GUIDE

Side hustles: how to protect your job while building extra income

Grow London LocalMatching London small businesses to support

Posted: Thu 26th Feb 2026

Side hustles are having a moment. A bit of extra cash, a creative outlet. A business idea that might one day replace the day job.

But plenty of people jump in without checking the basics, then get blindsided by an awkward HR conversation, a contract clause they didn't spot or a client conflict they didn't think counted.

Fortunately, you can avoid most problems if you read what you've signed and set a few boundaries early. This guide takes you through the practical side:

What to look for in your employment contract.
When you should tell your employer.
What can go wrong if you don't.
How to run a side hustle without burning yourself out.

Quick note: this is general guidance, not legal advice. If your situation is sensitive (if you're in a senior role, for example, or work in a regulated industry), it's worth getting tailored advice.

1. The rise of side hustles in the UK

Lots of people now have more than one income stream.

Some do freelance work in the evenings. Some sell products online. Others build a small service business at weekends.

Employers aren't automatically against this. In fact, many are fine with it – as long as it doesn't affect your performance, create conflicts or expose the company to risk.

From an employer's point of view, the concerns tend to be predictable:

Time and energy: are you still able to do your job properly?
Conflicts of interest: are you competing with them or working with a competitor?
Confidentiality: could you leak sensitive information (even by accident)?
Reputation: could your side hustle reflect badly on the business?
Ownership/intellectual property (IP): are you creating something your employer could claim rights to?

If you understand those worries, it's much easier to steer clear of trouble.

2. Check your contract: the clauses that matter

Before you launch anything publicly, dig out your employment contract and any linked policies (like a staff handbook, code of conduct, IT policy and social media policy). You're looking for a few specific areas.

Exclusivity clauses (and "permission to work elsewhere")

An exclusivity clause is a contract term that restricts you from doing other paid work, or says you need your employer's consent first.

Sometimes it's blunt ("You must not undertake other employment.") and sometimes it's softer ("You must not undertake other work that may interfere with your duties."). Either way, take it seriously.

Even if the clause exists, it doesn't always mean "no side hustles ever". It may mean:

You need to ask for permission.
You must make sure the side hustle doesn't affect your role.
You can do it, but not in certain industries.

If you're on a zero-hours contract, there are special rules around exclusivity. The Acas website is a good starting point for checking your position.

Conflict of interest

A conflict of interest is when your personal interests could clash with your employer's interests.

This isn't only about launching a direct competitor. Conflicts can include:

Freelancing for a company that competes with your employer.
Selling services to your employer's clients or suppliers.
Using knowledge from your job to target customers unfairly.
Making business decisions at work that could benefit your side hustle.

Even if your side hustle feels unrelated, ask yourself:

Could someone reasonably perceive a conflict?
Would I feel comfortable if my manager saw my website and list of clients?

Confidentiality and data protection

Most contracts include confidentiality duties. That generally means not using or sharing information you've learned through your job.

It includes obvious things (pricing, client lists, product plans) and less obvious things (internal processes, commercial strategies, anything marked confidential, personal data and so on).

If your side hustle involves marketing, content or consultancy, be extra careful about examples and case studies. "I won't name the company" isn't always enough if the details make it easy to identify.

Intellectual property (IP): who owns what you create?

This is a big one for creatives, developers, designers and anyone building a product.

Intellectual property (IP) means creations of the mind – for example:

Software code.
Designs, branding and written content.
Inventions and tools.
Training materials and templates.

Many contracts say that anything you create in the course of your employment belongs to your employer.

Some go further and try to claim rights over things you create outside work, especially if it relates to the employer's business.

If your side hustle involves creating IP, check:

Do you have a clause about inventions or "works created"?
Does it mention work created "during employment" (broad) or "in the course of duties" (narrower)?
Does it say anything about using the company's equipment or time?

As a practical rule, don't build your side hustle on a work laptop, with work software licences or on work time. It muddies ownership and makes disputes far more likely.

Outside working hours and Working Time rules

If you're doing a second job, your total hours can matter.

The UK has Working Time Regulations that set limits and requirements around rest. Some employers ask you to disclose extra work for this reason alone – not to block you, but to keep to the law.

A woman works on a laptop at a kitchen table while a young child sits beside her, drawing in a notebook.

3. Do you need to tell your employer? Legal and ethical considerations

There isn't one universal rule that fits everyone. It depends on what your contract says, what you do and what your side hustle looks like.

That said, there are clear situations where telling your employer is the sensible (and often required) move.

You should think about informing your employer if:

Your contract says you must get permission to do other paid work.
Your side hustle is in the same sector or even loosely adjacent.
You'll work with clients/suppliers linked to your employer's world.
You're in a regulated profession (such as financial services, healthcare, legal, education or the public sector), which often have stricter policies.
There's any chance it could affect your working hours, rest or performance.
You plan to use your name publicly (especially on social media and/or LinkedIn).

You may not need to tell them if:

Your contract is silent, and the side hustle is clearly unrelated.
It's small, occasional and won't affect your work.
There's no conflict, no client overlap and no risk to your employer's reputation.

But even then, silence can be risky if your employer later argues you should have told them.

A good way to decide is to ask: if this became public tomorrow, would it be a problem? If the answer is "maybe", it's usually safer to let them know.

How to tell them (without making it weird)

Keep it simple and professional, as your aim is to provide reassurance. This is what employers typically want to hear:

It's outside working hours.
It won't affect your performance.
It doesn't compete or cause any conflict.
You won't use company resources or confidential information.
You're happy to agree boundaries (not working with certain clients, for example).

You're being proactive and responsible rather than apologetic.

4. Risks of not telling your employer – what could go wrong

People don't usually get into trouble because they have a side hustle. They get into trouble because it creates risk, and they didn't handle it openly.

