Introduction to moonlighting in India
Moonlighting in India has remained to be an issue ever since the COVID-19 situation. Combating moonlighting has become another challenge for companies, especially the ones related to the tech industry. Companies really have important concerns and are finding themselves at the cross-roads although there might be the necessary bending going on, on the inside to accommodate the interests of both the employers and the employees. With a fresh approach of combating the menace of moonlighting in India, companies have started doing stricter background checks to check into the issue and have started hiring specialists for the same.
With the advent of the global pandemic, the world had come to the realm of an alternate understanding of work by working from home. However, this also accelerated the trend of taking up side jobs additionally to supplement their income by mostly working in the night shifts or weekends. That is from where the concept gets its name.
Now let us understand what exactly is moonlighting.
Moonlighting is the practice of working for one company while concurrently taking on additional duties and employment for ancillary earnings, usually without the employer’s knowledge.
Legal stance in India
Indian laws do not define moonlighting or explicitly regulate it. However, they do contain provisions that address the concept of dual employment. It may however be noted that dual employment is not illegal in India. Hence, most companies are restricting moonlighting, if not completely eradicating it, by including provisions regarding moonlighting in employment contracts and by way of stricter background checks, as explained earlier in our article.
Separately, Section 27 of the Indian Contracts Act, 1872 puts a reasonable restriction on the commonly practiced non-compete clauses in the standard employment contracts in India as it declares void, any agreement that restrains a person from exercising a lawful profession, trade or business of any kind. Whilst not always, anti-competition clauses to restrict employees from working with a peer organization have been constantly denied enforcement by Indian courts due to voidability as well as their being against the public policy. It is interesting to note that Courts have started to give some regard to such clauses basis their reasonability.
However, Section 8 under Schedule I-B of the Industrial Employment (Standing Orders) Central Rules, 1946 clarifies that a workman cannot work against the interest of an industrial establishment by taking dual employment in addition to their current job and Section 60 of the Factories Act, 1948 bars any adult worker from getting engaged in dual employment except in certain circumstances that may be prescribed by each State government. State specific laws like Delhi Shop and Establishment Act, 1954 also bring up double employment by restricting it in Section 9 of the Act where it prohibits employment in more than two establishments in excess of the period during which the employee may be lawfully employed under the Act.
Apart from these legal enactments hovering around the legality of moonlighting in India, a major concern is the violation of employment contracts that exist between the employers and employees. Generally, employment contracts have restrictive and negative covenants regarding dual emlployment, non-compete and confidentiality clauses and any contractual violation attracts a liability on the employee. This would be a legal repercussion that the violators would be burdened with if moonlighting is practiced by breaching the contractual terms.
Let us now plunge into how the courts have dealt with the issues pertaining to the concept of moonlighting in India.
Judicial Precedents
In the case of Niranjan Shankar Golikari v. the Century Spinning and Manufacturing Company Ltd., the Honorable Supreme Court observed that the restraint and negative covenants of employment contracts may be valid if they are also reasonable.
In the case of Gulbahar v. Presiding Officer, Industrial Tribunal and Others, the Respondent Management hired the Petitioner as a driver, however it was later discovered that the Petitioner was also employed by M/s Top Wheels Tours and Travels Private Limited. Consequently, the Respondent dismissed the Petitioner from the position. The Punjab and Haryana High Court held that the termination of the Petitioner from his employment because he was engaged in dual employment was completely valid.
It is evident from the aforementioned legal decisions that the judiciary also opines that moonlighting aka dual employment is not permissible and validly terminable.
Conclusion
The concept of moonlighting, from the ethical light has backing in agreement as well as disagreement. From the legal lens, India has not prohibited moonlighting in its legal provisions, thus, opening doors to methods by which regulations can be drawn and a middle ground can be sought. The best practice would be to add a ‘Conflict of Interest Clause’ and an exclusive ‘Moonlighting Clause’ in the employment agreement but there needs to be trust and engagement in addition to drawing legal limits to get the intended results.
In view of the ongoing discussions over moonlighting, the need of the hour is for the legislature to do its bit and develop a policy on moonlighting as part of the new labour regulations and/or take steps to settle the laws to bring clarity on the regulation of activities that have been taking place secretively since a long time, in the shadows.
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