Have you heard about ‘moonlighting’? Moonlighting gained popularity during the pandemic when people were willing to work after their job timing to make some extra income. It is also known as dual employment or outside employment. There is mixed opinion about the acceptability of moonlighting, some have accepted the concept of moonlighting, while some are against it and fired their employees who are practising moonlighting, and some are looking forward to adopting it in the future. In this article, we will discuss what is moonlighting, its legal position in India, how to draft moonlighting policy, why are companies against moonlighting, and how can the company prevent moonlighting.
What is Moonlighting?
The concept of “moonlighting” was first practised in America where people were engaged in a second job in line with their regular 9-to-5 job. Ever since the remote working model was adopted during the pandemic, people began to work in two companies or organizations or pursued their hobbies during their past time. This idea of working for two companies or organizations is called ‘moonlighting’.
There is as such no clear definition of moonlighting. In simple terms “moonlighting” means when a full-time employee of a company, without the knowledge of the company takes up some additional jobs.
Different types of moonlighting are seen in different occupations across the globe. These include teachers or doctors working in an NGO or public organization, or working as a teacher in other institutions for additional income, higher incentives, or for gaining experience or for welfare purposes.
Moonlighting is mostly found in the IT sector where employees could work for other companies in their spare time; remotely.
Many factors have led to increasing in moonlighting.
These are –
Work from home – During the pandemic, when all the companies were working online remotely, the employees could easily take up some secondary jobs in addition to their regular jobs and earn some additional income.
Lay-off or lack of commitment from employers – Pandemic also contributed to economic crises which led to the laying off their employees by the company under the pretext of cost-cutting. This had in turn resulted in a lack of trust in employment which led people to do multiple works.
Skill development – Another reason for moonlighting is skill development, people do additional work to upskill themselves. It is reported by the PwC’s India Workforce Hopes and Fears Survey 2022 that in India about 51% of employees stated that they were not provided with any digital or technical training by their employers that is needed for their career development as compared to other countries.
The gig economy – The new generation is focused on creating gigs and doing multiple projects for different types of businesses. Therefore, they are comfortable with the idea of the gig economy and moonlighting.
Socio-economic and cultural influence – We are in some way or the other influenced by the lifestyle of influencers, which makes us want to achieve the same. Therefore, people are willing to moonlight to catch up for that lifestyle.
Is it legal in India? The legal position of moonlighting in India?
The term ‘moonlighting’ has not been defined in Indian laws. However, certain laws focus on regulating dual or double employment to some extent.
Section 60 of The Factories Act, of 1948 does not allow an employer to engage a person in their factory if they have already worked for another factory.
The Occupational Safety, Health, and Working Conditions (OSH) Code prohibits dual employment in a factory or mines similar to the Factories Act.
The Industrial Employment (Standing Orders) Rules, 1946 has extended the restrictions stating that the employee should not engage in any work which is against the interest of the industrial establishment and should also not take any double employment which has the possibility of adversely affecting the interest of their industrial establishment or employer.
The Industrial Relations (IR) Code under the draft model standing orders prohibits dual employment. However, it also allows the worker to engage in an additional job only with the permission of their employer subject to certain conditions.
However, these laws are only applicable to factories, industries, and mines and it does not cover other categories of employees. As moonlighting is found mostly among IT sector employees, these employees are not covered under the above laws.
Employees engaged in a restaurant, theatres, retail stores, and other public amusement or entertainment facilities, information technology-enabled services, and information technology are governed by the respective states’ Shops and Establishments Act. For example; the Delhi Shops and Establishments Act, of 1954 does not allow dual employment.
Section 27 of the Indian Contract Act, of 1872 prohibits dual employment through a non-compete clause where an employee is prevented from conducting his own business which is in competition with their employer’s business or accepting offers from their competitors. This clause prevents the employee from competing with their employer or disclosing any confidential information either during or after the employment tenure.
Therefore, an employment agreement that contains a non-compete clause then, dual employment will be considered violative of the contract terms.
Niranjan Shankar Golikari Vs The Century Spinning & Mfg. Co. 1967
In this case, the Appellant was appointed as a Shift Supervisor and was required to sign a contract of 5 years where he had signed an exclusive employment contract which had restricted him from joining another company during the term of employment and was also not allowed to share confidential information about the company. However, the Appellant resigned from the company and joined the company’s competitor. Therefore, the Respondent had filed a suit of injunction restraining the Appellant from divulging any confidential information which may have come to his knowledge during the employment. The Respondent challenged the employment agreement stating that it is oppressive, unreasonable, and opposed to public policy.
