Most founders let staff run side hustles, yet a fifth forbid them. Here’s why they ban them, why others back them, and how fractional hiring shapes the debate.
- One in five (20%) write a ban into employment contracts, mostly to secure total commitment. By contrast, 61% allow side hustles by default.
- 33% of those who actively allow their employees to work on side hustles also provide support and resources for them.
- Allowing them brings real benefits. Among founders who permit side hustles, 56% say they give staff financial flexibility, and 43% say they build practical skills for the business.
- Only 9% of founders who use fractional or freelance talent ban side hustles, compared with 28% of those who stick to full-time roles.
Side hustles are more popular than ever, but not every founder is happy about it. New Startups.co.uk research reveals that one in five business owners (20%) explicitly ban employees from running secondary businesses, writing the restriction into contracts.
However, most take a softer approach, with six in ten allowing them by default, and 33% going even further by offering resources or support to help staff get ventures off the ground. Hiring style plays a part, too: founders using fractional or freelance talent are far more relaxed than those sticking to full-time roles.
So why do some founders draw a hard line on side hustles while others open the door? And what does it have to do with how they hire? We surveyed 295 founders across the UK, and spoke to employers about where they stand on backing their staff’s ventures, to find out.
Why 20% of founders are sidelining side-hustles
Of the 20% of founders who ban side gigs in their employment contracts, 40% do so because they expect total commitment to their business, and 38% do so to ensure full focus and productivity during working hours.
Jimmie Brennan, founder of Love Mondays Office Space, is in this camp. “As a business owner, if I am paying someone to do a job, I want them to be focused and give it their best; a side hustle is a distraction,” he tells us. His view was shaped by managing a team of 10, including an aspiring actor who became unreliable and distracted in the office.
The pressure on staff time is real. A further 32% of founders who ban side gigs cite burnout, and 37% want to prevent misuse of company tools. CV-Library found that 30.4% of UK professionals put in an extra 10 hours a week on their side hustle, and its CEO warned of burnout as a result.
Yet, even bans can have exceptions. Brennan says he would “happily support” an employee whose job is a means to an end, such as a staff member who wanted to earn enough to train as a pilot.
Still, most founders are against enshrining bans into contracts. While one in five say no, 61% allow side hustles by default and 18% permit them in contracts. So what do they get in return?
Trust, skills and retention: the upside of letting staff build
Our survey found that while most founders are relaxed about side hustles, few are shouting about it. While 61% allow them by default, just 12% permit them in contracts. However, 33% go the extra mile by permitting them and offering resources to support staff.
The benefits are tangible. Among founders who actively allow side hustles, 56% say they give staff extra financial flexibility, 43% say they develop practical skills for the business, and 39% say they improve retention and morale.
“Side projects can inspire, bring fresh perspectives, and fuel a culture of innovation,” Aidan Rushby, co-founder and CEO of Carmoola, tells us. “To hire and retain A Players today, you need to support their creative outlets.”
Omnea takes this further through its Future Founders Fund. Anyone who has spent five years at the company can make a 30-minute pitch and have $250,000 committed within 24 hours, plus office space and hands-on support from the founders, the board and a network of more than 150 operators.
The fund backs staff who want to found companies, rather than run a side hustle, but co-founder Ben Freeman says it has paid off in hiring. “It’s also become a hiring advantage. The most ambitious people in the market can join Omnea knowing they’ll learn first-hand how to build a company.”
For employees, this openness to entrepreneurship can make a huge difference. Hank Wu, who works at MAGIC AI and founded Posting Machine, tells us his company CEO, Varun Bhanot, is: “extremely encouraging when it comes to pursuing a side project alongside our work at MAGIC AI”, adding, “It’s rare to have a founder offer that level of support.
Why founders who hire flexibly are more relaxed about side hustles
Our survey results also found that how founders build their teams appears closely linked to how much freedom they give them.
Fractional and freelance hiring is now a mainstream choice. Our survey found that 29% of founders are actively recruiting on these terms, and a further 28% are considering it. Conversely, just 42% say they prioritise full-time employee roles.
The side-hustle gap between the two groups is striking. Among founders who use fractional and freelance hiring, 30% permit side hustles and 20% actively support them, while only 9% ban them. Among those who stick to traditional full-time roles, 28% enforce an explicit ban, more than three times as many.
The data suggests that founders who keep fixed costs down, avoiding the overheads of pensions, benefits and high fixed salaries, are more comfortable giving people autonomy. In contrast, those who commit to full-time contracts may feel more entitled to tight control in return.
This doesn’t mean that embracing side hustles is off the table for companies with more traditional personnel structures. Nearly three in ten full-time-focused founders may enforce a ban, but that still leaves most of them open to some level of outside work.
Ultimately, the real question is less about how you hire and more about what you’re trying to protect, whether that’s client relationships, confidentiality, or simply your team’s focus. Here’s what to weigh up before you decide.
- Ask what you’re trying to protect – If it’s client conflicts, confidentiality, or misuse of company tools, a targeted clause may work better than a ban.
- Consider a case-by-case approach. A staff member with a clear goal, such as saving for pilot training, may warrant a written plan rather than a blanket rule.
- Weigh the upside before you decide – Among founders who allow side hustles, financial flexibility for staff, practical skills, and retention and morale benefits are huge motivators for supporting the practice.
- Agree on guardrails for workloads – Burnout was a concern for 32% of founders who ban, so set expectations on hours and energy up front.
