Should I take unpaid leave to do a contract?

Contractor's Question: I have a short-term contract offer that I want to accept, but I am already working as a permanent employee elsewhere. Could I just take unpaid leave from my employer for 3 months (the contract's length) and return afterwards, without notifying my employer?

If so, is there paperwork I need to submit to the contracting company? And is there likely to be any paperwork or contractual clauses with my full-time employer that I need to check to ensure I can take the leave (to perform the contract), as I wish?

Expert's Answer: What you are considering is essentially a career break, so that you will remain an employee of your substantive employer during your unpaid leave. The alternative would be to resign, but of course there is no guarantee that you will be re-employed at the end of the break.

The first thing that you need to do is to look at your contract of employment because many employment contracts require the employees to notify, or even obtain permission from, their main employer before taking on additional work outside of their main employment contract.

You do not say whether the work under the temporary contract would be related in any way to the work that you are currently undertaking. If the contract is for a competitor company your substantive employer would naturally be unhappy about you taking that work on. The employment contract you are already committed to may also contain conditions that prevent you from working for a competitor and even if there are none that apply strictly in this situation (most apply post-termination), it will still be in breach of your common law duties to your employer.

Employees have a duty of loyalty to their employers which requires them to act honestly and to disclose any information relevant to their business. Taking a 3-month period of leave might impose a burden on your employer, as it may be disruptive to their business, so if you are less than frank and open about your reason for the break, you may find yourself in breach of those duties. The more senior the employee; the higher the duty.

In any event your employer is likely to enquire why you want to take 3 months unpaid leave. Should your employer ask this, you do need to answer the question honestly because if they subsequently discover that the reason was to undertake a temporary contract when you said it was, say, to travel the world, you are likely to find yourself the subject of disciplinary action.

Finally, how has the temporary work come about? Is it entirely separate from your existing contract or is it work that you have come to know about in the course of your employment? If this is the case, your current employer might be interested in claiming their 'fair share' - as diverting profits that would otherwise have gone to your employer would also be in breach of your duties to your employer.

The expert was Iain Patterson, employment law specialist and partner at Browne Jacobson LLP.

Sunday 15th Aug 2010