These days, many Canadians are struggling to make ends meet. With so many workers continuing to work from home or away from their offices, having a side business is becoming far more common.
According to a March H&R Block survey, 28 per cent of Canadians report taking on a side gig to boost their income. That is up from 13 per cent in 2022.
As workers find new entrepreneurial ways to supplement their primary source of income, many legal questions arise: Must I seek permission from my employer? Can employers inquire about what workers do on their own time? And do employers have a right to dictate what workers do while away from the workplace?
In general, workers have the right to earn additional income on the side, so long as they are not doing it during company time. But this is far from an unfettered right as there is an implied duty of loyalty that every worker owes to their employer. Therefore, outside work can never conflict with any terms of employment and must not interfere or potentially interfere with responsibilities owed to one’s employer or its legitimate business interests.
However, with the ever-evolving ways that workers can now earn income on the side, the issues become even murkier. Many employers fear that workers with side businesses never completely operate them on their own time or may not be fully devoted to their primary roles. Concerns arise when workers’ external pursuits could potentially clash with their job responsibilities or turn into a conflict of interest, especially for those in more senior or client-facing roles.
When looking to the courts for answers, a recent case from British Columbia sheds light on when there are grounds for termination. In Dove v. Destiny Media Technologies Inc., an employee who worked for a technology company became involved in an external business at a cafe and general store, including managing inventory, handling correspondence and running a part of the business. During that time, the employee’s work performance, attendance and responsiveness declined, leading the company to fire her for misconduct, without any severance.
In a June decision, the court upheld the employee’s termination, finding there was cause for dismissal. Although the employee argued she was mostly doing the outside work on her own time, the court determined she was conducting other business during her employer’s regular business hours and that she became far less committed to her primary job.
The results in this case were seemingly predictable. There are few circumstances when performing a material amount of outside work during business hours, without permission, will be condoned.
However, what if the facts are less clear? How would Canadian courts decide cases where workers operate side gigs that might not directly conflict with their primary employment, or occur during regular hours, but raise questions about their commitment and potential conflicts of interest?
This is an area of workplace law that is ripe for change. The traditional concept of a 9-5 office job has relaxed in the last few years and new technologies have provided a multitude of ways for workers to earn income on the side, without needing to do so on company time. Given these factors, the concept of the duty of unwavering loyalty to one’s employer may need to be reconsidered.
There may not be a one-size-fits-all answer, but here is some guidance for employees:
Must you seek permission to operate or participate in a side business, even if fully on your own time?
The answer depends on the nature and circumstances of the side gig and your regular job. As a general rule, if the business you plan to operate could pose any kind of potential conflict of interest with your primary job or uses any of your employer’s products, intellectual property or resources, then seeking consent is necessary and failing to do so could be grounds for termination.
Are you allowed to perform any personal business during company hours? What about during lunch or break times?
Few people I know spend 100 per cent of their workday completely engaged in their employer’s business. However, if secondary work starts to objectively interfere with your ability to perform your primary job, it has become a problem.
Can your employer require you to disclose information about your side gig?
What you do during your private time should remain private. But not if it has affected or could affect your employer. An employer’s good-faith enquiry into your side business will generally be permitted. Failing to respond to questions also raises suspicions and is a sure-fire way to lead to even more concerns.
Can you be fired for refusing to stop doing outside work?
Yes. But whether you are owed severance is a more difficult question to answer. Depending on the type of outside work you perform, the terms of your employment and whether your employer’s concerns are overreactions, you may have a case for severance.