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Secondary employment guide for businesses
Increasingly, it’s becoming common for people to take on second jobs. This may be to boost their income, explore a passion, or simply to build new skills. Whatever their reasoning, as a business it’s important to know what your responsibilities are when one of your employees decides to do this.
It’s not just payroll changes and contract considerations to think about - there are other aspects, such as Working Time Regulations and National Insurance Contributions (NICs), when managing secondary employment.
This guide, compiled by QuickBooks’ payroll experts, breaks down what you need to know, including how tax and National Insurance work, what employment contracts may say, and how to stay compliant with time regulations.
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How tax works for employees with a second job
Tax can change for employees when they get a second job, but this doesn’t mean it necessarily gets more complicated. If you’re an employer, you need to know how HMRC handles income across multiple roles in order to stay compliant.
Normally, employees will continue to have tax deducted through PAYE. Each person is entitled to one Personal Allowance, which is the amount you can earn before paying income tax, but this allowance can be split between multiple employments. How this is allocated will affect how much tax is deducted from each job.
The second job is usually taxed at the basic rate (20%) from the first pound earned, unless the total income pushes the employee into a higher tax bracket.
To help HMRC apply the correct tax code, employees should fill out a starter checklist (previously known as a P46) when starting a second role. From there, HMRC assigns the appropriate code depending on the individual’s overall income.
For a second job, the following tax codes may be assigned:
BR (basic rate)
D0 (higher rate)
D1 (additional rate)
If your employee is self-employed in their second role, things work slightly differently. Instead of PAYE, they may need to register for Self Assessment and file a tax return to declare income and pay tax themselves. This is something they manage directly with HMRC, outside of your payroll.
For a deeper dive into staying compliant, take a look at our guide on what payroll compliance involves.
How National Insurance Contributions work for secondary employment
In cases of secondary employment, National Insurance is calculated separately for each job. If an employee earns above the weekly threshold (currently £242) in both roles, they’ll pay Class 1 NICs on each salary individually.
Usually, this means each employer only deducts NICs based on what they pay, so there’s no need to combine earnings unless the jobs are with the same employer or linked businesses. If that’s the case, contributions may need to be calculated across both roles.
There is a chance that employees may overpay NICs if they have multiple jobs, but they can request a refund from HMRC at the end of the tax year.
As an employer, your role is to apply the correct NIC category and confirm whether your business is the employee’s main or secondary employer. This is especially true if there’s a link to another company they work for.
Employment contract limitations explained
At the point where an employee is exploring a secondary employment, employers need to check what the existing employment contract allows. This is because some contracts include clauses or restrictions that limit the opportunities available.
Often, these clauses exist to prevent conflicts of interest or breaches of confidentiality.
These clauses may include:
Non-compete clauses – these prevent employees from working for competitors or offering similar services that could harm your business.
Conflict of interest clauses – these ensure employees don’t take on roles that interfere with their duties or create a perceived bias.
Exclusivity clauses – in rare cases, a contract may state the employee must not take on other paid work at all.
Working hours clauses – employees may be contractually obliged to notify you if additional work could affect their ability to meet contracted hours.
Working Time Regulations (WTR)
It’s also important to consider how secondary employment fits in with affects total working hours under the UK’s Working Time Regulations.
These regulations dictate that employees cannot be required to work more than an average of 48 hours per week across all jobs unless they’ve voluntarily signed an opt-out agreement. This applies to their combined working hours across both roles.
Even if your employee is outside your business, you could be in breach of employment law if they haven’t signed an opt-out and their combined hours exceed the limit.
As mentioned above, employers may consider including a clause in an employment contract that requires employees to inform you if they plan to take on additional work. This helps you manage risks around these legal obligations.
What to do if an employee gets a second job
So what can employers do to protect their business and their employee in cases of secondary employment.
Some of the key steps they can take include establishing the exact details of the employment, exploring what the existing employee contracts say, and making corresponding changes to their payroll systems.
Let’s explore these steps in more detail.
Establish the details
The first thing for employers to do is have an open conversation with your employee. Ask them to confirm the nature of the second job, what their expected hours are, and whether it could impact their current role.
This will help you assess any potential conflicts or breaches of contract, and it will help in assuring your employee that you are being considerate of their needs.
Review the contract of employment
The next step is to review any existing employment contracts for any clauses or restrictions that will hinder the secondary employment routes available.
In particular, look out for clauses related to exclusivity, non-compete, or working hours obligations as referenced above. If their new role raises concerns, you may need to revisit the contract or seek legal advice.
Make payroll changes accordingly
If your employee now has multiple PAYE roles, you may need to apply a different tax code. Should this be the case, you’ll need to make sure the correct National Insurance category is used, and confirm whether your business is their primary or secondary employer.
Want help managing PAYE and NICs? Explore QuickBooks Payroll. Our award-winning software automates pay runs and pension submissions, making it easier than ever to help you stay compliant and keep your employees happy.
Regularly assess the employee’s situation
The situation of your employee can change at the drop of a hat. With this in mind, make sure you keep an eye on their performance, availability, and wellbeing through regular check-ins and communications.
This can help you spot if the second job is affecting their contracted role, especially if total working hours begin to push against the Working Time Regulations.
Final thoughts
Although choosing to explore secondary employment is a personal choice, there are potentially significant consequences for both employee and employer.
Secondary employment can impact payroll, employment contracts, and how your business meets its legal responsibilities. Employers have a duty to ensure compliance in these areas and to manage the practical implications.
However, with the right processes and tools in place, like QuickBooks Payroll, managing employees with second jobs doesn’t have to be complex. With features that enable easy automation, accurate tax calculations, and up-to-date compliance, our payroll software is designed to help you save time and reduce errors.
FAQs
Do employees need consent to get a second job?
Employees may need to gain consent for a second job, but this depends on their employment contract. Some contracts include exclusivity or conflict of interest clauses that may restrict outside work.
Even if consent isn’t legally required, it’s good practice for employees to inform their primary employer, especially if their second job could impact performance or breach terms of employment.
How will I know if my business is the employee’s primary or secondary employer?
Generally, the employer where the employee earns the highest income is considered the primary employer.
HMRC typically allocates the employee’s tax-free Personal Allowance to the primary role. This is made evident by the tax code that is provided. For example, a BR (basic rate) code usually means your business is the secondary employer.
Is it common for employees to get a second job?
Yes, it is common for employees to get a second job. With rising living costs and more flexible work arrangements, second jobs are becoming increasingly common in the UK.
Employees may take on extra work for financial reasons, to follow a passion, or to gain new experience. Regardless of the circumstances, employers should be prepared to handle this trend with clear policies and consistent communication.
The information on this website is provided free of charge and is intended to be helpful to a wide range of businesses. Because of its general nature the information cannot be taken as comprehensive and they do not constitute and should never be used as a substitute for legal, accounting, tax or professional advice. We cannot guarantee that the information applies to the individual circumstances of your business. Despite our best efforts it is possible that some information may be out of date. Any reliance you place on information found on this site or linked to on other websites will be at your own risk.
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