The Cambridge Dictionary defines moonlighting as taking on a second job without telling your primary employer.[1] Though the term ‘moonlighting’ has gained popularity in recent years, the concept is not new. Teachers working 9 to 5 at school and then tutoring children in the evenings or physicians working full-time at private hospitals and then tending to patients in their private clinics are commonly accepted instances of moonlighting.[2] The debate has surfaced now, however, in the IT sector.
Recently, Wipro fired 300 employees for having a second job in rival companies with Rishad Premji, the chairman of the tech giant tweeting that moonlighting is “cheating- plain and simple”.[3]Similarly, IBM and Infosys warned their staff that moonlighting is strictly prohibited at their organizations.[4]
However, some companies like Tech Mahindra and Cred are not wholly against the idea. C.P. Gurnani of Tech Mahindra said that moonlighting is not an issue if the employee seeks to earn an additional income but maintains efficiency standards.[5] In this paper, the author seeks to examine the legal landscape in India concerning moonlighting and propose possible contractual clauses that balance the interests of both employers and employees while not outrightly banning it.
STATUTORY LANDSCAPE ON MOONLIGHTING
‘Moonlighting’ has not been expressly defined or prohibited in any labour statute/code but there are references to it in multiple provisions.[6] However, no provision deals with the same adequately. Firstly, Section 60 of the Factories Act prohibits an adult worker who has previously worked in a factory on a certain day from working in another factory on the same day.[7] To understand whether IT workers are covered within Section 60, one needs to determine the meaning of ‘factory’ and ‘worker’. Section 2(m) of the act defines a factory primarily as a premises where a ‘manufacturing process’ is conducted.[8] Similarly, Section 2(l) of the act defines a ‘worker’ as a person employed in a ‘manufacturing process’.[9] Section 2(k)[10] defines ‘manufacturing process’ and the relevant case law on the same is Uttaranchal Forest Development Corporation v. Jabar Singh.[11]
In the given case, the court propounded that to constitute a manufacturing process, the essential thing is transformation i.e., the thing produced after going through the manufacturing process should be different from what it was earlier.[12] Seen in this light, characterising IT professionals as workers under the Factories Act is out of the question. This is so because transformation requires the existence of an article or a substance to which a manufacturing process is applied.[13] IT work concerns the use of computers and software to manage data and not transforming an article.
On similar reasoning, IT workers are not covered under the Occupational Safety, Health and Working Conditions Code 2020 (OSH). In Section 30 of the Code, a worker who has worked in a mine or factory within the last twelve hours is not permitted to work in a similar establishment later on.[14] The definition of factory is defined in Section 2(w) of the code and is similar to the one in the Factories Act.[15] Thus, the presence of a ‘manufacturing process’ is essential which as explained before is not present in IT work.
The next provision relevant is Clause 8 under Schedule I-B of the Industrial Employment (Standing Orders) Central Rules, 1946 which states that a workman employed in an ‘industrial establishment’ cannot accept any other job that could adversely impact his employer’s interests in addition to his primary job.[16] On a prima facie reading, the provision seems to allow additional jobs that do not conflict with the primary employment like hobbies or passion. However, ‘industrial establishment’ under Section 2(e) of the Industrial Employment (Standing Orders) Act, 1946 means factory as defined in the Factories Act and thus IT workers are not covered under the Standing Orders as well.[17]
Finally, Section 22 of the Model Standing Orders for the Service Sector 2020 states that a worker employed in an ‘industrial establishment’ cannot take up an additional job unless permitted by the employer.[18] The Model Standing Orders does not define ‘industrial establishment’ but mentions in Section 1(2) that it applies to all industrial establishments covered under the OSH Code employing three hundred or more workers.[19]
The preamble of the OSH Code states that it applies to establishments and an ‘establishment’ is defined under Section 2(v) of the Code to include a place where an industry is carried on. [20] Industry has been defined under Section 2(zd) of the Code which reproduces the triple test of: (1) systematic activity; (2) organised through cooperation between employee and employer; and (3) for the creation and/or distribution of products and services intended to meet human needs.[21] The relevant case law on the meaning of ‘industry’ is Bangalore Water Supply[22]and an IT firm can be characterised as an industry if one looks at the court’s reasoning concerning research institutions.
