Can You Work Another Job While On Annual Leave In The UK?

If you run a small business, annual leave isn’t just a “nice to have” – it’s a legal right for your staff, and it’s part of how you keep your team rested, productive, and safe at work.

But what happens if an employee tells you they’re taking annual leave… and then you find out they’ve been working somewhere else during that time?

This question comes up more often than you’d expect, especially with side hustles, gig work, seasonal roles, and employees juggling more than one employer. And it can feel tricky because you don’t want to overstep – but you also need to protect your business from fatigue risks, conflicts of interest, and confidentiality issues.

In this guide we’ll walk through what UK employers need to know about whether you can work another job while on annual leave in the UK, what you can (and can’t) restrict, and how to set clear rules from day one.

Is It Legal For An Employee To Work Another Job While On Annual Leave In The UK?

In many cases, yes – it can be legal for an employee to work another job while on annual leave in the UK.

There’s no single rule in UK law that automatically bans it. Annual leave is time away from their job with you, but it doesn’t always mean they must be “resting” in the everyday sense.

That said, whether it’s acceptable (and what you can do about it) depends on a few key factors:

• What their contract says (for example, exclusivity, conflict-of-interest, and outside work clauses).
• Working time and rest requirements (fatigue is a real health and safety issue, especially in physically demanding roles).
• Whether the second job competes with you or creates a conflict.
• Whether it risks confidentiality or misuse of your business information.
• Whether it affects their performance when they return to work.

So while an employee may be able to work another job during annual leave, it’s not always “fine” from an employer risk perspective.

As a small business, your goal is to manage this in a fair and consistent way – not through assumptions or ad-hoc decisions.

What Does The Employment Contract Say About Second Jobs And Annual Leave?

If you want clarity, start with the paperwork. Your Employment Contract should set expectations about whether employees can take on additional work, and what approvals (if any) they need.

Common approaches include:

1) “You Must Tell Us” Clauses (Disclosure Clauses)

These don’t ban a second job outright, but they require employees to disclose other work. This helps you assess conflicts of interest, working time limits, and reputational risks.

For example, you might require disclosure where the outside work:

• is for a competitor or a supplier/customer of yours
• could impact working hours, attendance, or performance
• involves similar duties (creating IP/confidentiality issues)

2) “No Conflict” Clauses

This is usually a reasonable middle ground for SMEs. You’re not trying to control what people do in their personal time – you’re setting a clear boundary that your business must not be put at risk.

A conflict might include:

• working for a competitor (even casually)
• soliciting your customers or staff
• using your systems, tools, or time to support their other role

3) Exclusivity Clauses (Be Careful)

Some employers include clauses saying an employee can’t work anywhere else at all. These can be lawful in some circumstances, but they can also be risky if they’re overly broad or unnecessary for the role.

You’ll want to consider whether an exclusivity restriction is genuinely needed to protect legitimate business interests (like confidentiality or client relationships) and whether it’s proportionate.

Also note that exclusivity clauses are prohibited for some workers – in particular, you generally can’t stop zero-hours contract workers (and certain low-hours arrangements captured by the legislation) from working for another employer.

Where restrictions go further – particularly around competition – it may be more appropriate to use carefully drafted restrictive covenants within the employment contract. Any non-compete style restriction is only enforceable if it goes no further than reasonably necessary to protect legitimate business interests, so it needs to be tailored to the role and the risk.

4) Policies In A Staff Handbook

Many businesses set the rules in a policy rather than trying to squeeze everything into a short contract.

A well-drafted Staff Handbook can cover practical expectations around:

• outside work approvals
• conflicts of interest
• confidential information
• social media conduct
• fatigue and safety reporting

The big advantage is that policies can be easier to update as your business grows (as long as you implement changes properly and fairly).

A Quick Practical Point: What If The Contract Says Nothing?

If your contract is silent, you may still have some protection through implied duties (for example, not acting against the employer’s interests). But it’s much harder to manage disputes without clear written terms.

