Can An Employee Work For A Competitor On Weekends?

Finding out an employee is working for a competitor on weekends can feel unsettling. You might be worried about customer lists, pricing, staff morale, or whether they will be too tired to do their job properly on Monday, including under any fatigue management rules.

The good news is that this doesn't have to turn into a crisis. In Australia, the answer usually depends on what their employment contract says, whether there's a real conflict of interest, and how you handle the issue from here.

You generally can't control everything an employee does outside work. But you can protect your business from genuine conflicts, misuse of confidential information, and conduct that damages your business.

Can An Employee Work For A Competitor On Weekends?

Yes, an employee can work for a competitor on weekends unless their contract, workplace policy, or the circumstances make it a genuine problem for your business.

Australian law doesn't automatically ban employees from having a second job. This is often called moonlighting. It can be perfectly fine where the second job is unrelated, doesn't affect their work for you, and doesn't involve any misuse of your confidential information.

However, you may have stronger grounds to act if the side job creates a real business risk, such as:

• the employee is working for a direct competitor in the same local market
• they're dealing with the same customers, suppliers or referral partners
• they have access to your pricing, margins, client lists, rosters, recipes, processes or sales pipeline
• their outside work is affecting attendance, fatigue, safety or performance
• they're using your equipment, systems, uniforms or social media content for the other business
• they're actively diverting work away from your business

The key is to focus on the risk, not just the label of competitor. A blanket reaction like, you aren't allowed to work anywhere else, can be too broad if there's no genuine connection to your business interests.

For example, if you run a cafe in Brisbane and your barista works one shift on Sunday at a cafe across the road, that may be a real conflict. If the same barista tutors high school maths on Sunday afternoon, that's much less likely to be a problem.

What Counts As A Conflict Of Interest In A Second Job?

A conflict of interest usually exists where the employee's personal interests or outside work could interfere with their duties to your business.

It doesn't always have to be proven misconduct. A serious risk can be enough, especially if the employee is in a senior role, has customer relationships, or handles sensitive commercial information.

Common Examples Of Conflicts

Some common second job conflict of interest examples include:

• Client diversion: an employee tells your customers to book through the competitor instead
• Pricing misuse: they use your quotes or supplier rates to help the competitor undercut you
• Supplier overlap: they negotiate with the same suppliers for another business while knowing your buying terms
• Brand confusion: customers think the side business is connected with your business
• Fatigue and safety: the second job means the employee is too tired to safely perform their role
• Time theft: they work on the other job during paid work time

Say Mike runs a cleaning business in Melbourne with 12 staff. One of his supervisors, Jenna, works 38 ordinary hours per week for Mike and has access to client site lists, staff rosters and quote templates. Mike discovers Jenna is doing 8 hours every Saturday for a cleaning competitor that services some of the same suburbs.

The issue isn't only the 8 weekend hours. The bigger risk is that Jenna can see Mike's client details, pricing structure and staffing model. If Jenna's contract includes confidentiality and conflict obligations, Mike has a much clearer basis to ask questions and manage the risk.

Can Your Employment Contract Stop An Employee From Working For A Competitor?

Yes, your employment contract can restrict an employee from working for a competitor, but the restriction needs to be reasonable and connected to a legitimate business interest.

A well drafted contract shouldn't just say, you can't work anywhere else, with no explanation. That may be too broad, especially for part-time or casual employees who may need more than one job.

Instead, your contract should clearly cover things like:

• the employee must disclose any outside work that may create a conflict of interest
• they must get written approval before working for a competitor or customer
• they must not use your confidential information outside their role
• they must not solicit your clients, staff or suppliers for another business
• they must not perform outside work during their paid hours
• you can withdraw approval if the outside work starts causing a genuine problem

Under the Fair Work Act 2009, you also need to be careful that any direction you give is lawful and reasonable. A direction to stop working for a direct competitor may be reasonable where there's a real conflict. A direction to stop all weekend work, no matter what it is, may be harder to justify.

The contract should also work with any modern award, enterprise agreement, the National Employment Standards and workplace health and safety obligations. For example, a full-time employee's ordinary hours are generally 38 hours per week under the National Employment Standards, plus reasonable additional hours. Even though their second job is with someone else, fatigue can still become a work health and safety issue for your workplace.

Do Confidentiality Obligations Still Apply Outside Work Hours?

Yes, confidentiality obligations can apply outside work hours and after employment ends if they're properly drafted and cover information that's genuinely confidential.

This is often the strongest protection you have when an employee is working for a competitor. Even if you can't fairly stop every second job, you can require employees not to misuse your business information.

Confidential information can include:

• customer and lead lists
• supplier prices and margin information
• marketing plans and sales scripts
• software code, product roadmaps or technical processes
• recipes, formulas, procedures or training materials
• unreleased designs, campaigns or proposals
• internal financial information

Copyright and trade mark issues can also come up. For example, if an employee copies your website copy, photos, training manuals, packaging designs or branded content for the competitor, that may create intellectual property issues as well as an employment issue.

Make sure your employment contracts deal with intellectual property ownership, especially if the employee creates work as part of their role. For some businesses, this is just as important as the conflict clause itself.

