Is Moonlighting Illegal?

Moonlighting refers to taking up a second job beyond regular working hours. In India's changing work atmosphere, this topic is gathering a lot of eyeballs. While the process can serve as a source of extra income and skill development for employees, it comes with its share of problems. Employers take an objection to the possible instances of reduced productivity, conflicts of interest, and policy violations. Hence, the legal and ethical aspects of moonlighting have been the subject of debate.

This blog covers

• the legality of moonlighting in India
• Examines relevant laws and regulations.
• Highlights the implications for both employers and employees.

What Is Moonlighting?

Moonlighting is a process when an employee holds another job while still under employment for their primary role. This second job is often undertaken outside regular business hours. In most cases, the primary employer is completely unaware of the moonlighting activity of an employee. Moonlighting may take the form of freelance work or operation through part-time assignments or contracts.

Many people moonlight for a second income; others, however, have side jobs to learn something new or change their line of work. There are cases where a company may have legal obligations prohibiting or limiting moonlighting due to conflicting interests. Moonlighting provides benefits but, at the same time, brings forth concerns such as productivity and commitment.

Types Of Moonlighting

The types of moonlighting are:

Blue Moonlighting

This refers to situations where a person works a second job along with a primary job but is unable to manage both. Here, performance suffers in one or both jobs because of this situation. It symbolizes the different aspects of juggling multiple commitments without sacrificing an individual's output level. In conclusion, it is a failed moonlighting attempt.

Quarter Moonlighting

It requires working on side jobs for limited hours during the week, generally after the end of the working hours of the main job. It is an avenue to earn extra income without being fully committed. Such a scheme helps one sustain a work-life balance while building financial stability. Many individuals take up side jobs to seek new opportunities or develop extra skills.

Half Moonlighting

It illustrates that the individual is more devoted to their second job, spending a significant part of their spare time on it. There is a great time commitment involved in making this a priority. It entails a significant investment of time, requiring effort continuously. It nearly equals the labour of another part-time job.

Full Moonlighting

Jobs such as these types are the most demanding, where people hold two full-time jobs simultaneously. The process involves exemplary time management and dedication. Such a workload is always accompanied by time-squeezing schedules, allowing for hardly any relaxation. Under this strain, sustainability can be highly undesirable over extended periods.

Legality Of Moonlighting In India

In India, there is no particular law that prohibits an employee from moonlighting. Therefore, there is no central law stating "moonlighting is illegal." Although not expressly outlawed, moonlighting is nevertheless governed by many other existing laws primarily, those concerning:

Contract Law

In India, the Indian Contract Act of 1872 governs contracts. Employment contracts fall under this umbrella, defining the rights and obligations of both parties. Any breach of this contract may give rise to legal consequences. To avoid conflicts, employers and employees are bound to maintain the conditions agreed upon. Any breach of contract can lead to penalties and/or action under the law.

Intellectual Property Rights

Legal disputes ensue if the employee's moonlighting is towards developing intellectual property matching that of their primary employer's business. Disputes may fall under copyright or patent infringement, depending on what exactly was developed. In India, the Copyright Act of 1957 governs ownership and use rights concerning any creative work. The Patents Act, 1970, governs the inventions and the claims against them. Both laws are key to establishing rights and settling disputes in any such case.

Also Read : How to claim Intellectual property rights

Factories Act, 1948

The Factories Act, 1948 deals with rules regarding working hours and conditions for factories to facilitate the employee's working relationship. It defines the maximum total working hours for employees to prevent overwork. Good health and safety are to be ensured for the worker by banning excessive hours. The Act also promotes a balanced environment for professionals. As a result, productivity is maintained while keeping employees safe.

Shops And Establishments Act

Such acts are state-specific. They control working hours, leave entitlements, and conditions of employment in shops and commercial establishments. This is intended for fair labor practices for employees' welfare and protection. It also includes a limitation on the total working hours permitted for any person to work a day or week. Such an arrangement may indirectly restrain employees from taking extra work or jobs. Limitation of permissible working hours makes it difficult, if not impossible, for any employee to have a second job.

Industrial Employment (Standing Order) Rules

These guidelines outline model standing orders for various industrial establishments. They contain provisions relevant to the specific conduct of employees. They also define acceptable workplace behaviour. These standing orders may limit moonlighting, thereby maintaining discipline and regulating employment practices.

Information Technology Act, 2000

Moonlighting can attract penalties under this law for violation of pertinent confidentiality agreements on data. Similarly, the violation of intellectual property agreements while undertaking another job would apply. The Information Technology Act, 2000 can be invoked whenever misuse or disclosure of company-sensitive information occurs without permission, even if there is dual employment that is unauthorized and occurs with compromised data.

