In a world where salaried workers’ pay keeps falling, some people with a head for business, or with circumstances that leave them no choice, may be doing side work.
A major reason side work arises: salaried workers’ pay tends to fall
Data from the National Tax Agency and recruitment agency DODA’s survey of 220,000 white-collar positions show the following trends in average salaries.
They have been almost flat in recent years, but the long-term trend is downward. The National Tax Agency figure is probably lower largely because of the effect of non-regular employment.
The recruitment agency statistics have continued to fall. It seems that the salaries of people who enter the job-change market to compete have a stronger tendency to decline.
Because the consumer price index—the price of goods—has not changed greatly, real income also falls along with pay.
It is understandable that people with the business-minded desire to earn more would turn to side work.
Why companies dislike side work
Occasionally, there are companies that do not prohibit side work. Some people carry on their own consulting business while working at a company in the ordinary way. They probably do not prohibit it because, through consulting work, employees meet various people and jobs and improve their abilities, which can in some cases also benefit their employer.
I think many companies have wording in their work rules such as, “When engaging in side work, company permission is required.”
Court precedents state that “as a general rule, how employees spend time outside working hours is left to their freedom, and it is unreasonable for work rules to ban concurrent employment completely.” Therefore, prohibiting side work has no legal force.
Since side work cannot be prohibited legally, the prevailing approach is to have employees disclose it to the company and manage it.
Except for a few exceptional business owners, companies generally take a negative view of side work.
- It increases risks in managing employees’ health.
- They worry about the risk that business secrets will leak.
- Employees’ ability to concentrate on their work declines. They do not want them to treat it as something done on the side.
- Because employees may be unable to handle overtime, constraints arise on assigning them responsible work.
- It makes it more likely that they will resign.
Those are probably the reasons.
When side work is permitted, rules to be followed are set: do not let it affect the main job, do not spread it around to other employees, and so on. In principle, it should be permitted if it causes no problems. Also, because it is legally OK, employees normally cannot be dismissed merely because their side work was discovered (although they will likely be cautioned for violating work rules or the like).
This is what companies look at to judge whether you have side work
Companies normally cannot tell whether an employee is doing side work.
Of course, there are cases where someone chats away to coworkers and gets found out (laugh).
However, depending on how much you earn, the company may notice.
It is the resident-tax payment notice sent to the company by each municipality in June.
The notice states the standard tax amount. When a company is preparing its usual resident-tax payment data and the like, it may notice, “Huh? That’s high.” The tax amount varies according to how much someone earns.
Still, a company that cross-checks this data to see whether employees have side work must have an awful lot of spare time.
Normally they do not do it. If you are found out, perhaps you were unlucky, HR had too much time on its hands, or the business owner is especially sensitive about side work.
However, understand that the company has information that can make it suspect you have a side job.
Side Work Will Come to Light as My Number Takes Full Effect
It will not immediately become discoverable, but companies are required to manage the My Number of people they pay. As My Number becomes fully implemented, it becomes possible to know who received how much money and what the money was for.
Those affected will likely be people who, as mentioned above, have not reported their work to the company, have been doing it quietly without permission, and have not filed tax returns. For a time, weekly magazines caused a stir by asking whether hostess-club workers would disappear from nightlife districts; this was the reason.
How safe is each type of side work?
Earning pocket money through reward sites, crowdsourcing, or small outsourced jobs
Tax is currently withheld at source, so the risk is low. Take care if the amount becomes large.
Ordinary part-time or casual work
Because it is fully reported to municipalities as employment income, there is a risk of being found out regardless of My Number or the like.
Night work, such as hostess-club work
Because My Number makes it easy to identify people who have not filed tax returns, this will likely become an occupation in which a person’s side work is easily discovered by the company. The type of occupation, however, cannot be known.
Affiliate marketing
Because tax is withheld at source, side work will probably not become an issue unless you are making a killing, but take care if the amount is large. Payments from advertisers can be identified through My Number, so it will no longer be possible to conceal them.
Retail arbitrage
A business in which you buy items sold cheaply at auctions or in-store sales (procurement) and resell them on the internet and elsewhere at a profit. Used books are a well-known example. If My Number comes to be required for amounts paid by Amazon or Rakuten, the likelihood of being found out will increase.
Stocks and FX
They are not side work, but if you file a tax return rather than having tax withheld at source, there is a possibility that the company will find out.
So, what do you think?
I myself think side work will invigorate and energize Japan’s economy. It is not legally prohibited, either.
However, as stated above, care is needed once side work reaches a certain scale.
Once income from side work reaches a certain scale, file a tax return and pay your taxes properly so that you can have a clear conscience.