Moonlighting and Gig economy: Is prevention possible under the Indian legal framework?

Moonlighting is a growing concern in the Indian workforce. With the rise of the gig economy, where workers take up multiple jobs to make ends meet, preventing moonlighting has become more challenging than ever before. But is prevention possible under the Indian legal framework? This article explores the legal aspects of moonlighting and the gig economy in India and discusses strategies for prevention.

Moonlighting has become a topic of debate in the IT industry as working from home became the norm during covid-19 pandemic, which is believed to have led to to a rise in dual employment. One of the first moonlighting cases reported in India came from Bengaluru where an employee had seven provident fund accounts. ONE EMPLOYEE, SEVEN EMPLOYERS!

?Legal Framework for Moonlighting in India

The legislation in India does not entirely ban moonlighting. Factories Act certainly impose restrictions on dual employment but that is an altogether scenario, which cannot be compared with working patterns that prevail in todays’ conditions. Thus there is no clear law that prevents dual employment. However, it can create conflicts of interest and other ethical issues in the workplace. Employees owe a duty of loyalty to their employers, and moonlighting can be a breach of this duty. Additionally, moonlighting can affect an employee's productivity and performance at their primary job, leading to potential disciplinary action.

Employers can prevent moonlighting by including a clause in the employment contract that prohibits employees from engaging in any other work without prior approval. Employers can also implement a code of conduct that sets out the ethical standards expected of employees, including the prohibition of moonlighting.

Applicable legislations:

• 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/she may be lawfully employed under the legislation.
• 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.

Judicial Precedents

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 CWP No.15088 of 2015, 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 in Manubhai Gorbhandas v. Arvind Mills Company, 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.

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.

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.

Steps for preventing moonlighting:

A few steps employers can take into account when dealing with moonlighting are:

• Contractual Protection:?The first line of defense 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
• 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.
• 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 with the direct competitors of their primary employer, not using company resources, non solicitation at the full time job, etc.. 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.

Legal Framework for the Gig Economy in India

The gig economy is a new concept in India, and there are no specific laws that govern it. However, gig workers are classified as independent contractors, and the law provides them with certain rights and protections. The Indian government recently introduced the Code on Social Security, which aims to provide social security benefits to gig workers, including health insurance and pension benefits.

Preventing moonlighting in the gig economy can be challenging as gig workers have the freedom to take up multiple jobs. However, there are several strategies that employers can use to prevent moonlighting in the gig economy.

One approach is to implement a non-compete clause in the employment contract that prohibits gig workers from taking up similar jobs with competitors. This clause should be carefully drafted to ensure that it is reasonable and does not unfairly restrict the gig worker's right to work.

Another approach is to provide gig workers with incentives and benefits that promote loyalty and discourage moonlighting. For instance, employers can offer health insurance, retirement benefits, and other perks that make it more attractive for gig workers to stay with the company.

Employers can also conduct regular performance evaluations to ensure that gig workers are meeting their obligations under the employment contract. This can help identify any moonlighting or other unethical practices that may be affecting the gig worker's performance.

Conclusion

Moonlighting and the gig economy are new challenges that employers in India must face. While prevention may not be entirely possible under the current legal framework, there are strategies that employers can use to discourage moonlighting and promote loyalty and productivity among employees. Employers must carefully draft employment contracts, implement ethical codes of conduct, and provide incentives and benefits that promote loyalty. By taking a proactive approach, employers can mitigate the risks of moonlighting and the gig economy and create a positive work environment for their employees.

?

References:

1. Dual Employment Or Moonlighting In India by Samvad Partners

2. LLR November 2022

#moonlighting #employmentlaw #dualemployment #gigworkers #hradvisory #hrmanagement