The law recognises the mutual trust and confidential relationship or fiduciary relationship between the employer and employee wherein the employee is expected to perform his duty duly and faithfully and failure to do so will cause a possible termination of the employee by the employer. Logically, this activity of side income is a private act and just like any other private acts, as long as it doesn’t affect the Company or (in legal terms; as long as the mutual trust and confidential relationship between an employee and employer is maintained and sustained throughout the whole employment), then the Company shall have no power to control over employees in such matters.
Regardless of the abovementioned concerns, it is very common for a Company to have a written policy on moonlighting procedures or maybe just a single clause in the handbook on conflict of interest. Either way, these written clauses can be very helpful in the future, in case things are out of control. You can never stop them from involving in moonlighting but what you can do as an employer is to control and regulate. Therefore, implement policies on moonlighting where you highlight the need to have an approval from the Management before engagement of side income or employment in any other form of business activities.
If you want to impose this side income policy on employees, then it is better to hit the nail on the head by making it clear on the do’s and the don’ts in the written policy such as imposing the need to have an approval first regardless of whether the act (engagement of side income) affects the Company’s interest or otherwise or when is the exact time that you allow them to conduct the side income activity – e.g. during or after office hours?
These are meticulous considerations for guidelines of side income policy that you may need to think of, before communicating it to the employees at large. In case of uncertainties, always welcome inquiries from your employees instead of letting them hear it on the grapevine. The aim of this policy is to let your employees know that you are fine (or otherwise) with this new trend in working environment, and you encourage them to seek a declaration of approval before proceeding with the additional side income. Above all that, ensure that there is constant awareness of your existing policy and update it if necessary.
To have side or additional income is not wrong NEITHER right since it depends on the nature of the main job as well to determine this question, but in the long run, the written policies are beneficial for you and your employees.