Secondary employment

Secondary employment is the term used to describe any additional employment or 'outside work' that a public official is engaged in outside of their position in the public sector. It can include working for another employer, running a business or providing paid consultancy services, or being involved in a family business. Secondary employment need not be a corruption risk if it is managed properly by the agency concerned. 

Employees of agencies covered by the Public Sector Management and Employment Act 2002 must have the approval of their department head before commencing secondary employment1. Public officials must also consider whether the secondary employment may adversely affect the performance of their public sector duty or give rise to a conflict of interest. This applies to all public officials, whether or not they are employed in the public sector on a full-time, part-time, or temporary basis. 

Local government employees must notify their general manager in writing of any secondary employment.2

Improperly engaging in secondary employment can constitute corrupt conduct as defined in the Independent Commission Against Corruption Act 1988.
 

Corruption risks

A risk assessment of the secondary employment of employees in a public sector agency is likely to identify some or all of the following corruption risks:

  • An employee using public resources for secondary employment. This might include work time, vehicles, communication devices, stationery, photocopiers, tools and equipment, and confidential information such as details of forthcoming transactions that are not yet in the public domain.
  • An employee falsifying timesheets, or taking paid sick leave under false pretences, to engage in secondary employment.
  • An employee seeking secondary employment with clients of their public employer in return for promising to exercise their official functions to favour the client.
  • Clients of an agency offering secondary employment to officers as an inducement to be favoured in their dealings with the agency.
  • An employee who runs a business that offers goods and services used by the public agency submitting tenders for goods and services to the agency without declaring their interest in the business. 
  • An employee actively misrepresenting their secondary employment as being under the auspice of their public sector employer. 
  • An employee directing subordinates to perform tasks for the employee's own secondary employment.

 

Managing corruption risks

As a minimum your agency should:

  • Introduce policy and procedures for secondary employment that contain the elements listed in the Policy Development Model
  • Include in the policy sanctions for any breach of the policy and procedures
  • Review the policy every two years
  • Refer to the management of secondary employment in relevant corporate documents such as codes of conduct
  • Train all relevant employees in the policy and procedures to ensure they are aware of their accountabilities.
  • Include the management of secondary employment as a risk to be assessed in the agency's internal audit and corruption risk management processes.

 

Risk management strategies

Following your risk assessment of the secondary employment of employees you should consider these risk management strategies:

  • Maintaining records of all secondary employment applications and approvals including the projected hours of work in employees' personnel files and centrally on an electronic database.
  • Reviewing all secondary employment approvals every 12 months.
  • Regularly reminding employees of their statutory obligations in relation to secondary employment – for example annually with performance reviews. 
  • Regularly auditing the attendance records of all employees granted permission to undertake secondary employment roles.
  • Restricting or prohibiting secondary employment for employees in certain positions, such as procurement and contract management, commensurate with the risks of corruption.
  • Devising a method for consulting centralised secondary employment records when procurement or recruitment panels are being convened to ensure that employees with related interests are not members of panels.
  • Informing contractors to the agency about secondary employment restrictions on agency employees.
  • Randomly auditing the secondary employment declarations of employees to ensure that they are current and complete.
  • Conducting Australian Securities and Investments Commission searches on randomly selected or targeted employees.

 

Case studies

Case study 1

An agency employee was responsible for approving air-conditioning maintenance contracts. Privately, he was associated in a management capacity with two companies that were involved in related maintenance work. The officer did not inform the agency of his involvement in these companies or seek approval under the agency's secondary employment policy.

Over a period of several years the officer awarded air-conditioning maintenance contracts to companies owned by his friends and associates. They in turn sub-contracted work to the officer's own businesses. It is estimated that in this way the officer improperly obtained more than $710,000 over a six-year period.

Case study 2

A public sector agency was undertaking a bridge renovation project in a regional area. One of the agency's employees, involved in this project, took leave without pay for 12 months.

During his leave the officer developed an item of equipment that could be used specifically for the kind of work being done on the bridge project. A company registered in the name of the officer's wife contracted the equipment to the agency for use on the project. The lease of this equipment continued after the officer returned to work at the end of his leave.

The ICAC's enquiries with the agency did not indicate that there was any corrupt conduct. However, the agency conceded that there were corruption risks in its lease of this equipment from a company associated with a current employee, and that the situation gave rise to a perception of impropriety. The agency undertook to contract the equipment from another source.

