India: Moonlighting: A Question Of Ethics Or The Future Of Work

Introduction

While moonlighting is not a novel concept in the workplace, the latter half of 2022 saw the issue gaining particular prominence in India and across the world. The opinion of employers on the topic was polarised, with several leading domestic and multinational companies fiercely opposing it (some even conducted mass terminations for those who were found moonlighting),¹ while others took a more considered view on the matter.

The Cambridge Dictionary defines 'moonlighting' as an act on the part of an employee of working an extra job, especially without informing the primary employer. In a lighter vein, the world's most famous moonlighters are some of our favourite childhood superheroes!²

The reasons behind moonlighting

While there are multiple reasons for moonlighting, apparently one of the most prominent reasons for the recent spurt in instances of moonlighting was the lack of physical supervision by employers during the remote work phase stemming from the Covid-19 pandemic. Additionally, some suggest that during this time moonlighting potentially presented itself as an opportunity to establish multiple sources of income, especially for employees who faced salary reductions or loss of pay during the pandemic. With fear of recession looming large globally, employees may have also viewed taking up multiple jobs or a side hustle as a means to support themselves financially in case they lost their primary job. However, in most cases, due to employees' lack of transparency in disclosing their secondary jobs, employers have generally not been amused with the increase in this trend, which has brought along with it several new business and legal challenges. For example, moonlighting not only poses a threat to the misuse of employer's confidential information and intellectual property, but also raises issues around data security and potential conflicts of interest. On top of that, reduced productivity at work and a lack of focus on the business of the primary employer are other valid concerns that employers may have.

The situation in India

In India, employment and labour legislation exists at federal and state level. While this legislation does not contain a specific definition of moonlighting, certain federal laws³ and some state-specific laws⁴ acknowledge the concept of 'dual employment' or 'double employment'.⁵ Essentially, in the manufacturing sector, there is a restriction on dual employment on the days in which the employee has already worked in any other industry. Whereas in commercial establishments/the services sector, subject to the state law, either there is a blanket prohibition on an employee from working in another establishment on a day in which the employee has been given a holiday or the employee is on leave, or there is a restriction on dual employment on the day in which the employee is employed in any other establishment.

The Indian Supreme Court has opined⁶ in a case dealing with the subject that 'the general rule in respect of relationship of master and servant is that a subsisting contract of service with one master is a bar to service with another master unless the contract otherwise provides or the master consents'. At the same time, the Supreme Court in the same case also held that 'if the contract otherwise provides, or the master consents, there may not be any prohibition on having dual employers'. The High Court of Punjab and Haryana⁷ upheld a termination order passed by the tribunal based on the documents produced by the employer proving that the employee was also employed by another establishment.

Several companies have taken a stance against moonlighting, with a leading Indian information technology company's CEO calling it a question of ethics.⁸ Contrary to this stance, a prominent minister in the Indian government has supported⁹ moonlighting and has said that companies should not put a lid on employees' dreams. In July 2022, the Japanese government introduced a policy according to which, companies prohibiting their employees from taking up a second job have to explain the reason for such prohibition.¹⁰

Employers' interests

If the opinion is divided with the majority of employers not in favour, how can employers protect their interests? For starters, employers can ensure that their employment agreements have robust clauses specifying that the employment is on an exclusive and full-time basis and any outside activity needs prior permission from the employer. Likewise, a non-compete clause prohibiting employees from working elsewhere during the course of their employment is a must. Further, non-disclosure and intellectual property protection clauses in the employment contract or a standalone agreement on these subjects would come in handy for employers to protect against unauthorised disclosure and misuse of their confidential information and intellectual property. Employers can also consider including unauthorised dual employment or moonlighting as an instance of misconduct in their company policy/handbook, which may enable an employer to take appropriate disciplinary action against a delinquent employee. Such measures may act as a deterrent and may significantly reduce instances of unauthorised moonlighting in the company.

If the intent is not to restrict or prohibit, but to regulate moonlighting, employers could consider putting in place a policy on moonlighting clearly demarcating and regulating instances wherein holding a secondary job, pursuing a hobby or passion, or managing a gig may be permitted by the employer. In India, some employers have, over a period of time, taken a considered view on moonlighting with appropriate mechanisms in place. For example, Swiggy,¹¹ a leading Indian food delivery company, formulated an industry-first policy to regulate moonlighting. Infosys,¹² a leading Indian information technology company, which had earlier taken a strict stance against dual employment has now allowed its employees to take up 'gig' jobs on the side with the prior consent of managers. Tata Consultancy Services,¹³ one of the world's top information technology companies, is planning to come up with a platform for internal 'gigs' for its employees. This support probably stems from companies weighing the pros of regulating rather than restricting moonlighting. The trust shown by employers to permit employees to take up other gigs may potentially help with employee retention. Further, permitting employees to pursue their hobbies or passions professionally may also help increase employee satisfaction and may, in turn, help increase productivity at work and foster greater employee engagement.

