Moonlighting: The Indian Legal PerspectiveNovember 28, 2022 By Dinesh Parmar
“This is cheating - plain and simple” Rishad Premji, Wipro
“65% knew of people pursuing part-time opportunities or moonlighting while working from home” - Kotak Institutional Equities Survey, July 2022
These two statements have created much debate in recent times. It also raises prominent questions about whether the practice is actually right or wrong. Perhaps the most important question is, where does the Indian Constitution or Legal system stand on this? In other words, Is moonlighting legal?
To answer all these questions it is important to first understand the arguments of both sides and then take see where does the legal outlook stand. More importantly, what exactly is moonlighting? So, without wasting time, let’s dive right into the answers.
What is moonlighting?
Moonlighting put simply is the practice of working a second job in excess of the existing or primary one. It is usually done outside of the business hours of the primary one.
For example, A person has a 9 am to 5 pm job in his primary company. In moonlighting, outside of that time period he works another job and enjoys its perks and benefits. Now, this secondary job may or may not be in the same or similar field. It totally depends on the employee's preferences & choices.
Moonlighting vs Freelancing
Moonlighting and freelancing are completely different terms and should not be confused. In freelancing, a person takes up multiple projects, works on them anytime during the day as per their choices and receives pay & perks on an assignment basis. The people here are not employees of a particular organisation and not on the payroll of one business. They usually work for a range of clients across sectors at the same time.
While in moonlighting, a person does a secondary or tertiary job outside the business hours of the primary one, they are on contract with a specific company and payroll. The primary company here also contributes and adheres to ongoing pan-India pension funds.
View - Moonlighting should be allowed
The proponents of this philosophy support the view with the following statements:
- Outside of business hours, rest is my personal time, what I do, should be no other’s concern.
- What’s the harm in earning a few extra bucks? Everyone needs additional resources to support the family.
- I can always go for learning and growth purposes by doing side jobs.
- How I manage my time is at my discretion.
- If it’s widely acceptable & practiced in most developed countries, what’s the harm here?
And the list goes on.
Counterview - Moonlighting is unacceptable
A majority of this view are the employers or the organisations that recruit people. They feel it is unacceptable because:
- It goes against business ethics and integrity.
- Employees have access to sensitive and confidential information, who’s to be responsible if they leak that information to outsiders?
- Why should competitors have the same person with that skill set at a different price?
- It is bound to affect employee productivity and efficiency.
Where does the law stand?
Coming to the most important aspect, does the Indian legal system permit it? Well, to be frank, the stance is mixed and there is no clear stand on the issue. There have been judgments and regulations from both sides. For Example, the Factories Act, 1948 under section 60 specifically prohibits moonlighting. The Bombay Shops Act under Section 65, the Delhi Shop Act, the AP shop act and some others explicitly disallow dual employment. But there’s a flip side too. The Factories Act, 1948 covers only factories and similar places, it is not applicable to IT areas.
Dual employment is permissible under the Industrial Employment ( Standing Order ) 1948.
Even the courts are divided. The Supreme Court in PK Ponwal Badi Factory Vs Omkar Laxman Thange & Others ruled that “the general rule in respect of the relationship of master and servant is that a subsisting contract of service with one master is a bar to service with other master unless the contract otherwise provides or the master consents”.
Apart from the Supreme Court, The Madras High Court too in a similar 1993 case stated “if the contract otherwise provides, or the master consents, there may not be any prohibition to have dual employers”.
So, What’s the final outcome?
As per current available legislations and judgments, unless otherwise specifically stated in the employment contract, moonlighting is permitted.
What’s the way forward:
In today’s times especially post-pandemic era, where hybrid work model is seen and is being promoted. It is important to take a middle path, the extremes of both may be harmful to employees as well as employers. The need of the hour is to have a relook at the moonlighting issue in regulation terms and framing of clear-cut laws that may permit dual employment but with caveats like non-disclosure or informing the primary employer about the same and ensuring that productivity or efficiency doesn’t suffer.
Those companies that are still uncomfortable with those rules, may go for specific prohibitions in employment contracts by having a non-compete and conflict of interest clause.
As for those who are affected by current layoffs and confused about whether your contract bars dual employment or those looking to join new companies or the organisation itself in order to prevent plausible exits and legal hurdles, it is important to take the services of a legal advisor or professional law firm. These legal advisors are masters in these fields and they can guide one and pave the way for better career and growth.