Frequently asked questions

Is it appropriate for a council planning officer to engage in secondary employment as a private planning consultant?

Previous Commission investigations have identified development assessment processes as a significant corruption risks for agencies. This is due, in part, to the combination of the discretionary nature of planning decisions, the potential profit margins involved in development and the tendency for recurring contact between developers and planning staff.

The involvement of planning staff in secondary employment in the development industry contributes to this risk of corrupt conduct. Secondary employment provides an opportunity for staff with undisclosed conflicts of interest to engage in partial conduct. The ability of an agency to identify such conduct is limited given that it is reliant upon the honesty of staff undertaking secondary employment to disclose potential conflicts of interest.

As a result, the Commission believes that secondary employment for staff involved in high-risk roles such as planning should be discouraged in the absence of extenuating circumstances. Extenuating circumstances would include situations where a council had insufficient resources to employ a planner full time.

Is it appropriate for public officers to use their flexitime or annual leave to engage in secondary employment?  

There is nothing inappropriate with this in itself. However, one of the conditions for the approval of secondary employment is that the work does not interfere with the officer's official duties. Agencies would generally approve applications for flexitime and annual leave subject to operational requirements - this may not always accord with an officer's first preference for leave. As such, officers need to be informed that their secondary employment must fit in with the requirements of their official position, not the other way around.    

How prohibitive should the secondary employment policy be? 

The policy should address the specific risks of your agency and include as much detail as your employees need to make it work. Many policies include these sorts of provisions:

  • The kinds of jobs that may, or may not, be approved by the agency for secondary employment.
  • Conflict of interest management arising from public officials owning, or being associated with, private businesses; for example, in relation to tendering and procurement.
  • The use of public resources, including work time, for secondary employment is prohibited.
  • Staff that work in a regulatory or inspectorial role may not undertake secondary employment in that area.
  • Secondary employment that comprises a pecuniary conflict of interest with the primary employment is prohibited or severely limited.
  • Secondary employment that is closely related to the agency's core functions and/or the officer's primary employment might be approved subject to restrictive conditions.

How can my agency make sure that secondary employment records are up to date? 

Secondary employment should only be approved for a maximum of 12 months. There should be a reminder to update approvals in annual performance reviews or some other regular event in the agency. The approvals given for secondary employment should be reviewed or audited regularly to ensure they are current and comply with the policy.

 What records should be kept of secondary employment in the agency? 

This depends on the extent of the risk posed by secondary employment to your agency. If it happens rarely and the outside work is unlikely to be in the same area of work as the agency, it may be enough to record the request and approval - or refusal - on the employee's personnel file. If secondary employment is common or has the potential to conflict with employees' public sector roles a more detailed system is probably needed and should require that:

  • applications for secondary employment are made in writing to the applicant's manager (or delegated officer)
  • applications contain details about the nature of the secondary employment, the employer, and the projected hours of work. This could include the employee being required to provide the Australian Business Number (ABN) of the private business they own or in which they are engaged
  • applications are assessed by an appropriately delegated officer against the criteria of the secondary employment policy and the reasons an application is approved or rejected are recorded
  • applications and approvals or refusals are kept on the employee's personnel file and in a central electronic database.

Resources

Other publications

  • Inappropriate use of council resources, NSW Department of Local Government Circular 06-64, 2006
  • The Model Code of Conduct for Local Councils in NSW, Division of Local Government, December 2012
  • Model Code of Conduct, Personnel Handbook, NSW Department of Premier and Cabinet, Sydney, September, 2005, Chapter 8
  • Managing the workplace, Personnel Handbook, NSW Public Service Commissioner
  • Policy and Guidelines for the use by staff of communication devices, NSW Department of Premier and Cabinet, Sydney, January, 1999.

 

Relevant ICAC investigations

 

Legislation

  • Local Government Act 1993
  • Government Sector Employment Act 2002 (NSW) 

Relevant websites

 

Related topics on the ICAC website

 

Endnotes

1. Chapter 8.9 of the Model Code of Conduct in the NSW Department of Premier and Cabinet's Personnel Handbook.

2. Section 353 of the Local Government Act 1993 & Department of Local Government's Model Code of Conduct for local councils.