Moonlighting: No blanket ban in India though several laws frown upon it

The Factories Act is one such, but its provisions don't apply to firms that don't run a factory; many states have their own laws on the matter

Wipro recently fired 300 employees in India, saying they were moonlighting. The firm's action brings to the fore the question of where we stand in relation to laws governing dual employment.

Though moonlighting isn't totally prohibited in India, there are several acts that talk about dual employment. Section 60 of the Factories Act, 1948, prohibits the double employment of adult workers in factories.

However, its provisions on double employment do not apply to organisations that don't run factories.

Besides the Factories Act, the state-wise Shops and Establishment Acts lay down provisions related to organisations not covered under the Factories Act.

The Shops and Establishment Act is a state legislature and may change from one domain to another. However, it may bar employment in the same institutions or organisations after work hours.

The Bombay Shops & Establishments Act states that no employee shall work in any establishment, nor shall any employer knowingly permit an employee to extend services to another establishment on an off day.

The Delhi Shops and Establishments Act states that no person shall work for the business of an establishment or two or more establishments or an establishment and a factory for a period in excess of which he may lawfully be employed under the act.

Industrial Employment (Standing Orders) Central Rules, 1946, state that a workman cannot by doing dual employment work against the interest of an industrial establishment.

It is to be noted that the term dual/double employment as defined in the Shops and Establishment act is different from what is stated in the Factories Act. Under the provisions of the Factories Act, there is a direct obligation on the employee not to work on off days anywhere and an obligation on the employer not to permit such employment.

The definition of workman under the Factories Act is different from the definition of employee under the Shops and Establishment Act. By this definition, the IT sector is not governed by the factories act but by the Shops and Establishment Act.

In the case of Gulbahar vs Presiding Officer Industrial Tribunal (2016), the Punjab-Haryana High Court upheld the dismissal of the petitioner on the ground of dual employment. Similarly, a Delhi District court upheld the dismissal of the employee under dual employment in the case of Metso Paper (India) Pvt Ltd vs Mr V Gokulakrishnan in 2019.

While the laws do not expressly prohibit moonlighting, employer contracts certainly do, says P V Murthy, head of labour practice at Economic Laws Practice. “While I have not taken a look at the Wipro contract, the employer can certainly fire an employee for working for another organisation. When an employee works for a competitor, then he/she is in violation of the employer-employee contract and their termination is legal,” he said.

Organisations are not in favour of dual employment as it may affect the efficiency of the employee. Other reasons are the confidentiality of their clients and a conflict of interest. Standard employment contracts have non-confidentiality, non-compete, and exclusivity clauses to protect the interests of the establishment,” says Meghna Mishra, partner at Karanjawala and Co.

On the other hand, Vaibhav Bhardwaj, Partner at IndusLaw said Bombay shops and establishment act says an employee cannot work beyond a certain number of hours. “However, it has not specified if those specific hours are for one or two organisations. So if both organisations do not have a problem with it, an employee can work for both for those limited working hours,” he said.

“The validity of the contract comes with how aligned it is with law. If the contract is less favourable, it could be challenged,” he added.

Recently, Swiggy introduced the moonlighting clause for their employees which allows the workers to take up other jobs outside their work hours. “During Covid, a lot of people took up additional jobs to earn money. But many employers were not aware of it. It is also difficult to track such employees. Since there is no specific law to define moonlighting, the employment contract would be enforceable,” said Sanket Jain, Partner at Pioneer Legal.

Talking about how employers can even regulate the after-work hours of employees, Bhardwaj said, “Employers have the exclusivity for the entire day of the employee. This also pertains to social media and influencers after hours. Though it is not prohibited or illegal, it is not very well looked upon. However, if employer-employees have an understanding, it should not be a problem,” he said.