Moonlighting: Important considerations for organisations and employees

1. What is moonlighting according to the Indian law?

2. Do laws on moonlighting cover all categories of employees, including the CEO and Board
members? (or only full-time employees)

3. What is the concept of "moonlighting"?

While there is no statutory definition of moonlighting under Indian law, it is generally

understood as taking up additional work (during or after working hours and/or on
holidays) outside of one's normal employment. This is done either through taking up
secondary employment or through freelancing projects on a contractual basis.

4. Is moonlighting permitted in India?

There is no specific law that deals with moonlighting in India. However, certain laws
like the Factories Act, 1948 and few state Shops and Establishment Acts (such as in
Delhi, Punjab, Telangana) prohibit employees (or in some cases employers) from
"being employed" (or from "employing" individuals) for more than the statutorily
prescribed working hours in another factory or establishment. Such provisions,
however, would not cover individuals who take up multiple part-time jobs, but restrict
the total number of hours worked within the maximum statutory working hours.
Individuals who also take up freelancing projects outside of their work hours would
also not be covered under this prohibition.

Since no law specifically governs this practice, the approach adopted by employers is
not uniform. Few companies like Swiggy and Tech Mahindra permit employees to
take up alternate jobs while ensuring that the same does not impact their regular work.
On the other hand, certain companies in the IT/ITES sector (like Infosys) have issued
a stern warning to employees from moonlighting.

5. Is the law different for employees moonlighting in private and government

sectors?

6. What challenges can moonlighting pose for employers? What legal actions can
employers pursue against employees who are found to be moonlighting?

Response: Some challenges that moonlighting can pose for employers are:

 The employer to an extent may be deprived of the best services of the employee
since employees engaging in multiple jobs may get over-worked and become less
efficient.
 The increased likelihood of an employee disclosing confidential and other
sensitive information with a competitor.
 Possibility of unauthorised use of the employer's resources by the employee.
7. Can employers take action against employees who moonlight?
To be able to take disciplinary action, the employment contracts and company
policies must contain provisions prohibiting any moonlighting. If an employee is
found in breach of such provisions, employers would then have the right to initiate
disciplinary action. However, any disciplinary action must be proportional to the
impact of the moonlighting by the employee. On occasion, the courts have held that
where the moonlighting did not result in any advserse consequence to the employer, a
termination of employment would be considered excessive. Therefore, all disciplinary
action must follow due process and the must be ascertained according to the facts and
circumstances of each case.
Are employees obligated to inform their employers of their gig work and other
sources of income?
What legal actions can employers pursue against employees who are found to be
moonlighting?

8. What legal remedies can an employee seek if fired due to moonlighting?

Response: If the employment is terminated due to moonlighting, the employee can
raise an industrial dispute against the employer for wrongful termination, provided
moonlighting was not prohibited under the terms of the employment contract and/or
company policies. Even if moonlighting was prohibited under the contractual terms or
comany policies, the employee can also raise a claim that termination of employment
was not proportional as the employee's act did not adversely impact the primary
employment. Another ground on which employees can challenge the termination is if
a fair opportunity for the employee to explain their conduct was not provided prior to
the termination.

9. What is the industry practice around moonlighting?

Most companies do not permit moonlighting by their employees. However, in recent

times some companies are choosing to regulate moonlighting rather than prohibiting it
outrightly, in a bid to attract more talent from competitiors.

10. What key aspects should employers include in the employment contract if they
decide to permit moonlighting or gig work?
Response: If employers intend to permit moonlighting, there are several ways in
which they can protect their interests. A common approach adopted by employers is
to allow moonlighting on the basis of written approvals from employees. The
advantage of this is that the permission can be withdrawn at any time if the
moonlighting impacts the work. Some other measures that employers implement is to
restrict working for a competitor / client, or undertaking any activity which adversely
impacts the employer or employee productivity, or any activity which leads to conflict
of interest or misuse of confidential information, etc.