Moonlighting – Legal or Illegal?

 

Moonlighting – Legal or Illegal?

Recently, Moonlightling became a buzzword and a topic of controversy when Rishad Premji, Wipro chairman, tweeted that moonlighting in the tech industry is cheating. This invited different opinions on the issue where Monhandas Pai, former director of Infosys disagreed with Premji on the issue. Mohandas Pai stated that employment is a contract between employers who pay employees for working for them for ‘n’ number of hours per day. After the ‘n’ hours, the employees have freedom and can do what they want. 

Major IT companies like TCS, Infosys and Wipro stated that they would delay or reduce the variable payout to employees for FY 2023 first quarter due to weaker margins, leading to the rise in moonlighting. While in August, Swiggy, a food delivery platform, announced an industry-first ‘Moonlighting policy’ and allowed its employees to work on other projects under certain conditions after working hours. Days after Swiggy’s announcement, Rishad Premji, Wipro chairman, termed the concept of moonlighting as cheating.

This brings to us issue as to what is moonlighting, its legality or illegality thereof and how the employers can protect themselves.

What is moonlighting?

Moonlighting means working for one organisation while taking extra jobs, usually without the employer’s knowledge. Moonlighting is side employment taken up at night or on the weekends. The phrase moonlighting became popular when Americans started looking for a second job in addition to their 9-to-5 jobs to supplement their income.

The Legality of Moonlighting in India

Below are the laws that put restrictions on dual employment in India.

• Section 60 of the Factories Act, 1948, states that a worker is not allowed to work in two factories simultaneously. However, the definition of a worker under the Factories Act does not cover an IT professional or any employee working in an administrative or supervisory position.
• The Industrial Employment (Standing Orders) Central Rules, 1946, states that a workman should not work against the interest of the industrial establishment and should not take any additional employment which may adversely affect the employer’s interest.

However, all the above laws are for workmen and do not apply to employees working as professionals or in supervisory or administrative positions. Thus, there is no overreaching law prohibiting dual employment or moonlighting in the IT sector. However, when employees work in similar jobs, there may be a confidentiality or Intellectual Property Rights violation as employers include such restrictions in the employment agreements.

The legality of moonlighting per se would depend upon the employment contracts. If the employment contract contains non-compete clause and single employment clauses, then moonlighting would be illegal and in violation of the employment contract. The Courts in India have ruled restrictive trade covenants like non-compete, single employment clauses during the course of employment to be legal and reasonable. However, if an employment contract doesn’t contain any non-compete or single employment clauses, then moonlighting won’t be prima facie illegal as there hasn’t been an express violation of any contract. However, issues like sharing of confidential information or intellectual property rights intentionally or inadvertently could come up if the employee is engaged in working for a competing company. The legality of moonlighting in that case would then have to be adjudicated by the proper judicial authority as per the facts and circumstances of the case.

Since, moonlighting has become has major issue during the WFH model and will continue to do so, both employers and employees have to be careful during the contract negotiations and insertion or omission of certain clauses as the legality or illegality of Moonlighting would depend upon the stipulations in the contract.

This Article has been Compiled by Aditya Raj (Legal Associate) and Arun Gupta (Partner). 

  You can direct your queries or comments to the author at info@factumlegal.com

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