Dual Employment or Moonlighting in India
‘Moonlighting’ or dual employment,
refers to the practice of taking up a second job, often covertly, outside normal
business hours, while continuing to be formally employed with another employer. In
India, moonlighting is often perceived as a way of acquiring an additional
source of income and improving one’s skillset, especially amongst certain
categories of skilled employment. With the introduction of ‘Work-From-Home’
("WFH”) policies during the pandemic, this concept appears to have
gained traction recently and different companies have sought to address it -
albeit in different ways, however, the concept of dual employment has been
rampant in the unskilled sector in India, due to a lack of job security and low
levels of income. The intent behind moonlighting therefore, clearly differs
across sectors in the labour market.
At
the outset, there are limited provisions that actively restrict moonlighting.
However, most companies adopt contractual restrictions, in the absence of
specific legislative protection, to prevent moonlighting by their employees.
For example, employment agreements usually include a clause restricting the
employee from acquiring employment elsewhere during the term of employment.
Hence, if caught moonlighting, an employee of such a company could be
terminated for breach of the terms of his or her employment.
In
this note, we take a look at the applicable laws in relation to moonlighting
and its legal implications, as elaborated in the jurisprudence relating to it.
Applicable
Legislation
The
Factories Act, 1948 and the Industrial Employment (Standing Order) Rules, 1946,
prohibit adult workers from engaging in dual employment. Further, rules related
to dual employment have been captured under State-specific labour laws such as
the Delhi Shops and Establishments Act, 1954.
·
Section 60 of the Factories Act, 1948: It restricts employees of a factory in
engaging in double employment in India, when they are already working in a
factory.
·
Section
9 of the Delhi Shops and Establishments Act, 1954: It restricts employees from working
in two or more establishments, in excess of the period during which he may be
lawfully employed under the legislation. However, while this provision reads as
a restriction on dual employment, it can also be interpretated to mean a
restriction on overtime work, as it is tied to the period of time during which
an employee may be engaged to work.
·
Schedule
I-B of the Industrial Employment (Standing Order) Rules, 1946: It restricts workmen from taking up
any employment that may prejudice the interests of the industrial establishment
in which he is employed.
·
Clause
22 of the draft Model Standing Orders for Service Sector, 2020: While these model standing orders are
not notified under the Industrial Relations Code, 2020, the relevant clause
states that a workman is expected to refrain from working against the interest
of the establishment in which he is employed and shall not take up any other
employment that may adversely impact the interests of his employer. However, a
worker may take up additional employment, with or without conditions, after
obtaining the necessary permission from his employer. Therefore, the new labour
codes, seem to address the reality of the industrial sector, whereby workers
tend to engage in dual employment and where gig workers are typically engaged
in such establishments.
Judicial Precedents
In
this section, we analyse certain judicial precedents that have expounded the
principles of law relevant to moonlighting or dual employment in India.
In
most cases, Indian courts have upheld the termination of an employee for
moonlighting or dual employment. For instance, in the case of Gulbahar vs Presiding Officer
Industrial[1], the High Court of Punjab and Haryana
upheld the termination of an employee who was engaged in double employment, as
alleged by the employer and upheld the dismissal.
Similarly, the Bombay High Court was of the opinion that the dismissal of a factory worker for double employment under Section 60 of the Factories Act, 1948 was neither excessive nor harsh but was in fact reasonable, as by engaging in dual employment, the worker was depriving his employer from the best of his services as it is humanly impossible to work at the same quality and efficiency for extended periods of time, continuously.[1]
Another
scenario that was upheld by courts would be if the certified standing orders of
a company clearly outline a restriction on dual employment and consider it as
an act of misconduct. In such a case, courts have upheld moonlighting as an act
of misconduct which would invalidate any relief, if it is established beyond
reasonable doubt.[2]
Therefore,
if an employee engages in dual employment when there are clear restrictions in
place, the courts have so far, adopted an employer-friendly view.
Present
Scenario
In
the recent past, moonlighting has risen as a side-effect of the pandemic and various
companies across industries have adopted different approaches as regards to how
this issue should be dealt with. For instance, according to publicly available
information, it appears that certain companies have allowed employees to take
up additional projects or demarcated certain jobs as ‘side gigs’, within their
organisation, outside business hours, for the development of their skill set,
while others have strictly forbidden dual employment and have resorted to
terminating employees found moonlighting, for breach of their contracts.
Issues
such as confidentiality, non-compete, ownership and assignment of intellectual
property of employees as well as contribution to employment social benefit
schemes, such as under the Employees’ Provident Funds and Miscellaneous
Provisions Act, 1952 or the Employees' State Insurance Act,1948, are grey areas
and legitimate concerns that plague employers when dealing with employees
engaging in dual employment.
Certain
companies have already adopted measures to address such concerns by regulating
the manner in which employees may take up dual employment by way of,
illustratively, (a) demarcating projects that require approval and those that
do not, majorly on the basis of economic consideration and area of business; (b)
requiring strict adherence to their confidentiality and non-compete obligations
and ensuring that the envisioned project does not affect their performance or
attendance; and (c) treating violation of the dual employment terms, as
misconduct, which could lead to disciplinary action or even termination,
depending on the severity of said violation.
Conclusion
In light of this, it cannot be denied that moonlighting is a prevalent phenomenon and is here to stay, whether one is in favour of it or not. Accordingly, it is important that the employer should identify the company’s stance when developing and executing their HR policies and practises. Companies can also adopt a moonlighting policy based on their nature of service and employment conditions. A few steps employers can take into account when dealing with moonlighting are:
Contractual
Protection: The first line of defence is to incorporate
suitable contractual provisions in the terms of employment, whether in the
appointment letter or in policies or other documents that form a part of the
terms of employment. For example, a non-compete clause is a standard inclusion
in most employment contracts and are enforceable during the term of employment.
Such negative covenants that are applicable during the term of employment are
generally not considered to be violative of Article 27 of the Indian Contract
Act, 1872 as a restraint on trade.
Vigilance:
Employers need to be vigilant regarding protection of their rights by tracking
their employees’ performance levels, investing in better cyber security
protection and creating better awareness among their employees. Such an
option might be suitable for companies dealing with sensitive or critical data.
In fact, clients of such companies might deem it imperative to disallow other
work or moonlighting by the employees.
Moonlighting
Policy: In case an employer decides to allow moonlighting by
their employees, a policy can be implemented whereby the company outlines
approvals as well as projects that can be undertaken by such employees. For
instance, an employee should not be allowed to take up projects that may
require the employee to create or invent products or intellectual property that
could be used in the same area of work as their primary employer. Further, the
policy should outline and mandate transparency from employees with relation to
any additional projects or activities they wish to undertake. The policy should
also ensure that the employees continue to adhere to any confidentiality or
non-compete obligations that may be in place.
These measures would enable companies to allow their employees to take up additional engagements, in a regulated manner, while ensuring that their own interests are protected, and we are likely to see more organisations adopt such policies as the need for skilled labour or gig workers, rises.