However, while permitting moonlighting, employers may need to carefully consider some legal aspects including applicable rules relating work hours, rest time, overtime, health and safety, social security contributions and taxation and so on.

Conclusion

Like two sides of a coin, moonlighting has both pros and cons and it may be difficult for employers to pick a side. While it is a common perception that moonlighting will decrease the productivity of an employee in the primary job, it is also possible that allowing an employee to pursue a gig involving their hobby or passion may, in fact, enhance employee satisfaction and engagement in the workplace. That said, employers' apprehensions are certainly justified where non-transparent employees start moonlighting with a competitor without the knowledge of the primary employer, thereby putting the primary employer's confidential information and intellectual property at risk. Employers, accordingly, may need to tread the line carefully and take an informed decision on whether to completely prohibit moonlighting or regulate it by formulating policies and putting in place appropriate mechanisms.

Only time will tell if moonlighting ends up just being a question of ethics or whether it becomes the future of work!

Footnotes

1. Aashish Aryan, 'Wipro fires 300 staff members found to be moonlighting for competitors' The Economic Times (22 September 2022) https://economictimes.indiatimes.com/tech/information-tech/wipro-fires-300-staff-members-found-to-be-moonlighting-for-competitors/articleshow/94349603.cms?from=mdr

2. Bruce Wayne, Tony Stark, Clark Kent and Peter Parker have primary jobs at Wayne Enterprises, Stark Industries, the Daily Planet and the Daily Bugle, respectively, while holding their undisclosed secondary job, a description of which apparently involves saving the world!

3. Section 60 of the Factories Act 1948 expressly restricts dual employment by any adult worker on the days in which they have already been working in any industry. Schedule 1-B of the Industrial Employment (Standing Orders) Rules 1946 prescribes that a workman shall not work against the interest of the industrial establishment and shall not take any additional employment that may adversely affect the interests of their employer.

4. Section 69 of the Andhra Pradesh Shops and Establishments Act 1988 and Section 69 of the Telangana Shops and Establishments Act 1988 prohibit an employee from working in any other establishment or from allowing any employer to allow any employee to work in any establishment on a day or part of a day on which the employee is given a holiday or is on leave. Section 9 of the Delhi Shops and Establishments Act 1954 also prohibits dual employment by any employee on the day when they are employed in any establishment.

5. Itika Sharma Punit, 'India's tech outsourcing giants are not happy about employees taking up second jobs. Here's what the law says' Rest of World (4 October 2022) https://restofworld.org/2022/newsletter-south-asia-moonlighting-indian-law/

6. Manager, Pyarchand Kesarimal Ponwal Bidi Factory v Omkar Laxman Thange and Others; AIR 1970 SC 823.

7. Gulbahar v Presiding Officer and another; CWP No 15088 of 2015.

8. 'Moonlighting A 'Question Of Ethics', Says Wipro Ceo' Outlook India (12 October 2022) www.outlookindia.com/business/moonlighting-a-question-of-ethics-says-wipro-ceo-news-229474

9. Gulveen Aulakh, 'Rajeev Chandrasekhar backs moonlighting but cautions against violating employment' Mint (23 September 2022) www.livemint.com/companies/news/rajeev-chandrasekhar-backs-moonlighting-but-cautions-against-violating-employment-11663942049943.html

10. Charles Chau, 'More employees in Japan engage in moonlighting' HRM Asia (22 November 2022) https://hrmasia.com/more-employees-in-japan-engage-in-moonlighting/

11. Tushar Goenka, 'Swiggy employees can now moonlight: Staffers can take up external projects for an economic consideration' Financial Express (4 August 2022) www.financialexpress.com/industry/swiggy-employees-can-now-moonlight-staffers-can-take-up-external-projects-for-an-economic-consideration/2616812/

12. Shivani Shinde, Sourabh Lele, 'Infosys allows employees to take up gig work with managers' prior consent' Business Standard (21 October 2022) www.business-standard.com/article/companies/infosys-allows-employees-to-take-up-gig-work-with-managers-prior-consent-122102100014_1.html

13. Shivani Shinde, 'Talent Cloud will address moonlighting, says TCS CHRO Milind Lakkad' Business Standard (17 October 2022) www.business-standard.com/article/companies/talent-cloud-will-address-moonlighting-says-tcs-chro-milind-lakkad-122101600898_1.html

Originally published by International Bar Association on the 27^th of July, 2023.

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