The majority reasoned that since research institutions involve cooperation between the employer (institution) and employee (scientists) for the production of services which add value to the nation’s wealth, research institutions can be characterised as an industry.[23] Seen in this context, IT professionals do produce software (service) which can be sold at great prices in the market and thus an IT firm can be characterised as an industry.
There are however two problems with the above conclusion. Firstly, the general idea of industry is employees working together in a common place for the production of goods and services. Thus, when the court in Bangalore Water Supply characterised a teaching institution as an industry, the common workplace could be a school or a university.[24]
Even though some large IT companies have offices, many IT companies do not have a dedicated office, and experts work from home from nine to five. Secondly, as mentioned previously, the Model Standing Orders for the Service Sector applies only to industrial establishments employing three hundred or more workers and thus many small to medium-scale IT firms are not covered.
JUDICIAL POSITION ON MOONLIGHTING
Based on the last section, one can conclude that there is no law which adequately addresses moonlighting by IT professionals in India. In this regard, the judicial stance on moonlighting is also far from clear but as the author will demonstrate, based on the ratio of certain cases, an argument can be made in favour of limited moonlighting.
To start, consider two cases that outrightly reject moonlighting. In Gulbahar v. Presiding Officer,[25]the question before the Punjab and Haryana High Court was whether the termination of a driver by his primary employer was justified if the driver also engaged in additional work for another travel company. The court without citing any statute or a precedent, summarily held that since the driver engaged in dual employment, the termination was justified.[26] On a similar issue under the Factories Act, the Bombay High Court in Manubhai Gordhandas v. Arvind Mills Company[27]citing Section 60 of the Act held that double employment deprives the primary employer of the best efficiency of the employee and is anti-social since it denies another worker a job opportunity and thus firing an employee engaging in moonlighting is justified.[28]
There are however judgements including that of the Supreme Court which allow moonlighting if the employer consents. In Manager, Pyarchand Kesarimal Ponwal Bidi Factor v. Omkar Laxman,[29]the issue before the court was whether an employee could be transferred unilaterally to another employer without the employee’s consent.
Answering the issue in the negative, the apex court held that generally a servant is prohibited from contracting service for another employer while being in employment of the primary employer but such additional employment can be undertaken if the primary employer consents.[30] Similarly, the Madras High Court in Govt. of Tamil Nadu v. Tamil Nadu Race Course General Employees Union[31]while dealing with the issue of regularisation of race course workers post the acquisition of the race course by the government held that there are no prohibitions against dual employment if the master consents.[32]
Furthermore, two apex court cases favour moonlighting even though they do not specifically address it. First is the case of Glaxo Laboratories (I) v. The Presiding Officer, Labour Court Meerut[33]wherein a group of inebriated employees of the appellant company had entered a bus carrying other employees and in protest manhandled them. The question before the court was whether the misconduct alleged was conducted in the premises or in the vicinity of the establishment to make the employees liable.
The company argued that ‘in the vicinity’ was to be interpreted broadly and any act of misconduct by the employees was subject to punishment.[34] To this, the court reasoned that an employer is not the Guru of the employee and an employment contract would become a contract of servitude if the employer was given the authority to control employee conduct both during and after work hours and wherever they may be.[35]
The second case that supports moonlighting to some extent is that of the Board of Trustees of the Port of Bombay v. Dilipkumar Raghavendranath[36]wherein the issue before the apex court was whether an employee had a right to be represented by a lawyer in a disciplinary enquiry under Article 21 of the Constitution. The court replying in the positive held that the right to life includes the right to livelihood and since the result of a disciplinary enquiry is likely to negatively impact a person’s reputation and means of subsistence, representation by a lawyer is essential to ensure fairness.[37]
Thus, given that moonlighting is undertaken for additional income which forms an essential part of livelihood, it can be argued that Dilipkumar may support it. Thus, given the interpretation of the Supreme Court in favour of employee rights, it can be contended that moonlighting with reasonable restrictions such that the interests of the employer are protected is a plausible argument that the judiciary might support.
WAY FORWARD: MOONLIGHTING CLAUSES
In light of the possible support by the judiciary in allowing moonlighting to some extent, reasonable contractual restrictions on moonlighting that balance employer and employee interests are the way forward. Why reasonable because according to the landmark case of Niranjan Shankar Golikari v. The Century Spinning Co.,[38] only reasonablerestrictions that apply during the term of employment like a clause stipulating that an employee is prevented from engaging in a similar business or working for a competitor firm during the subsistence of the contract are enforceable and not against the restraint of trade.[39]
In this regard, a contractual clause stipulating a blanket ban on moonlighting such that employees are prohibited from pursuing their hobbies or working on projects completely unrelated to the primary job would be illegal. Before commenting more on the nature of such restrictions, it is first important to understand the employers’ concerns regarding moonlighting and the motivations behind employees’ participation in it.
