Is Moonlighting Grounds for Termination?
The short answer is that it might be but as like many legal questions it can be highly dependent on the facts. Recently, in Cavanagh v Canada Revenue Agency, an adjudicator weighed in on that very question.
The former employee was a business valuator with Canada Revenue Agency (CRA). CRA's Code of Employee Conduct did not prohibit moonlighting unless a real or potential conflict of interest existed. In such a situation, the employee would be required to modify or cease the "outside activities". The employee engaged in outside business valuations and went so far as to set up a corporate entity through which he could provide these services. He took the position that no actual or potential conflict of interest existed because he was not providing tax advice as it related to the valuations.
The adjudicator rejected that argument ruling that CRA properly evaluated the potential and apparent conflict of interest and acted properly in terminating the employment.
The Lessons. There are a number of lessons for both employers and employees based on this decision.
Lessons for Employers: Most moonlighting occurs so that the employee can supplement income which may be a valid concern based on existing factors such as salary, number of children (or support obligations) or personal issues such as gambling or addiction.
Restrictions on moonlighting could be perceived as discriminatory if they can be linked to those issues. It is prudent for employers to draft employment policy which restricts (not prohibits) moonlighting to address valid and specific employer concerns such as image, reputation, marketing, sales, work resources, or job performance. The policy should be consistently implemented in such a way that the employee can gain written approval prior to engaging in the outside activities.
Employers should document all communication related to outside employment and provide clear directions, (being sure that the person providing the directions has the authority to do so). Finally, any breaches of the policy should be followed by progressive discipline leading to termination.
For employees it is prudent to obtain permission for outside activities that may provide a conflict of interest. Clearly communicate what activity you intend to engage in and include information related to how you intend to market and promote that activity. Additionally, keep clear records of communication between yourself and the employer.
Since this is an area that is highly dependent on the facts, it is prudent to seek legal counsel.
Finally, the decision of Cananagh v Canada Revenue Agency is likely to undergo Judicial Review.
The content and the opinions expressed here is informational purposes only and does not constitute legal or professional advice. Nor does reading or commenting on it create a lawyer/client relationship with the author. I encourage you to contact me directly at adrianlawoffice@gmail.com if you have specific legal questions or concerns.
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