The right to undertake sideline occupation – where is the limit?

The Danish Salaried Employees Act confers rights to ”undertake off duty tasks”, if the task can be performed without any inconvenience to the employer, but what does that mean in practice?

As a general rule, an employee has the right to decide what to do in his or her spare time, and the employee therefore has the possibility of engaging in paid or unpaid activities in their spare time, as long as the activities do not cause the company any inconvenience.

Section 15 of The Danish Salaried Employees Act states that the employee has the right to undertake an off-duty task without the consent of the employer, when the task can be performed without causing the company any inconvenience. The intention of this rule is to comprise e.g. board duties in sporting associations, political association activities, board members in trade unions, etc.

However, sideline occupation – meaning work of a commercial nature – is not covered by this rule, and the employer thus has the right to limit the employee’s access to it without failing to observe The Danish Salaried Employees Act. In any case, it should be stated in the employment contract.

If the employee violates a decision on a ban of sideline occupation, the employee will be in breach of the terms and conditions of the employment, and the employer has the right to terminate – or in the given circumstances dismiss – the employee.

Correspondingly, competitive work during employment will conflict with the employee’s obligations towards the employer, including the duty of loyalty, and could, similarly, lead to termination or dismissal. This applies regardless of whether a competition clause, which is to be applicable after the termination of the employment, is agreed upon or not.

Recently, the Copenhagen City Court delivered a judgement in a case, in which a key account manager in a company was dismissed after the employer found that the employee – despite a ban against commercial sideline occupation without the prior consent of the employer – was registered as the managing director of a company that he had founded himself and of which he was still the co-owner. He was also listed as the managing director with contact information on the website of the company.

The employee explained that the company belonged to his wife and that the registrations were solely pro forma. He also maintained that his only affiliation to the company comprised minor unpaid book-keeping and accounting assistance.

The City Court found that the employee did not meet the burden of proof in relation to his role in the company being only pro forma. He was thus in breach of his obligations towards the employer, and the dismissal was justified.