After numerous employees at IT companies were terminated on this very basis, the long-running discussion surrounding "moonlighting," a colloquial term for doing a second job in secret, has become more heated. Major IT firms like TCS, Wipro and Infosys also said that they would delay or reduce the variable payout to employees for the first quarter of FY 2023 due to reduced margins, which would cause an increase in moonlighting. The work-from-home model encouraged several employees to take on side jobs in order to supplement their income and gave rise to moonlighting among Indian professionals, which created regulatory concerns for companies.
A food delivery service called Swiggy unveiled an industry-first "Moonlighting policy" in August 2022 that permitted its employees to take on additional projects after work hours, subject to certain restrictions. Rishad Premji, chairman of Wipro, referred to the idea of moonlighting as cheating a few days after Swiggy's announcement.
What is Moonlighting?
Moonlighting is when a person does multiple jobs without the knowledge of their primary employer outside of their regular working hours. This could be done to increase income, maintain meaningful engagement in life, or make good use of one’s skills and passions. Doctors frequently consult outside of normal business hours, teachers frequently coach students through tuitions, consultants and freelancers work for multiple companies, and employees frequently participate in artistic creative activities like volunteering, music, singing, drama, theatre, and social media content creation. The adage gained popularity when Americans started seeking second occupations to enhance their income in addition to their normal 9–5 work[1].
Is Moonlighting Legal in India?
From a taxation standpoint, over-employment, also known as dual employment in India, is technically acceptable in the US and the UK. Although a second job in the UK may change a worker's tax status, the first employer's payroll department wouldn't be specifically informed of this, and in larger organizations, it's likely that it would go unnoticed[2].
In India, it's legal to hold multiple jobs without breaching the law. However, a person with a comparable set of employment could raise worries about a breach of confidence because many employers often forbid employees from holding down more than one job in their employment agreements. If an employee's contract stipulates non-compete and exclusive employment, as is the case with the majority of traditional employment contracts, moonlighting might be regarded as cheating and can lead to contractual liability. It is considered permissible if the employment contracts do not contain this clause or offer exceptions.
Dual employment is not permitted under the Factories Act. IT corporations are, however, excluded from that rule in several states. Employees should carefully review their employment contract with their primary employer to ensure compliance with any moonlighting policies before seeking side work or launching a business.
Why Do Employees Moonlight And & Why Are Companies Upset?
While the prospect of more money is always alluring, this is not the only factor driving people to search for different job options. Others do it out of boredom, while some do it out of passion. A quick Google search will show that there are many startups and small businesses that provide part-time employment options. People have found it very simple to take up additional employment thanks to easy access to job vacancies through job portals and online tests/interviews. Priorities come first. Cash is important! Finding a side job is always a lucrative approach to increasing your income. Following the pandemic, there have been employment and wage reductions and overall stagnation, which have strained people's finances. The dread of losing one's job was another. People have turned to side businesses to pay off debts or increase their income. The desire to pursue one's passion while maintaining their primary source of income is another. A person who works in IT might also be talented in other areas unrelated to coding, programming, testing, and the like, such as music or writing. The extra time, which was a luxury before working from home became the norm, allowed them to pursue the interests that they have always had. People could more easily split their time between two gigs because of flexible working hours. One's desire to start their own business may inspire one to work on more projects[3].
On the other hand, Companies worry that having employees work two jobs at once will lower their productivity and job quality. Additionally, there is a chance that two deadlines will cause more stress than one, which could result in smaller or lower-quality output. Another side effect of a side gig is fatigue, which can cause negligence and diversion. Employers are often concerned about data and confidentiality breaches, particularly if an employee collaborates with a direct rival. Another issue is the possibility that employees will exploit company resources for a side job.
Moonlighting under Existing Indian Laws and New Labour Codes
Indian law does not define or specify what moonlighting is. However, dual or double employment is somewhat regulated by the legislation listed below.
According to the Factories Act of 1948, an employer is prohibited from demanding or permitting an adult employee to work in the factory on days when they have already worked in another workplace. The OSH Code's prohibition on dual employment of employees who work in a mine or factory is largely equivalent to the prohibition outlined in the Factories Act. The model standing orders under the Industrial Employment (Standing Orders) Rules, 1946 prescribe additional items that are applicable to all industries, including that a worker shall never work against the interests of the industrial establishment in which they are employed and shall never take any additional employment there that could harm their employer's interests. The draught model standing orders for the IR Code contain a similar prohibition, although the employer may, in their discretion, allow the employee to accept a second job or assignment with or without restrictions after receiving their prior consent[4].
The aforementioned regulations only apply to a specific set of businesses and employee groups, hence their scope is limited.
The Shops and Establishments Act governs employees who work in, among other places, retail establishments, dining establishments, theatres, and other public amusement or entertainment facilities, as well as information technology and information technology-enabled services. Each state has a unique Shops and Establishments Act. For instance, the Delhi Shops and Establishments Act of 1954 forbids multiple works.
In light of the aforementioned situation, employers must specify the employee activities that they want to accept or allow during non-work hours. If the position is exclusive, the employment contract needs to make it clear. The businesses should also think about implementing strong employment contracts and HR policies that clearly define the terms of employment, including the responsibilities and limitations placed on the employees as well as what would qualify as "misconduct" by an employee and call for disciplinary action. To guarantee that it is maintained by the courts, the employer should take any action in a fair and reasonable manner.
Additionally, if an employee's contract contains non-compete provisions and exclusive employment, as is the case with the great majority of conventional employment contracts, moonlighting may be regarded as unethical. Employees might not view it as a breach of confidence or trust if employment contracts do not contain this clause or offer exceptions.
How to check if an employee is moonlighting?
Companies can know if an employee is moonlighting and working for its competitors using their Universal Account Number (UAN) of the Employees’ Provident Fund (EPF). Companies can access an employee’s UAN number to get to know if two PF contributions are being made by different companies. When two PF contributions are being made simultaneously to a UAN, it is a clear indication of moonlighting by the employees. However, it isn’t easy to find moonlighting by an employee when he/she takes up additional work as a consultant, freelancer or part-time since an employer does not make the PF contribution for such work.
[1] R V, S., & Kasiva. (2022, September 26). Moonlighting: The Indian Legal Perspective. Retrieved from Lexology website: https://www.lexology.com/library/detail.aspx?g=af9cbec7-149a-4b34-8631-4f70f180dd13
[2] Mukhopadhyay, S. (2022, August 29). Explained: What is moonlighting? Is it ethical to do more than one job in India? Mint. https://www.livemint.com/news/india/explained-what-is-moonlighting-is-it-ethical-to-do-more-than-one-job-in-india-11661748291458.html
[3] George, J. K. (2022, October 17). Moonlighting: Why employees do it? Why companies oppose it? The Week. https://www.theweek.in/news/biz-tech/2022/10/16/moonlighting-reasons-benefits-laws-in-india-sacking-employers-upset-ideas-moonlight.html
[4]Acharya, M. (2022, September 13). Concept of Moonlighting and Its Legality in India. ClearTax. Chronicles. https://news.cleartax.in/concept-of-moonlighting-and-its-legality-in-india/8455