This is where problems often start: one manager says “it’s fine”, another manager later says “it’s misconduct”. Over time, informal practices can become difficult to unwind – and in some cases, workplace norms can start to look like a contractual expectation through custom and practice.

Getting your wording right early can save a lot of stress later.

Working Time, Rest And Health & Safety: The Risk Many Employers Miss

Even if you don’t mind an employee working during annual leave, you still need to think about fatigue.

UK employers have health and safety duties, and tired staff can create real risks – not only to themselves, but to colleagues, customers, and the public (especially in driving roles, machinery work, care settings, hospitality kitchens, and construction).

Why Working Time Rules Still Matter

The Working Time Regulations 1998 set rules around maximum weekly working hours and minimum rest. This is one of the first legal frameworks to check if you’re dealing with an employee working multiple jobs.

In many cases, the headline rule is an average 48-hour working week (usually averaged over 17 weeks), unless the worker has opted out.

However, the position can be more complex in practice. Working time limits and rest entitlements can depend on the type of work, the contractual arrangements, and whether a valid opt-out applies. Where someone has multiple jobs, an employer may not have full visibility of the total hours worked elsewhere – but fatigue and safety risks can still land back on your doorstep.

But here’s the practical issue for small businesses:

• You may not know the hours they’re doing elsewhere.
• The employee may not be tracking it accurately.
• If fatigue leads to accidents or performance issues, you may still be pulled into the consequences.

It’s worth having a clear process and wording around working time and outside work, and knowing what to do if you suspect excessive hours. If you want a plain-English refresher, this guide on Working Time Regulations is a useful starting point.

Does It Matter That It’s Annual Leave?

It can. Annual leave is intended to provide rest and recovery. If an employee uses that time to do heavy work elsewhere, they might return exhausted, which can affect:

• performance and productivity
• attendance (more sick days after leave can be a red flag)
• workplace safety
• customer service

This doesn’t automatically mean they’ve done something “wrong”, but it does mean you should treat outside work as a business risk issue – particularly where roles involve safety-critical tasks.

Practical Employer Tip: Build A Fatigue Check Into Your Return-To-Work Process

You don’t need to interrogate employees about their holidays. But you can create a culture where staff feel safe raising concerns about tiredness, and managers know when to adjust workloads or monitor performance after leave.

Where you suspect excessive working hours, your next steps should be proportionate and evidence-based – not based on gossip.

Conflicts Of Interest, Confidentiality And IP: Where Second Jobs Become A Real Problem

For many SMEs, the biggest concern isn’t that a team member is “busy” during annual leave – it’s that they might be working for a competitor, using your information, or damaging your brand.

Conflict Of Interest: The Big One

A conflict of interest can arise if an employee’s second job could compromise their loyalty, judgement, or decision-making at work.

Common SME examples include:

• A salon employee doing mobile appointments on the side and targeting your clients.
• A marketing employee freelancing for a competitor while on leave.
• A manager working for a supplier and influencing purchasing decisions.

The issue isn’t that people want extra income – it’s that your business relationships, pricing, customer lists, and reputation can be affected.

Confidentiality: “They Didn’t Mean To” Still Causes Damage

Even well-meaning staff can accidentally disclose confidential information when they’re switching between workplaces.

Confidential information could include:

• customer lists and contact details
• pricing and quotes
• business plans, product roadmaps, supplier terms
• internal processes and training materials

If you suspect a leak, the question quickly becomes: what policies and contractual protections do you have in place? This is why many employers include clear confidentiality clauses and reinforce them with training and policies. The risks of mishandling this can be significant – this overview on confidentiality breaches is a helpful reference point.

Intellectual Property: Who Owns What They Create On “Holiday”?

IP issues can creep in where employees create work during annual leave that overlaps with what they do for you.

For example, if your employee is a designer, developer, content creator, or engineer, and they build something during annual leave for another role (or their own side business), you may need to consider:

• whether they used your tools, templates, systems, or know-how
• whether the work is derived from your confidential information
• whether their employment contract assigns IP created “in the course of employment” (and what that means in practice)

This is a grey area that can become contentious quickly, so it’s worth getting tailored legal advice if you think the lines are being blurred.