Legal entanglements come into play where unauthorized dual employment results in a breach of data. This is essentially a deterring clause in any employer's armory against the employee leaking or disclosing confidential assets.

Company Policies

Moonlighting regulations are primarily defined by individual company policies and employment contracts. Some organizations incorporate specific provisions barring or limiting moonlighting by employees. Such restrictions are typically imposed to avoid conflicts of interest and thereby elicit a total commitment to their primary job responsibilities. Alternatively, organizations may restrict any secondary opportunity that interferes with employees' productivity or performance. Therefore, it is important that you familiarize yourself with these policies to avoid any potential breach of contract.

Contractual Obligations

In India, the legality of moonlighting rests on adhering to contracts with the primary employer. If an employment contract specifically forbids moonlighting or requires notification of any secondary employment, penalty on violation of such terms may be disciplinary action up to and including termination of employment.

Also Read : Concept Of Moonlighting In India

Why Employees Engage In Moonlighting?

The employees engage in moonlighting for the following reasons:

Supplementing Income

The main reason employees moonlight is to earn extra income because of rising costs of living, debts, and uncertainties in finances. Others do work on the side in hopes of achieving their financial goals or even saving for future investment.

Skill Development

Apart from one's primary job, moonlighting provides an employee with a good opportunity to learn new skills and important knowledge. With moonlighting, one can even master new professional skills. It is a medium for strengthening a person's profile for overall career and professional growth.

Entrepreneurial Aspirations

Through moonlighting, entrepreneurs can work on their business ideas while remaining financially stable which a job may provide. It comes with the opportunity to gain experience while testing the idea regarding market demand. By working with a few clients in the shadows, it is easy to make a leap from a full-time job to entrepreneurship with full confidence.

Career Diversification

Some employees will moonlight to develop skills and look for new opportunities. This option provides work experience in addition to the primary job. In doing so, they create another job option on their career path while doing the primary one.

Common Clauses That Restrict Moonlighting

The common clauses that restrict moonlighting are as follows:

Non-Compete Clauses

These clauses prohibit employees from engaging in work that directly competes with the employer's business, either during their employment or for a specified period after. This is a very common way to stop employees from working for direct competitors.

Confidentiality Clauses

These clauses obligate employees to safeguard the confidentiality of sensitive company information, such as trade secrets, client details, and proprietary data. Engaging in moonlighting activities that might cause the disclosure or use of such information can amount to a breach of these clauses.

Exclusivity Clauses

These clauses may explicitly state that the employee's primary employment is their sole employment, effectively prohibiting any form of moonlighting.

Conflict Of Interest Clauses

These provisions seek to avoid situations where the personal interests of an employee, including secondary employment, may be construed as conflicting with the interests of the employer. They often require employees to disclose any potential conflicts of interest.

Working Hours And Performance Clauses

Such clauses shall determine that the full working hours and utmost efforts of the employees shall be devoted to the main job. If moonlighting comes in the way of their performance or availability, it's a possible breach.

Intellectual Property Clauses

Such clauses deal with the ownership of intellectual property generated during the period of employment by the employees. They may further restrict the usage of company resources or time by employees to develop intellectual property for their own advantage or for the benefit of any third party.

Prior to Approval Clauses

These clauses require that employees obtain explicit permission from their employer before engaging in any secondary employment.

How To Check If An Employee Is Moonlighting?

Detecting employee moonlighting can be challenging, but employers can employ several strategies to identify potential instances.

Monitoring Performance And Productivity

• The decline in work quality, mistakes, or missed deadlines may point to distractions for the employee.
• These days, productivity may be significantly lower than the norm. The employee may be facing one or more challenges.
• Constant fatigue, change in mood, or frequent absences can indicate burnout or an overload of work.
• Unusual work hours, such as consistently entering late or leaving early, may signal an underlying problem.
• Spotting these patterns will allow quicker identification of workers who require support or adjustment of their workloads.

Utilizing Technology

• The monitoring of computer activity, internet surfing, and application usage can show whether employees are oriented toward work-related tasks during office hours.
• Network logs can reveal suspicious user data transfer and visits to unauthorized websites, thus ensuring compliance with company policy.
• Tracking location and usage patterns while the employee uses company devices goes a long way in creating visibility about their work behaviors.

Reviewing Records and Information

• In the Indian context, scrutiny of EPF records can sometimes reveal whether or not an employee is being contributed toward by two or more employers. This method has its drawbacks, in that it can't track independent work or instances of freelancing.
• In a respect-for-privacy context, at times, scanning public social media profiles can provide some insight into secondary employment.

