation; and
  4. To prevent a real conflict of interest that cannot be managed without including a secondary employment provision.

I note specifically that the plural “reasons” is used in the Act meaning an employer must have more than one genuine reason to prevent or restrict an employee from engaging in secondary employment. 

If you are an employer and are seeking advice surrounding preventing or restricting an employee, or potential employee, from engaging in secondary employment, or would like assistance in preparing a secondary employment clause to include in an employment agreement, please do not hesitate to contact my office, I would be more than happy to help.