Here's what can happen if you ignore your contract or keep things hidden.

Disciplinary action (and sometimes dismissal)

If your contract asks that you disclose or get permission for your side hustle, and you don't do it, you could be disciplined for:

Breach of contract.
Misconduct (especially if you were deceptive).
Bringing the employer into disrepute (in extreme cases).

Whether that leads to dismissal depends on the facts, your role and the employer's policies. But it's not a risk worth taking lightly.

Breach of confidentiality (even accidentally)

If you use inside knowledge to win work for your side hustle, or you refer to your employer's projects in marketing, you can land in serious trouble fast.

This includes sharing personal data. If your side hustle involves customer lists, marketing databases or any data handling, be careful. The legal and reputational stakes are high.

Conflict-of-interest claims

Even if you didn't mean to compete, your employer may see it that way – especially if clients overlap.

If you're in consultancy, recruitment, marketing, tech, finance or professional services, conflicts can pop up with surprising ease.

Intellectual property disputes

If your employer believes they own what you've built, it can turn into a messy dispute involving takedown requests, legal letters and a product you can't safely sell.

If you're building something valuable (such as an app, a course or a brand), it's worth being extra clean. That means:

Using separate devices and accounts.
Keeping written records of when and where you created the work.
Not using your employer's templates, code, designs or contacts.

Reputational damage

This cuts both ways: your employer's reputation and yours.

A side hustle that looks harmless to you might look unprofessional in your industry if it's poorly presented, overly controversial or clashes with your employer's values.

If your main job is part of your long-term career plan, protect it.

Young Asian female business owner in her home office, sitting at her desk in front of her laptop and writing on a tablet

5. Tax and insurance – the bits people forget

Side hustles feel casual at the start, but HMRC doesn't really do "casual".

Tax basics (in plain English)

If you're earning money outside PAYE (Pay As You Earn) employment, you may need to:

Register for Self Assessment (if your situation requires it).
Keep records of income and expenses.
Set aside money for tax (so it's not a nasty surprise).

Even small amounts might need reporting, depending on the type of income and your overall situation. The safest approach is to:

Track everything from day one (a simple spreadsheet is fine).
Keep receipts and invoices.
Check HMRC guidance on self-employment and "side income".

If in doubt, a short chat with an accountant can save you a lot of grief later.

National Insurance and VAT

Depending on your profit and turnover, you may need to think about:

National Insurance contributions (linked to profits made from your self-employment).
Registering for VAT (based on thresholds relating to taxable turnover).

Keep the rules in mind and check the current HMRC guidance when your side hustle starts growing.

Insurance: what cover might you need?

This depends on what you're doing, but common examples include:

Public liability insurance: if you work with the public.
Professional indemnity insurance: if you give advice or provide professional services (like consultancy, coaching or IT services, for example). It covers claims that your work caused financial loss.
Product liability insurance: if you sell physical products.
Business equipment cover: if you rely on kit (camera gear, tools or a laptop, for example).

Also check whether your home insurance needs updating if you run any part of the business from home.

6. Managing your time: balancing work and hustle without burning out

This is where good intentions go to die. A side hustle can be exciting – until you're replying to customers at midnight and dreading Monday.

Here are a few practical approaches that actually work:

Set a "container" for the side hustle

If your side hustle can expand endlessly, it will. Give it limits, such as:

Two evenings a week, not "whenever".
One weekend day a month, not "every weekend".
A fixed monthly revenue target, then stop.

Constraints are how you stay consistent.

Build a minimum viable routine

All you need is a schedule you can repeat easily. For example:

Monday: admin (invoices, emails) – 45 minutes.
Wednesday: delivery work – 90 minutes.
Saturday morning: marketing or stock – two hours.

If you can't sustain it for four weeks, it's too heavy.

Protect your recovery time

Burnout usually starts as "I'm just busy for a bit". Try:

One evening a week with no work (main job or side hustle).
One full day off every fortnight.
Phone notifications off after a certain time.

If your sleep goes, everything goes.

Don't use your employer's time (or tools)

This is both a legal risk and a cause of serious stress. Keep it clean by:

Using a separate laptop (if possible).
Using a separate email account and calendar.
Not taking side hustle calls during work hours.
Not storing side hustle files in work systems.

Be realistic about what "extra income" costs

Side hustles have hidden costs, like time, energy, social life and rest.

If you're building extra income because money is tight, focus on side work that pays reliably, doesn't require constant marketing and doesn't create conflict with your job.

Sometimes the best side hustle is the boring one that doesn't drain you.

7. Resources and next steps: where to get advice

If you want to follow up with more information, these are good starting points:

Acas: practical guidance on employment rights and workplace issues (including contract clauses like exclusivity).
GOV.UK: information on self-employment, Working Time rules and more.
HMRC: guidance on Self Assessment, self-employment guidance, record keeping, allowable expenses and tax on side income.

If you're unsure about a specific clause or a potential conflict, consider:

Speaking to HR (if you trust the relationship).
Getting advice from an employment solicitor.
Getting quick tax guidance from an accountant.

Conclusion

A side hustle can be a smart move – financially, professionally and personally.

But it isn't "just a bit of extra work" once it bumps into contracts, clients or company policies. Do the simple checks early:

Read your contract and policies.
Identify conflicts and risks around IP.
Decide whether to tell your employer (and, if you need to, do it cleanly).
Get tax and insurance basics in place.
Set boundaries so you don't burn out.

That way, you get the upside of extra income without the quiet anxiety of "I hope this doesn't come back to bite me".

Find the right support for your business

At Grow London Local, we understand that you’re passionate about your small London business. That’s why our website is packed with resources tailored to you. Find more support