What the law says about side-hustles and moonlighting in South Africa
Alternative sources of income have become more critical for some South Africans in the post-pandemic economy, says Schoemanlaw Inc.
According to the legal firm, the pandemic caused an immense shift in the socioeconomic climate of South Africa, changing various industries and forcing some employers and employees to readjust their way of thinking to adapt.
Moonlighting refers to acquiring a second occupation, typically in secret, in addition to one’s regular employment, said Schoemanlaw.
“However, employees must be aware of the impact moonlighting may have on the employer-employee relationship in the main occupation,” said the firm.
“Of significant importance is whether the second form of occupation potentially conflicts with the main employer’s interests.”
Schoemanlaw said that under common law, the employee has a duty of good faith toward their employer.
This requires that an employer does not behave in a manner detrimental to the employer’s enterprise or interests.
“An employee breaches the implied duty of good faith towards his employers if he is aware of but remains silent about information which undermines his employer’s business interests,” Schoemanlaw said.
The scope of good faith
A case concerning the labour appeal court and a meat company (Bakenrug Meat (Pty) t/a Joostenberg Meat Ltd) confirmed that the employee’s good faith duties extended beyond the scope of an actual conflict of interest and included any potential conflict that may arise.
The court found that an employee acts in bad faith if a conflict of interest can arise even though no real competition exists, noted the law firm.
“The court continued by stating that the employee proved that they could discharge their duties to the employer while continuing their side business, which was irrelevant to the case.”
The employee failed to disclose material information and therefore violated their duty of good faith, added Schoemanlaw.
Drawing from the court’s conclusion, Schoemanlaw said that an employee has a duty of good faith for their employer – this includes disclosing information that may impact the employer’s business interests.
“Accordingly, a potential conflict of interest arising from the actions of an employee without its disclosure would result in a breach of the good faith duties owed to the employer by the employee and may result in a fair dismissal,” stated the law firm.
Polyjobbers
Halfway through 2022, the Old Mutual Savings and Investment Monitor showed that more South Africans are turning to side hustles to ensure financial security.
The report showed that over half of working South Africans are turning to second income streams to extend their household budget, and this is an evergrowing trend.
Out of the 1,505 respondents to Old Mutuals survey – 49% still relied on a single income every month; however, those pursuing second revenue streams – called ‘polyjobbers’ – have increased to 51% in 2022, up from 47% the year before.
How to avoid
Legal firm Cliffe Dekker Hofmeyr said that to try and avoid complications regarding moonlighting, employers typically regulate the practice by expressly prohibiting a secondary occupation in employment contracts or collective agreements.
If no prohibiting clause exists, an employee may have the option of starting a second job – provided it does not contravene the standards of the primary employment relationship, said Cliffe Dekker Hofmeyr.
Commentary from Schoemanlaw Inc.
Read: What the law says about bosses cutting pay because of load shedding in South Africa
