Outside employment: Overview, definition, and example
What is outside employment?
Outside employment refers to a situation where an employee takes on additional work with another employer or engages in self-employment while still being employed by their primary employer. Some companies allow outside employment as long as it does not interfere with job performance, create conflicts of interest, or violate company policies.
For example, a full-time marketing manager at a corporation may take on freelance graphic design projects outside of work hours, provided that it does not affect their primary job responsibilities.
Why is outside employment important?
Outside employment is important because it can impact an employee’s performance, loyalty, and compliance with confidentiality or non-compete obligations. Employers may restrict or regulate outside employment to ensure that employees remain focused on their primary job, do not misuse company resources, and avoid conflicts of interest.
For businesses, having a clearly defined outside employment policy helps protect intellectual property, prevent divided loyalties, and ensure compliance with industry regulations. This is particularly relevant in finance, healthcare, and technology sectors, where outside work could create competitive or ethical concerns.
Understanding outside employment through an example
A financial analyst working at a bank wants to take on part-time consulting work for a private investment firm. However, their employment contract includes an outside employment clause that prohibits working for direct competitors or businesses in the same industry. If they proceed without employer approval, they could be in breach of their contract.
In another case, a software engineer at a tech company decides to develop a mobile app in their free time. Their employment agreement allows outside employment but requires disclosure to ensure that the new project does not compete with the company’s business.
Example of an outside employment clause
Here’s how an outside employment clause might appear in a contract:
“The Employee shall not engage in outside employment or business activities that interfere with their duties under this Agreement or create a conflict of interest. Any outside employment must be disclosed to and approved by the Employer in writing. Failure to comply with this provision may result in disciplinary action, including termination.”
Conclusion
Outside employment allows employees to take on additional work while maintaining their primary job, but it must be managed to prevent conflicts of interest, reduced job performance, and violations of company policies. A well-drafted outside employment clause ensures clarity, protects employer interests, and provides guidelines for employees seeking additional work opportunities.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.