What Can Employers Do In Practice If Staff Work Another Job While On Annual Leave?

If you discover (or suspect) an employee is working another job while on annual leave, you’ll usually want to avoid knee-jerk reactions.

A fair, consistent process matters – particularly if you later need to take formal action.

Step 1: Check Your Contract And Policies First

Before you speak to the employee, confirm what your documents actually say. Look for:

• outside work / secondary employment clauses
• conflict-of-interest wording
• confidentiality and IP provisions
• working time and fatigue obligations
• any requirement to request approval

If your documentation is unclear or outdated, it’s a good sign your business would benefit from updating your Employment Contract templates and ensuring policies are aligned with how you operate in real life.

Step 2: Separate “Outside Work” From “Misconduct”

Working elsewhere during annual leave isn’t automatically misconduct.

But it might become a disciplinary issue where, for example:

• they breached a clear contractual term (e.g. working for a competitor without permission)
• they misused confidential information
• their outside work creates safety risks or leads to performance issues
• they were dishonest when asked (dishonesty often escalates the issue)

If you treat every situation as “gross misconduct”, you risk overreaching. A measured, fact-based approach is usually safer.

Step 3: Have A Calm, Documented Conversation

In many cases, the best first step is an informal chat. Keep it practical and focused on business impact. For example:

• Are they working elsewhere?
• Is the other work related to your industry or customer base?
• What hours are they doing in total?
• Is there any impact on rest, safety, or performance?

If the role raises conflict concerns, you can explain why and ask them to stop or to restructure the arrangement (for example, not working for a competitor, or not targeting your clients).

Step 4: Consider Reasonable Management Options

Depending on what you find, options might include:

• Approval with boundaries (e.g. permitted outside work as long as it doesn’t overlap with your sector).
• Requiring disclosure of hours to manage fatigue risk and compliance with working time rules.
• Updating their duties if there’s a real fatigue or safety concern.
• Formal warning or disciplinary action if there’s a clear breach of contract or policy.
• Legal enforcement in serious cases (for example, misuse of confidential information or soliciting your clients).

What’s “reasonable” depends heavily on the employee’s role, seniority, and your industry – which is why getting advice early is often the most cost-effective move.

Step 5: Prevent The Issue With Clear Written Rules From Day One

If you want to reduce headaches in the future, it helps to treat this as a “legal foundations” issue, not just an HR issue.

For many SMEs, a strong approach looks like:

• Contract clause requiring disclosure of secondary work.
• Clear conflict-of-interest and confidentiality provisions.
• A policy in your handbook explaining approvals and consequences.
• Manager training so responses are consistent (and non-discriminatory).

This is also where you should think about consistency. If you allow one employee to work elsewhere during leave, but discipline another for the same thing, you may create employee relations issues (and potentially legal risk) unless you can clearly justify the difference.

Key Takeaways

• In many cases, it can be legal for an employee to work another job while on annual leave in the UK, but whether it’s acceptable depends on the specific circumstances.
• As an employer, your starting point should be the employment contract and your workplace policies, especially clauses on outside work, conflicts of interest, and confidentiality.
• Working time rules and fatigue risk can matter even if the work is done during annual leave, particularly in safety-critical roles (and the position can be more complex where workers have multiple jobs and/or opt-outs).
• Second jobs can become a serious issue where they involve competition, conflicts of interest, misuse of confidential information, or IP concerns.
• A measured approach usually works best: check the facts, document discussions, and respond proportionately based on your contract and the business impact.
• If your documents are unclear, updating your Employment Contract and Staff Handbook can help you stay consistent and protected from day one.

This article is general information only and not legal advice. For advice on your specific situation, get in touch with a lawyer.

If you would like help reviewing your employment contracts, drafting outside work clauses, or managing a tricky employee situation, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.