Therefore, the Court rejected the Appellant’s claim and upheld the non-compete clause in an employment contract that prevented an employee from working with a company that is in competition with their employer during the term of the employment. The court further stated that the restriction can only be enforced if it is reasonable and not harsh or one-sided. The injunction imposed was only related to time, area, and nature of employment and cannot be said to be oppressive, unreasonable, or opposed to public policy as it was in the interest of the Respondent’s company.
Can moonlighting get you fired?
If the person is working on an exclusive contract and the employee is practising dual employment without the consent of the employer then, such employee will be liable for breach of contract and terminated.
However, if the employment contract contains clauses such as non-solicitation, confidentiality, non-compete, or right to intellectual property, etc. it acts as a restrictive covenant where the interest of the company is protected and if the employee breaches these provisions of the contract then the employer can take appropriate action against such employee.
In Government of Tamil Nadu Vs Tamil Nadu Race Course General Employees Union, 1993, the Court had permitted dual employment provided the employer has permitted it or has not been prohibited under the employment contract.
How can you find out if the employee is moonlighting?
If an employee is moonlighting it can be found through the employee’s Universal Account Number (UAN) appearing on the Employee Provident Funds Organisation (EPFO). This can help to know whether the employee is working simultaneously with any other company. Through UAN the employer can come to know whether simultaneously two provident funds are contributed to the employee’s UAN.
Wipro had recently terminated 300 employees who were working with their competitors. This was known through UAN.
However, if the employee is additionally working as a freelancer or consultant where PF is not made then, you cannot come to know about moonlighting.
The company can also hire a third-party agency to conduct a background check to find whether the employee is practising moonlighting.
Another method of tracking the employee’s activity is by giving the employees devices which can be utilized solely for the purpose of office work and the company will come to know if the device is utilized for another company’s work.
What are the things to consider while drafting moonlighting policy?
Moonlighting policy should contain the dos and don’ts the employee should follow during the term of employment. It should also mention who should not be allowed to participate in moonlighting. These are subject to reasonable restrictions based on the company’s business.
Sample Moonlighting Policy –
The Company has based the moonlighting policy consistently and without any discrimination for all its employees. This moonlighting policy is in compliance with all the applicable laws, rules, and regulations.
The employees should notify the company about their additional jobs at the time of joining the additional job.
The moonlighting activity or work should not be in competition with the company’s work, it should not affect the company’s interest, and it should not affect the employee’s performance with the company.
The employee should not use the company’s name to gain additional work or for any unauthorized purposes.
The employees are also required not to disclose or use any confidential information of the company.
Moonlighting should not affect the performance of the employee such as refusing to work overtime, taking leaves to complete other work, refusing to travel for company work, or other job-related problems.
The company can even request the employee to terminate the additional job if it finds that the additional job is hindering his performance or negatively impacting the company.
If the employee refuses to terminate the additional job then the company can take disciplinary action against the employee and terminate them.
If the employee is found using sick leave for any fraudulent purposes or refuses to comply with the company’s moonlight policy then the employee will be terminated immediately.
Hence, these above points can be utilized in moonlighting policy based on the business of the company keeping in mind the restrictions are reasonable.
Why are companies against moonlighting?
Moonlighting though may be good for employees is criticized by companies because there is a higher risk to business due to breach of confidentiality, solicitation of co-employees, attrition, competition, and compromise of intellectual properties. Also, the quality of work is affected due to taking on multiple projects.
How can moonlighting be prevented?
Moonlighting can be prevented if the employers interact with their employees and take their feedback regarding job satisfaction, working environment, and pay scale, conduct a background check to know whether they are indulging in any moonlighting, create a conducive environment where the employees feel a sense of belongingness and trust, invest in upskilling the employees by providing learning skill development opportunities.
Moonlighting means the act of working in addition to the regular job to earn some extra income. Workers working in factories or industries are prohibited from doing dual employment through the Factories Act, or Industrial Employment (Standing Orders) Rules. The Indian Contract Act also prohibited dual employment through a non-compete clause. However, some companies allow moonlighting as far as it does not affect the company’s interest and employees’ productivity. To curb moonlighting the company should work towards retaining their employees and pay attention to their requirements. A company should also have a strong and well-defined moonlighting policy which should cover the kind of work an employee should undertake with other companies during and after employment tenure.