There has undeniably been a huge increase, across all professions, of people taking second jobs or finding an extra source of income by ‘moonlighting’ (often on a freelance or casual basis) in a role that may or may not be related to their main job – usually because they need the extra income but sometimes to ‘feed’ other interests that their main job doesn’t fulfil.
Getting a second job can be a great (or necessary) thing to do, and while it’s not illegal to have a second job, there are several issues you need to consider, to avoid jeopardising your main source of income. Our ‘Freelancing On The Side’ episode of our helpful ‘Take The Leap’ series covers some of the important factors you’ll need to consider:
Due to the coronavirus pandemic, the government announced on 17th March 2020 (in the coronavirus draft legislation) that employees and workers will be able to take Emergency Volunteer Leave in blocks of two, three, of four weeks. This will be statutory unpaid leave with compensation for loss of earnings and expenses incurred at a flat rate, for those who volunteer through an appropriate authority.
The law states you may only work a certain number of hours each week (an average of 48 hours per week), although you can choose to Opt-Out of this working hours limit if you want to. If you will be working over 48 hours per week because of a second job then your Employers should ask you to sign an Opt-Out agreement and they should monitor the hours you work in a week.
If they feel that the long hours you work has an effect on your ability to do your main job (you arrive late, or tired and possibly more at risk of having an accident, leave early, aren’t working productively, have more sickness absence and so on) they may speak to you regarding your performance.
This will apply mostly to employees (it would be very unusual for a freelance contract to contain the clauses that we explain below).
Although you may think you can do what you like outside of your normal working hours this is not necessarily the case!
While employees do not have a legal obligation to disclose any other employment to their Employers, many Employers will restrict you from working elsewhere via a clause in your contract of employment. Such clauses are likely to exist to prevent you:
Doing anything that could cause a potential conflict of interest for your Employer (i.e. you shouldn’t work for a competitor or rival company or work for a company that is a client or supplier of your Employer)
Doing anything that could bring your Employer into disrepute (for example you have a job as a lap dancer while during the day you’re something more official!)
Being in breach of the Working Time Regulations (see above).
However, with or without these clauses, you will usually be required to obtain written permission from your employer before you engage in any other type of paid or unpaid work outside of your normal working hours. Often this clause will also state that any failure on your part to declare any such activities may make you subject to disciplinary proceedings.
In addition, the clause may state that the Employer can withdraw their permission if your work starts to suffer in any way (see above) where there is no other explanation for this. This clause, if it exists in your contract, is binding on you, i.e. you must follow it otherwise you will be in breach of contract. If this happens you may give your Employer grounds to make an application for an injunction to prevent the continuing breach or give your Employer grounds to dismiss you fairly if you refuse to give up the other work.
Therefore be open with your employer about your other life; they may see it as a good way for you to develop other skills and keep you motivated, and have no problem with your second job at all.
If your employer believes you are working for another business during your working time with this (and perhaps using their equipment and resources to do so) this could have serious consequences. Most contracts will have an express clause requiring you, the employee, to devote your whole time and attention to the Employers business during your normal working hours. Your Employer is likely to instigate disciplinary action in these circumstances. If such an express term does not exist in the contract then the employee is still likely to be in breach of the implied duty of fidelity (duty of good faith).
It’s not unknown for employees on long-term sick leave try to supplement their sick pay with additional income from another job. Employers may naturally assume they can discipline or dismiss an employee who does this on the basis of the employee’s dishonesty. However, your employer will need to determine whether, that while your illness may have a genuine effect on the job you do for them it may not prevent you from performing other, different, work.
The taxman will still want to take his share of your pay from your second job through tax and National Insurance contributions, although there is no separate (or higher) tax rate for a second job.
If your second job is on a PAYE basis (whether you are employed directly or you are an agency worker) you won’t be able to give your 2nd Employer a P45 when you start your second job so you’ll need to fill in a P46. Your employers will see you’ve declared that you have another job, but you don’t have to tell them how much you’re earning.
Your yearly tax-free personal allowance will usually only be used against your main job and tax will be deducted accordingly, although you can ask HMRC to split the allowance between jobs. You will get a tax code for each job and it’s usual to have a BR (basic rate) tax code for your second job.
It’s important to check that the right tax code is being used for each, so have a look at your payslips if you have multiple tax codes, or think you are paying too much tax, and contact HMRC to check you understand what’s going on and that you’re being taxed correctly. You may also find you may have to fill in an annual Self-Assessment tax return.
Those receiving Child Tax Credits or Working Tax Credits should also consider their situation carefully before taking on a second job. Tax credits are calculated on your estimated income at the start of the year and the extra income from a second job will reduce your future entitlement.
Also, you need to consider the tax earnings thresholds (you can check these in our article “Tax rates and thresholds“. If your total income goes over one of the thresholds you may pay more tax than you expect, leading to a nasty surprise at Self Assessment time.
If your second job is on a Freelance self-employed (non-PAYE) basis then you will need to tell the HMRC this, so your freelance income is accounted for and it is likely you will be asked to complete an annual Self-Assessment tax return. You can find out more in our article Freelancing on the side – what tax do I pay?
If you are an Employer and need ongoing professional help with any staff/freelance issues then talk to Lesley at The HR Kiosk – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.
Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.
Use our Take-Home Pay Calculator to work out your true earnings and see if you could save money with a different company set up.
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