Establishing Clear Policies And Communication

• A moonlighting policy with definite provisions for disclosure requirements can assist in discouraging unauthorized activities.
• An organization dedicated to the ethos of open communication, wherein all employees may freely discuss their work-life balance issues, will help prevent undercover moonlighting.
• Ensure employment contracts contain robust clauses for non-compete, confidentiality, and conflicts of interest.

Consequences Of Moonlighting Without Employer Permission

Engaging in moonlighting without the employer's permission might lead to various repercussions, whose severity usually depends on the specific situation, the employer's policies, or the law.

Disciplinary Action

• The employer may give formal warnings, verbal or written, to the employee working for another company clandestinely.
• In serious situations, the employer may suspend an employee without pay for a specified time.
• Termination of Employment follows if the activity performed moonlighting violates clear provisions in the contract or can sufficiently harm the employer's interest.

Legal Repercussions

• When employment contracts include clauses that restrict any form of moonlighting, for example, a non-compete clause, exclusivity clause, or confidentiality clause, the employer will be able to institute legal action for breach of that contract.
• Moonlighting may also result in claims by employers for financial damages based on the claims that the moonlighting activities have resulted in losses or harm to the business.
• If the moonlighting job involves the employment of an employer's intellectual property or creating competing intellectual property, legal disputes are likely to arise.

Professional And Reputational Damage

• An employee's future career prospects may be seriously impaired by damage to their professional reputation as a result of being caught moonlighting without permission.
• The employer would have lost trust in the employee who indulges in moonlighting, notwithstanding whether the employee retains their job or not.
• Disciplinary action concerning moonlighting will act as a blockage in the employee's career within the company.

Latest Policies Related To Moonlighting

The landscape of moonlighting policies in India is evolving, driven by factors like the rise of the gig economy and remote work.

Emphasis On Contractual Obligations

Moonlighting is being increasingly managed by employers through well-defined contractual clauses. This includes tightening non-compete and confidentiality agreements to the advantage of the company. Explicit exclusivity clauses are incorporated with the intention to prevent secondary employment. Employees are also expected to disclose possible conflicts of interest in order to maintain transparency.

Varying Company Stances

Organizations have unique approaches to moonlighting and not a single policy. Some have stringent regulations stating that this activity is an infringement of trust, besides being a productivity risk and a confidentiality breach. Others are open to the still-evolving flexibilities that entail permitting moonlighting, given prior approval and explicit guidelines, or performance-based rather than time-based assessments.

Influence Of The Gig Economy

Many companies have taken to re-assessing their policies due to the expansive growth of the gig economy and remote working opportunities. Monitoring employees who have undertaken second jobs has become much harder on account of the increasing possibilities of remote work.

Punishment For Moonlighting

Basically, moonlighting is not legally punishable. Nevertheless, an employer can sue for breach of contract if that particular moonlighting breaches any agreement with the employer. Breaching confidentiality agreements while moonlighting will land you in a huge grave. In general, employees doing outside jobs without permission may be subjected to disciplinary action. Some companies may levy fines or try to claim damages for their losses. Legal consequences vary according to the employment contract and company policies.

Judicial Precedents

A few case laws are:

Niranjan Shankar Golikari v. The Century Spinning & Mfg. Co.

This Supreme Court case is significant for its stance on non-compete clauses. The case establishes that the courts are willing to uphold reasonable restrictions on employment that protect an employer's legitimate interests. This becomes very significant as one examines the validity of non-compete clauses designed to limit moonlighting.

Gulbahar v. Presiding Officer

The employee's termination due to dual employment has been upheld by this judgment from the Punjab and Haryana High Court. It reflects that the courts can support such actions taken by the employer against such an employee for 'moonlighting' acts against the condition of employment. This is also because if the employee is working for another employer while being employed at his current place, then that constitutes a ground for termination.

Conclusion

Moonlighting is not illegal in India, but whether the employee is permitted to do it depends greatly on the fine print of their employment contracts as well as considering if there is an absence of conflict of interest concerning the primary employer. Therefore, as the Indian workforce changes, both employers and employees will have to manage the opaque situation with mutual transparent understanding with respect to rights and obligations, ensuring that any secondary employment activities do not interfere with the integrity of the primary work relationship.

FAQs

A few FAQs are:

Q1. Is moonlighting illegal in India?

There's no specific law against it, but it's governed by employment contracts and company policies.

Q2. Can my employer fire me for moonlighting?

Yes, if it violates your employment contract or company policies.

Q3. What happens if I breach my employment contract by moonlighting?

You could face termination, legal action, and reputational damage.

Q4. Should I tell my employer if I am moonlighting?

It depends on your company's policy and your contract. Transparency is often recommended.