For employers, a major concern is the possible conflict of interest wherein an employee starts working for a competitor as a second job.[40] There are two pertinent issues with employees working for competitors. First is the possibility of disclosure of confidential data or trade secrets and second is the possible solicitation of customers or co-employees negatively affecting the business interests of the primary employer.[41]
Further, there is a legitimate possibility of moonlighting converting to daylighting such that employees start using the resources of the primary employer and complete tasks of their second job during office hours of their primary job.[42] Moreover, there is a concern about reduced productivity and efficiency given that doing several jobs can lead to stress and exhaustion.[43]
For employees, the primary reason behind moonlighting is to augment their income. Given the increasing inflation and the high cost of living in Tier-I cities like Delhi, Mumbai and Bangalore, IT professionals feel the need to engage in a second job.[44] Furthermore, by engaging in different industries through a second job, employees develop new skills and get better exposure to new learning possibilities which is essential given the high job insecurity prevalent in the market now.[45]
During the Covid-19 lockdown, most IT professionals were subjected to work from home which provided them with greater personal time and thus many people started pursuing hobbies to offset boredom. Post the lockdown, most employees wish to pursue their hobbies outside office time for job satisfaction.[46] Finally, given the successes of numerous start-ups, young people are highly motivated to launch their own companies.
Considering the above, clauses within employment contracts that place reasonable restrictions on moonlighting are pertinent. Firstly, employees should be duty-bound to disclose their engagement in a second job to ensure transparency. Secondly, certain categories of employees like senior officials and KMPs may be prohibited from moonlighting altogether. This is so because such employees have greater access to confidential information and their hundred per cent engagement in the company’s growth is essential.[47]
Thirdly, employees should be prohibited from engaging in a job for a competitor to prevent conflict of interest.[48] It should be noted that, given the Indian government’s strong push to support businesses and create jobs through startups in the wake of the COVID-19 economic downturn, the author is not completely opposed to employees starting their own startups or working for another startup in industries similar to those of their employers. However, to secure employers’ concern of possible conflict of interest, a reasonable turnover limit such that once the startup achieves a certain revenue level, the employee would have to either leave his primary job or quit the startup can be included.
Fourthly, the moonlighting policy should prohibit any disclosure of confidential information.[49] Fifthly, employees must not employ the company’s equipment for finishing tasks of their second job and the employer should have the authority to take action against employees who regularly miss work because of moonlighting. Finally, the moonlighting policy should have proportionate punishments based on the seriousness of the violation.
Thus, for disclosing confidential information, an employee can be subjected to a disciplinary proceeding followed by termination if found guilty. On the other hand, for violations like using the company’s resources for a second job or frequent absenteeism, employees can be first issued a reprimand before being terminated after repeated instances.
CONCLUSION
Moonlighting is a contentious phenomenon in the IT sector given the rise of remote work and is not specifically addressed by Indian law. Although some decisions categorically condemn moonlighting with others favouring limited dual employment after the employer’s consent, an argument in favour of a moonlighting policy with reasonable restrictions can be made based on court interpretations supporting employee rights under Article 21 of the Constitution. In this regard, the structured policy mentioned in the last section of this paper which mandates disclosure of second jobs by employees, forbids conflicts of interest, maintains confidentiality, and imposes appropriate sanctions for violations, may be supported by the courts based on fairness and proportionality.
[1] Cambridge Dictionary, Meaning of Moonlighting in English, available at https://dictionary.cambridge.org/dictionary/english/moonlighting (Last visited on February 15 2025).
[2] Ananya Pandey & Aryan Jaiswal, Moonlighting in the IT Industry: Debates, Policies and Legal Perspectives 6 International Journal of Law Management & Humanities 4 (2023).
[3] Kalpana Sunder, Moonlighting: The Controversy Among India’s Tech Workers, October 18 2022, available at https://www.bbc.com/worklife/article/20221014-moonlighting-the-controversy-among-indias-tech-workers (Last visited February 15 2025).
