Moonlighting refers to full or part-time employment in addition to a primary job. It is generally undertaken without informing the primary employer. It is typically done ‘under the moon’, that is, at night or on weekends. The moonlighter contends that they are exercising their freedom of choice. On the other hand, the employer has concerns about decreased productivity of the employee.
While moonlighting is said to have existed since long, it gained prominence in recent years. According to a study published in 2019, alternative work arrangements in the US increased by 38 percent in 5 years preceding the study. Changes in employment patterns are visible since the pandemic with the economy suffering a jerk leading to sudden loss of jobs and pay cuts. In light of this, moonlighting gained traction during and post the pandemic. While increased financial security is the forebearer for moonlighting, other possible reasons include wanting to gain exposure in another field, increased experience for future employment prospects, and disinterest in the current job. Below could be signs of an employee being a moonlighter:
- opting for work from home more often than their colleagues;
- inability to join online meetings;
- deadlines being missed frequently;
- delayed responses to work correspondence; and
- appearing fatigued and exhausted during office hours.
When such suspicions arise, an employer has a wide variety of options to choose as the future course of action. While the law is yet to catch up with this 21st-century phenomenon, employers have increasingly been taking steps to track moonlighting among their employees. This article after attempting to understand the laws regarding moonlighting in India, will delve into how moonlighting is being tracked by companies in recent times.
The legal status of moonlighting
The Indian legal system does not expressly deal with the phenomenon of moonlighting. However, the intention of the legislatures when drafting Section 27 of the Indian Contract Act, 1872 could be inferred as a hint towards an attempt to curb moonlighting, which states that an employee could be prohibited from starting their own business or working with competitors during the course of their employment to avoid competition with the present employer.
Further, under Paragraph 8 of Schedule I-B of the Industrial Employment (Standing Orders) Rules of 1946, and Section 60 of the Factories Act of 1948, dual employment is prohibited. The Supreme Court observed, in Manager, Pyarchand Kesarimal Ponwal Bidi Factory v. Omkar Laxman and Ors., that the general rule in the relationship of master and servant is that the subsistence of one contract of service with the master is a bar to service with other masters unless provided in the contract or the express consent of the master. However, the above-mentioned statutes and precedents relate to just one sector of employment, i.e., factory workers and workmen. For employees working as professionals or in administrative positions, the Indian legal system does not have laws regulating or prohibiting moonlighting.
How can an employer track moonlighting?
There are multiple ways for an employer to track moonlighting and few of them depend upon the duration of the employee’s engagement with the company.
1. For fresh employees, employers should be cautious from the beginning. The following safeguards can be taken:
a) employers can question the employee if they are engaged in any engagement or employment other than the current employment;
b) employers can insert a clause prohibiting moonlighting in their employment contract. This clause shall have the effect of stopping the employee from engaging in moonlighting altogether and/or making it mandatory for the employee to inform the employer when they are engaging in moonlighting by having the employee disclose any outside engagement to their employer. This gives the employer an opportunity to monitor and check for potential conflicts of interest or leakage of confidential information;
c) a confidentiality agreement or a non-compete agreement can be entered into which prohibit the employee from engaging in work that could compete with the company’s commercial interests.
2. For existing employees, in whose employment contracts above safeguards have not been inserted, employers can engage in background checks through multiple means to track moonlighting, such as:
a) checking the employees’ Universal Account Number (“UAN”) which would reveal if the employee were receiving salary from more than one source. A UAN is a 12-digit identification number assigned by the government to both, the employer, and the employee, which enables them to contribute to the Employees Provident Fund;
b)consent from the employee to analyse their bank account statements which could reveal salary and other income sources.
c) engaging a data analysis third-party vendor which specialises in monitoring moonlighting in the corporate sector.
d) lastly, the company can deploy their legal and technical team to conduct a background check. The legal and technical team would then review public records, scour through financial records and employment history or they could scan freelancing websites to match employees’ profile.
3. Informal means of tracking moonlighting can be employed in addition to the above, a few such means include:
a) conducting seminars/sessions for employees to help them understand the company policies, impact of moonlighting, the potential pitfalls;
b) stringent actions being taken any employee engaging in dual employment would have the impact of deterring other employees from engaging in the same;
c) enabling whistle-blower platforms wherein other employees or anyone in the organization could report potential moonlighting or dual employment. Ensuring anonymity of whistle-blower complaints so that employees can report without fear of retribution for exposing their colleagues, or demotion or fear of expulsion from the company.
Therefore, a company has a plethora of ways in which they can deal with dual employment, they majorly depend on various factors such as seriousness to deal with moonlighting, the resources being deployed to track it, and whether confrontation with the employee is a possibility. However, a balance has to be struck between tracking such activities and the privacy of the employees because moonlighting is a delicate situation to handle for any employer and it has to be done keeping in mind the company’s interests while also acknowledging the realities of the post-pandemic world. On the other hand, with companies increasingly keeping a lookout for moonlighters, employees must also be cautious. They must keep in mind the company’s moonlighting policy or repercussions from the employer, before engaging in other businesses.
 Understanding Trends in Alternative Work Arrangements in the United States, https://www.nber.org/system/files/working_papers/w25425/w25425.pdf.
 Manager Pyarchand Kesarimal Ponwal Bidi Factory vs. Omkar Laxman Thange and Ors. (AIR 1970 SC 823).
 Employees Provident Fund data tip blows off moonlighting cover in IT sector, https://government.economictimes.indiatimes.com/news/governance/employees-provident-fund-data-tip-blows-off-moonlighting-cover-in-it-sector/94705380.
Author: Subham Tibrewala, Associate (assisted by Gayatri Kondapalli)
Disclaimer: The content of this article is intended to provide a general guide to the subject matter and that the same shall not be treated as legal advice. For any queries, the author can be reached at firstname.lastname@example.org