Concept of Moonlighting and Its Legality in India

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. The WFH model led to several employees taking up parallel gigs to earn extra income and gave rise to moonlighting amongst professionals in India, leading to compliance issues within companies.

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.

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.

Is Moonlighting ethical?

The IT sector’s opinion is divided when it comes to moonlighting. Rishad Premji, Wipro chairman, tweeted that moonlighting in the tech industry is cheating. Mohandas Pai, former director of Infosys, disagrees with Premji on this issue. He does not consider moonlighting as cheating.

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. 

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 Shops and Establishments Act regulates employees working in a shop, commercial establishment, restaurant, theatre and other public amusement or entertainment places. Every state has its Shops and Establishments Act. The Bombay Shops and Establishments Act and Delhi Shops and Establishments Act put a restriction on double employment.

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 violation as employers include such restrictions in the employment agreements.

When an employee’s contract contains non-compete and single employment clauses, the employers can consider moonlighting as cheating. However, it is not cheating when the employment contracts provide relaxations or do not have such a clause. Thus, before taking up a side job or starting a business, employees must check the employment contract and ensure compliance with any moonlighting policies.

For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@clear.in