[4] Aditi Raj & Himanshu, Moonlighting: The Legal Dipole of Swiggy & Wipro, July 19 2023, available at https://cll.nliu.ac.in/moonlighting-the-legal-dipole-of-swiggy-wipro/ (Last visited on February 2025).
[5] Id.
[6] Bishen Jeswant & Varsha Sriram, Moonlighting – Legal Considerations and Contractual Regulation, October 10 2022, available at https://corporate.cyrilamarchandblogs.com/2022/10/moonlighting-legal-considerations-and-contractual-regulation/ (Last visited on February 15 2025).
[7] The Factories Act, 1948, §60.
[8] The Factories Act, 1948, §2(m).
[9] The Factories Act, 1948, §2(l).
[10] The Factories Act, 1948, §2(k).
[11] Uttaranchal Forest Development Corporation v. Jabar Singh, MANU/SC/0140/2006.
[12] Id.,16.
[13] Id., 25.
[14] The Occupational Safety, Health and Working Conditions Code, 2020, §30.
[15] The Occupational Safety, Health and Working Conditions Code, 2020, §2(w).
[16] The Industrial Employment (Standing Orders) Central Rules, 1946, Schedule I-B Clause 8.
[17] The Industrial Employment (Standing Orders) Act, 1946, §2(e).
[18] The Model Standing Orders for Service Sector, 2020, §.22.
[19] The Model Standing Orders for Service Sector, 2020, §1(2).
[20] The Occupational Safety, Health and Working Conditions Code, 2020, §2(v).
[21] The Occupational Safety, Health and Working Conditions Code, 2020, §2(z).
[22] Bangalore Water Supply and Sewerage Board v. A. Rajappa and Ors., MANU/SC/0257/1978.
[23] Id.,137.
[24] Id., 118-120.
[25] Gulbahar v. Presiding Officer, 2016 SCC OnLine P&H 2069.
[26] Id., 10.
[27] Manubha Gordhandas v. Arvind Mills Company Ltd., (1956) IILLJ 554 BOM.
[28] Id., 5.
[29] Manager, Pyarchand Kesarimal Ponwal Bidi Factory v. Omkar Laxman Thange and Ors., MANU/SC/0267/1968.
[30] Id., 7.
[31] Govt. of Tamil Nadu v. Tamil Nadu Race Course General Employees Union and Ors., MANU/TN/0277/1991.
[32] Id., 16.
[33] Glaxo Laboratories (I) Ltd. v. Presiding Officer, Labour Court, Meerut and Ors., MANU/SC/0247/1983.
[34] Id., 13.
[35] Id., 13-15.
[36] Board of Trustees of the Port of Bombay v. Dilipkumar Raghavendranath Nadkarni and Ors., MANU/SC/0184/1982.
[37] Id., 13.
[38] Niranjan Shankar Golikari v. The Century Spinning and Mfg. Co. Ltd., MANU/SC/0364/1967.
[39] Id., 20.
[40] R.G. Rane & Company LLP, Balancing Two Jobs: Navigating the Legality of Moonlighting in India, May 9 2023, available at https://www.linkedin.com/pulse/balancing-two-jobs-navigating-legality-moonlighting-india-rgrlegal/ (Last visited on December 30 2024.
[41] Aishwarya K., India’s Legal Perspective on Moonlighting, 3 Jus Corpus Law Journal (2022).
[42] Id., 58.
[43] Dr. Akanksha Jain & Shilpa Goyal, The Dichotomy Of Moonlighting In India: Ethical And Legal Analysis With Employer-Employee Perspectives And Path To Acceptance, 44 Library Progress International 3 (2024).
[44] Dharshini K, Susan Abraham & Krishna Prasath, Moonlighting in the Contemporary Work Culture in New Trends of Business, Management & Commerce Studies 159, (2023).
[45] Id., 167-168.
[46] Id., 159.
[47] Think Bridge, A Detailed Deliberation on Moonlighting, August 30 2024, available at https://www.thinkbridge.com/blog-post/a-deliberation-on-moonlighting (Last visited 15 February 2025).
[48] Resource for Employers, Moonlighting Policy, Jan 2024, available at https://resources.workable.com/moonlighting-policy, (Last visited 15 February 2025).
[49] Id.
Author: T. Sai Sanket Sharma, student at National Law School of India University Bangalore
