Does Utilizing the Sharing Economy for Side Jobs or Multiple Jobs Conflict with the Employment Rules of One's Main Job?

In Japan, the proliferation of platforms such as “Airbnb” and “Uber” has made it possible to earn additional income through the use of personal assets or spare time. This phenomenon, known as the sharing economy or “kyōyū keizai” in Japanese, is expected to continue its significant growth in the future.

Many companies prohibit their employees from having secondary or concurrent jobs as per their employment regulations. Therefore, the relationship between these prohibitions and the income earned through the sharing economy could potentially become an issue.

https://monolith.law/corporate/side-business-labor-regulations[ja]

What is the Sharing Economy

The sharing economy began in Silicon Valley on the west coast of the United States in the late 2000s. Companies like “Airbnb” and “Uber” have since expanded to Japan and have become widely popular.

As of March 2021, the number of corporate members of the Sharing Economy Association, which was established in December 2015 (Heisei 27) with the aim of promoting and developing the sharing economy, has increased from 32 at the time of establishment to over 300.

According to the “Sharing Economy Market Survey 2020” released by the Association in December 2000 (Heisei 12), the market size of the sharing economy (the transaction amount between asset/service providers and users) in fiscal 2020 was 2.1 trillion yen, and it is predicted to reach 14.15 trillion yen by fiscal 2030.

Types of Sharing Economy

There are various types of sharing economy, but the Sharing Economy Association classifies them into the following five categories based on the subject of sharing.

1. Space: Sharing of spaces such as private lodging, parking lots, and meeting rooms
2. Things: Buying and selling through flea market apps, rental of bags, etc.
3. Mobility: Sharing of cars, bicycles, etc., delivery of food, shopping on behalf
4. Skills: Sharing of spare time or tasks
5. Money: Participants lending money to other people, organizations, projects, etc.

Among the five genres, the service that shares skills, number 4, is said to be particularly increasing.

While providing things, spaces, and means of transportation requires owning real estate or private cars, etc., skills do not need to be owned, so the barrier to participation is not high. This aspect makes it easy for not only users but also companies to enter as platformers.

Regulations on the Sharing Economy and Side Jobs/Double Jobs

When employees earn income through the sharing economy as a side job or double job, the issue arises as to whether the prohibition on side jobs or double jobs in the employment rules applies.

On the other hand, if there is no prohibition on side jobs or double jobs in the employment rules, the question arises as to whether there are any legal points to note. Let’s first explain the case where a prohibition is in place, and we will discuss the case where no prohibition is in place later.

When a Prohibition on Side Jobs/Double Jobs is in Place

When a prohibition on side jobs or double jobs is in place in the employment rules, the issue is whether the prohibition is valid. Looking at past precedents, even if side jobs or double jobs are prohibited in the employment rules, or if prior permission is required, it is considered that the prohibition does not apply if there is no risk of disrupting the employer’s management order or labor control, or if it does not significantly hinder the provision of labor.

In making a concrete judgment on the degree of risk of disrupting the employer’s management order, the following points are considered:

1. Whether it does not become a competitive relationship
2. Whether it does not violate the obligation of confidentiality
3. Whether it does not become a conflict of interest
4. Whether it does not damage the external credibility of the employer
5. Whether the total working hours do not become excessive, damaging health, or causing problems for the main job

Depending on the specific circumstances of each employer’s business content, the job content of the workers, and the content of the side job or double job they intend to do, a judgment is made with attention to the above five points. In addition, if the main job is in an industry where safety cannot be ensured without paying attention to health, the above 5 elements may be strictly viewed, and the prohibition on side jobs or double jobs may be more likely to apply.

However, in general, even if it is called the sharing economy, the nature of the type that earns revenue by utilizing real estate, etc., and the type that provides labor is quite different. In the case of the sharing economy where assets managed by oneself are provided for accommodation, etc., the range of physical and time constraints is limited, so from the viewpoint of the above 5 elements, the possibility of contradicting the purpose of the prohibition on side jobs or double jobs is low, and the prohibition is less likely to apply.

On the other hand, in the case of sharing economy services that provide labor or advice as professionals, careful judgment is required from the above 5 elements. Normally, even in the sharing economy that provides labor, the degree of physical and time constraints is not so high in many cases, so if it is an industry that does not have a problem in terms of confidentiality, conflict of interest, etc., the prohibition on side jobs or double jobs often does not apply.

In the “Guidelines on E-commerce and Information Material Transactions” (August 2020) of the Ministry of Economy, Trade and Industry, examples that are considered not to be subject to the prohibition on double jobs include:

• Using a private lodging service, handing over keys, etc. without hindering work, and renting out a vacant room at home on holidays
• Using a crowdsourcing service, providing translation services in a field unrelated to the industry of the workplace on holidays, without using the know-how at the workplace
• Although earning income through various sharing economy services, the time and degree of engagement are not so much as to hinder the main job in terms of social common sense, and there is no violation of the obligation to avoid competition, etc.

When a Prohibition on Side Jobs/Double Jobs is Not in Place

If there is no prohibition on side jobs or double jobs in the employment rules, disciplinary reasons must be stipulated in advance in the employment rules, so it is not possible to directly question the act of side jobs or double jobs as a violation of the employment rules.

However, even in such a case, the following provisions are examined to see whether the side job or double job does not violate them:

1. Provisions for when the order and discipline within the employer’s organization are disrupted
2. Provisions for the obligation to concentrate on duties
3. Provisions for the obligation to avoid competition and conflict of interest
4. Provisions for the obligation of confidentiality

Even if there is no prohibition on side jobs or double jobs, it is necessary to be aware that it may be considered a violation of the employment rules in relation to other provisions and may be subject to disciplinary action.

Summary

The sharing economy is a business model born alongside the evolution of technology, possessing a nature that is more flexible in responding to societal changes than traditional businesses. Furthermore, as many sharing economy services are CtoC matching services, the more skill providers there are, the more users increase, and it can be expected that the service will become widely popular.

The New Normal era, where new needs are easily born, is a chance for those providing sharing economy services to create new business models and expand their performance.

Guidance on Measures by Our Firm

Monolith Law Office is a legal office with high expertise in both IT, particularly the internet, and law. Establishing agreements in advance when utilizing the sharing economy for side jobs or dual jobs can help prevent troubles before they occur. Our firm handles the creation and review of contracts and employment rules for various cases, from companies listed on the Tokyo Stock Exchange Prime Market to venture companies. If you have any concerns about contracts, please refer to the article below.