Moonlighting: The Rise of Side Hustles

What is Moonlighting?

The term “Moonlighting” was first used in the 1920’s to describe people who worked at two jobs, one during the day and one at night. It refers to the moon’s light shining on someone’s face while they work late into the evening or early morning hours.

Moonlighting refers to the practice of working a second job or starting a side business while still employed at one’s primary job. In other words it means than when an employee takes up a side hustle while being on the payroll of a primary employer usually without their knowledge. It is a practice that has become increasingly common in recent years, as people look for ways to supplement their income, retain meaningful involvement in life, or effectively utilise one’s talents and passion.

This idea can also be regarded as being a permanent employee of one company while working for another in the same industry. This term become quite popular in America when people started to work a second job additional to their regular jobs of 9 – 5. Since the situation of Pandemic effected the job security in the world and gave more rise to the work from home culture, employees got free time after work which they thought to utilise by taking an additional/secondary job to fulfil their passion and hobby and started working part-time jobs. Many workers in the IT industry moonlight “secretly” after hours to earn extra money. Due to remote working and decreased job security after the pandemic, the practise has become more popular. More than 43% of workers believe that having two jobs helps them maintain their income in the event that their primary source of income is destroyed.[1]

Moonlighting in India and whether it is Legal in India?

In India, the legality of moonlighting is somewhat complicated and in bit of a grey area particularly in India. On the one hand, there are no specific laws that prohibit employees from taking on a second job. However, many companies have policies that restrict or prohibit moonlighting, particularly if it is seen as a conflict of interest or if it interferes with the employee’s ability to perform their primary job duties.

As the law does not define or specify what moonlighting is, dual or double employment is somewhat regulated by the legislation listed below.

• The Factories Act of 1948 forbids employers from requiring or allowing adult workers to work in factories on days when they have already worked at another job. Employees who work in a mine or factory are not allowed to hold dual employment, which is prohibited by the OSH Code and the Factories Act, respectively. A worker shall never work against the interests of the industrial establishment in which they are employed and shall never take any additional employment there that could harm their employer’s interests, according to the model standing orders under the Industrial Employment (Standing Orders) Rules, 1946.
  (The aforementioned regulations only apply to a specific set of businesses and employee groups, hence their scope is limited.)
• Employees who work in, among other places, retail stores, restaurants, theatres, and other public amusement or entertainment facilities, as well as in information technology and information technology-enabled services, are governed by the Shops and Establishments Act. The Shops and Establishments Act varies from state to state. For instance, multiple works are prohibited by the Delhi Shops and Establishments Act of 1954.
• Dual employment is not specifically defined or addressed by Indian law. On the other hand, Section 27 of the Indian Contract Act, 1872 forbids the addition of a non-compete clause. An employee is prohibited from starting their own business or accepting a job offer from a rival by such a clause. The employee is ultimately prevented from competing with their company, leaking data, or doing either during or after the employment period.

In light of this, it might be said that accepting dual employment is against the terms of a contract for employment’s non-compete clause. The stance of Indian law on this matter isn’t entirely clear, though.

What may be the Potential Risks of moonlighting for the employer?

1. Conflicts of Interest: One of the risks associated with employee moonlighting is the potential for conflicts of interest. If an employee is working a second job that is in direct competition with their primary employer or that requires them to perform duties that do not align with their primary role, this can create ethical concerns and potential legal issues.

2. Poor Time Management and Fatigue: Another risk associated with moonlighting is poor time management and fatigue. Juggling multiple jobs can be stressful and challenging, leading to a decrease in the quality of work and potentially even burnout. This can ultimately lead to a decrease in productivity in the workplace.

3. Legal Troubles: Employers may also face legal troubles if their employees engage in unethical practices or behaviors while working in their second job. For example, if an employee shares confidential information or engages in unethical behavior that reflects poorly on their primary employer, this can result in legal action against the employer.

4. Decreased Productivity: Finally, employee moonlighting can lead to a decrease in productivity in the workplace. If employees are working multiple jobs, they may be less focused on their primary job and may have less availability to complete work for their primary employer. This can result in a decrease in the quality of work and potentially even missed deadlines.

5. Confidentiality breach: Moonlighting increases the chances of a confidentiality breach of product prototypes, trade secrets, and critical data. This may happen when employees take up similar jobs at two different companies.

6. Misuse of company resources: Employees may use company-provided software and laptops for their second job. Some employees may also use their regular job’s working hours for their second job.

Efficient ways to manage and prevent employee moonlighting

1. Having an open communication with your employees: A positive approach to moonlighting is to appoint an HR expert and have an open communication channels with your employees. You can ask them their reasons for moonlighting and help them with it if you can.

2. Creating a moonlighting policy: There are no particular laws that forbid employees from working second jobs. However, you might hire a human resources professional or department to design a suitable corporate policy that your staff can adhere to. You have the authority to take the necessary action if your employees break these laws/policies.

For this, you could add one of these to the employment contract:

• Non-compete: Where employees agree not to compete with the employer during and for a specific time after the employment period.
• Moonlighting policy: This would set out an expectation that employees should treat their work at your business as their primary job and shouldn’t let other jobs interfere with their performance. It’s typically drafted by a human resource employee after seeking adequate legal advice.

3. Taking Disciplinary actions if necessary: You as the employer can impose disciplinary measures if the second job of one of your employees impairs their performance or results in a conflict of interest. For instance, businesses like Wipro, Infosys, and BBC recently attempted to fire their workers who did side work.

Listed below are a few sanctions you can use:

• Publish letters of caution.
• Suspend underperforming part-time workers.
• Send termination letters for flagrant violations of the company’s no moonlighting policy and problems like disclosing private or confidential information.

4. Providing regular increments: As the cost of living increases, many employees adopt dual employment due to low salaries and employee benefits. Low wages may also make your employees feel undervalued and exploited.

5. Use productivity/digital tools to track employee time

Common Consequences of going against company’s cause of Moonlighting

• Disciplinary Action;
• Legal Action;
• Damages;
• Reputational Damage.

Different ways in which the company/employer can detect if the employee is moonlighting

• Verifying the UAN (which is linked to the EPF Account) – Check whether more than 1 PF contribution is being made.
• Background Screening
• Digital Forensics
• Social Media Screenings
• Timesheet/Attendance Verification

Conclusion: As moonlighting becomes increasingly prevalent, employers must navigate its implications with diligence and foresight. Understanding the legal landscape, potential risks, and effective management strategies is crucial for maintaining organizational integrity and employee satisfaction. By fostering open communication, implementing clear policies, and leveraging technology, employers can mitigate risks associated with moonlighting while empowering employees to pursue diverse interests and aspirations responsibly.

[1] https://timesofindia.indiatimes.com/blogs/voices/is-india-ready-for-the-concept-of-moonlighting/