An increasing number of Canadians are turning to side hustles to help cover rising living expenses, according to a recent survey by H&R Block Canada. Nearly 9 million Canadians, or 28 per cent of the population, now participate in the gig economy — a significant jump from 13 per cent in 2022, it found.
Another 12 per cent are considering joining the gig workforce, highlighting a growing trend in alternative employment amid ongoing financial pressures.
Combined with the rise of remote work, this has raised concerns among employers that “moonlighting” employees may not be fully engaged in their day jobs, according to Lai-King Hum, founder of Hum Law Firm.
“It used to be that a second job or side hustle would occur in the evenings or on weekends,” she said. “But if people are working remotely, they could be doing two full-time jobs at the same time.”
Although there are no explicit laws in Canada prohibiting individuals from holding multiple jobs, Hum said there is a potential for conflict of interest depending on the person’s role and the side hustle involved. But there is a common law duty of loyalty that obliges employees to act in the best interest of their employer, especially when it comes to competitors.
“So, if you’re working for a competitor, then that’s a breach of your common law duty,” said Hum.
The worker’s role can also play a part in how the employer should view a second job. For example, a server who works at one restaurant Monday to Friday and another one on the weekends isn’t really a big deal, she said.
“There are a lot of servers that do that,” said Hum. “But if you’re an account manager in sales for one company, then it would likely be a conflict of interest if you worked as an account manager for another one — especially if they’re in the same industry.”
Employment contract clauses
Employers can safeguard against these conflicts by establishing clear policies in employment contracts, she said.
Conflict of interest clauses, for example, can be a useful tool. These clauses require employees to seek approval before engaging in outside work that could potentially conflict with their primary role, she said.
“The employee agrees not to directly or indirectly engage or participate in any other employment or self-employment, or any activities that would conflict with the interests of the employer unless the employee obtains prior written approval,” said Hum.
She added that it is essential to include a phrase noting that such approval “will not be unreasonably withheld,” to assure employees that the employer is not simply seeking to restrict all outside activities — just ones that could create a conflict or be viewed as problematic.
Employers can also consider including a “full-time and attention” clause, which mandates that employees dedicate their work hours exclusively to their primary role, she said. While non-competition clauses may be tempting, Hum clarified that they are no longer enforceable in Ontario — except for C-suite positions.
Discipline with caution
When it comes to disciplining employees for unauthorized side-hustles, Hum advised a cautious approach. She suggested that termination could be justified in cases of willful misconduct, particularly if the moonlighting activity directly harms the business.
However, she recommended first speaking with the employee to determine the extent of the breach and then consulting a lawyer to discuss the facts of the specific case.
For many employers, addressing these issues starts with proactive communication.
“If you put restrictions into the employment offer or into the employment contract, then it becomes much clearer, and the employee knows off the bat,” Hum said.
In addition to conflict of interest clauses, employers can also implement internal policies regarding the use of company equipment such as laptops and smartphones that could be tempting to use for side businesses.
If you need guidance from an experienced employment lawyer, contact Hum Law today at (416)214-2329 or Complete our Free Assessment Form Here. For more information, visit https://thehumlawfirm.ca/