Confidentiality terms work best when they're specific. A clause that treats everything the employee has ever seen as secret may be difficult to enforce in practice. A tailored clause that names the categories of information your business actually needs to protect is usually more useful.

Are Restraint Clauses Enforceable Against Employees In Australia?

It depends. Restraint clauses can be enforceable in Australia, but only if they go no further than reasonably necessary to protect your legitimate business interests.

A restraint clause is different from a confidentiality clause. Confidentiality protects information. A restraint tries to limit what the employee can do, often during or after employment.

Common restraint clauses include:

• Non-compete restraints: stopping the employee from working for a competitor for a period of time
• Non-solicitation restraints: stopping the employee from approaching your clients, customers, suppliers or staff
• Non-dealing restraints: stopping the employee from dealing with certain clients, even if the client approaches them first

Courts are cautious with restraints because employees should generally be able to earn a living. A restraint is more likely to be reasonable where the employee is senior, has strong client relationships, or has access to sensitive information. It's less likely to be reasonable for a junior employee with no real influence or confidential knowledge.

The restraint should also be limited by:

• time: for example, a shorter period is usually easier to justify than a long one
• area: for example, the suburbs, region or market where your business actually operates
• activities: for example, the specific competing work or client contact you need to restrict

Some employment contracts use a cascading restraint clause, with different time periods and areas. This can help a court read down the restraint to a reasonable level if a dispute arises. But this needs careful drafting. A copied template can easily overreach or miss the real risk in your business.

What Should You Do If You Discover The Side Job?

You should pause, gather the facts, check the contract and speak to the employee before taking any disciplinary action.

It can be tempting to react straight away, especially if the competitor is close by. But if you move too quickly, you may create unnecessary unfair dismissal, general protections or workplace relations risks under the Fair Work Act 2009.

A Practical Step-By-Step Process

1. Check the employment contract: look for outside work, conflict of interest, confidentiality, intellectual property and restraint clauses.
2. Check any policies: see whether you have a conflict of interest policy, code of conduct, IT policy or social media policy.
3. Record what you know: keep screenshots, customer complaints, roster details, emails or any evidence of overlap.
4. Identify the actual risk: be clear whether the issue is confidentiality, client diversion, fatigue, performance, safety or reputational damage.
5. Meet with the employee: explain your concerns and give them a fair chance to respond.
6. Consider a proportionate outcome: this could be written approval with conditions, a direction to stop certain conduct, a warning, or further action if the conduct is serious.
7. Get advice before dismissal: dismissal may be appropriate in some cases, but it should be handled carefully and based on evidence.

In Mike's cleaning business example, Mike shouldn't jump straight to dismissal just because Jenna works 8 hours on Saturdays. He should first check Jenna's contract, confirm whether the competitor services the same clients or suburbs, and ask whether Jenna has used any client lists or quote templates. If there's no misuse, Mike might approve the weekend work on strict conditions. If there's evidence Jenna has approached Mike's clients, the response may be much more serious.

What Should You Put In A Conflict Of Interest Policy?

You should put clear disclosure, approval and confidentiality rules in your conflict of interest policy, written in a way your team can actually understand.

Your policy should support your employment contract. The contract creates the legal obligations, while the policy gives practical examples and day-to-day rules.

Here is a simple outline you can use as a starting point. A lawyer should tailor it before you rely on it, because the right wording depends on your industry, roles and risk profile.

1. Purpose: explain that the policy protects the business, customers, staff and confidential information.
2. Who It Applies To: state whether it applies to full-time, part-time, casual, fixed-term, contractor and work experience arrangements.
3. What A Conflict Means: define actual, potential and perceived conflicts in plain English.
4. Outside Work Rules: set out when employees must disclose or seek approval for a second job, business or freelance work.
5. Competitor Work: explain the types of competitor work that may be refused or approved with conditions.
6. Confidential Information: list the information employees must not use or share outside work.
7. Use Of Business Property: cover laptops, phones, accounts, uniforms, vehicles, documents and software.
8. Approval Process: say who decides, what information is needed, and that approval should be in writing.
9. Ongoing Disclosure: require employees to update you if the outside work changes.
10. Consequences: explain that breaches may lead to withdrawal of approval, disciplinary action or termination in serious cases.

A good policy shouldn't feel like a trap. It should help employees raise issues early, before a small side job becomes a messy conflict.

Key Takeaways

• An employee working for a competitor in Australia isn't automatically unlawful, but it can be a serious issue if there's a real conflict.
• Your strongest protections are usually a tailored employment contract, a clear conflict of interest policy, confidentiality clauses and practical approval processes.
• Restraint clauses can help, but they need to be reasonable in time, area and scope to have a better chance of being enforceable.
• If you discover a side job, gather facts and speak to the employee before taking disciplinary action.
• Focus on the actual business risk, such as client diversion, confidential information, fatigue, safety or performance.
• Templates can miss the details that matter, especially if your staff have access to clients, pricing, IP or commercially sensitive information.

If you'd like help with your employment contracts, conflict of interest policy, confidentiality clauses or restraint wording, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.