Moonlighting has become quite popular among employees in recent years. Accepting jobs other than the primary source of income has become a trend that allows employees to generate additional income or pursue their passions and hobbies. Similarly, remote working and price inflation are some of the common reasons that lead employees to look for more opportunities other than jobs to earn extra income. However, as much as moonlighting is advantageous, it also has drawbacks. Practicing moonlighting impacts the employee’s compliance standards as well as legal regulations.
Being one of the leading labour law consultants in Mumbai, here we are sharing insights about compliance and legal issues in moonlighting. These insights are equally beneficial for employers and employees.
What Exactly Is Moonlighting?
Moonlighting refers to engaging in additional paid work apart from primary employment. This secondary job one opts for can be full-time, part-time, freelance, or even a side hustle. It allows individuals to earn extra income, pursue their passion, or acquire new skills.
What Are the Different Types of Moonlighting?
Blue Moonlighting
Not every employee can handle two jobs at a time, which makes them unproductive. Hence, they choose occasional freelance projects or gigs that require minimal time investment. This little to no attempt to engage in activity other than primary employment is called blue moonlighting.
Quarter Moonlighting
This includes employees taking part-time work for limited hours alongside full-time primary employment. In quarter moonlighting, the work lasts for 2-4 hours.
Half Moonlighting
In half moonlighting, the employee spends half of their free time working extra after the primary job functions. However, part-time jobs require the same effort as full-time jobs to earn more income.
Full Moonlighting
Here, employees equally manage two jobs, a primary full-time job as well as a side hustle simultaneously.
Compliance Issues Due to Moonlighting
Though moonlighting in India isn’t inherently illegal, there are some compliance requirements employees should adhere to. As labour law advisors, we have shared a few important compliance issues that one should consider.
Regulatory Compliance
Some professions and businesses have specific regulatory requirements and codes of conduct. Violating these regulations without obtaining proper permission for moonlighting results in penalties and disciplinary actions.
Contractual Restrictions
Several employment contracts contain clauses that restrict moonlighting activities. These often include limited working hours outside of primary employment, prohibiting competing businesses, or need prior employer approval for secondary jobs.
Confidentiality
Being in employment with a particular organization, it’s the employee’s duty to protect their employer’s confidential information. Moonlighting work shouldn’t involve sharing sensitive information of the company or creating a conflict of interest.
Working Hours & Fatigue
Excessive work pressure due to moonlighting results in fatigue and impacts employee’s performance in their primary job. It is employers’ responsibility to ensure whether their employees aren’t working excessive hours that could compromise safety or productivity.
Tax Implications
Both employers and employees need to be aware of potential tax implications associated with moonlighting income in India. Hence, employees should report their income to tax authorities through moonlighting; failing to do so results in tax evasion charges and penalties.
Non-Compete Clauses
Employment contracts of some companies include clauses related to labour law compliance in India. According to these clauses, employees should not take work from competitors during or after their employment period.
Legal Implications of Moonlighting
The perspective regarding moonlighting differs for every industry and business in India. Some consider it an unethical practice that requires timely actions; on the other hand, some think that it’s not a major issue until and unless it involves competitors or affects productivity at work. However, employees and employers equally need to understand the legal implications of moonlighting. The legality of moonlighting depends on whether the employee adheres to the contractual obligations with their primary employer. In case the employee breaches the employment contract, especially the non-compete clause or confidentiality clause, it leads to legal consequences. These may include disciplinary action, termination, or even legal disputes.
Popular Laws Related to Moonlighting in India That Can Result in Legal Implications
The Factories Act, 1948
The act applies restrictions on dual employment. As per the act, no adult workers can work at another factory on any day while already employed there.
The Indian Contract Act, 1872
This act establishes the legal framework for contracts, including employment contracts. Individuals should adhere to the clauses mentioned in the contract. In the case of breach of contractual clauses, such as non-compete agreements, it can lead to legal action.
The Industrial Disputes Act, 1947
This act defines procedures for investigating and resolving industrial disputes. It also includes disputes arising from potential conflicts of interest or breaches of employer policies related to moonlighting.
The Information Technology Act, 2000
The Information Technology Act governs cyber security and data protection. Employees must ensure they don’t misuse their primary employer’s confidential information or violate data security protocols during moonlighting activities.
Importance of Moonlighting Clause for Employers in India
A well-defined employment contract that consists of accurate moonlighting clauses brings clarity to both parties. Employers can consult a reputable labour law consultancy to draft clear and legally compliant moonlighting clauses in the employment agreement. Some of the important clauses to mention in the agreement for labour law compliance in India are as follows.
- Specify whether moonlighting is permitted and, if not, under what circumstances.
- Define restrictions on moonlighting activities, such as avoiding competition with the employer’s business or using company resources.
- Set expectations regarding work hours and performance to ensure moonlighting doesn’t negatively impact primary job duties.
- Encourage transparency by requiring employees to disclose any moonlighting activities that could potentially conflict with their primary work.
How Can Employees Stay Complaint with Moonlighting in India?
Employees considering moonlighting can ensure compliance by following these steps.
- Carefully review your employment contract and check clauses related to restricting moonlighting.
- In case the clauses are unclear, you can seek clarification from the employers’ HR department or consult with labour law advisor.
- If permitted, choose moonlighting activities that don’t directly compete with your primary employer’s business.
- You should be confidential about your employer’s information during moonlighting work.
- Effective time management is necessary to prioritize your primary job responsibilities and avoid fatigue and performance issues.
- You need to be transparent about your moonlighting activities to your employer beforehand, if the tasks can potentially create conflict with your primary work.
With the right understanding of legal laws and compliance, and by maintaining clarity, transparency, and providing the right information, both parties can stay compliant. Adherence to the legal regulations potentially avoids the consequences of moonlighting.
If you are looking for a reliable legal law advisor to guide you through the concerns related to moonlighting, choose Prompt Personnel. Being one of the renowned labour law consultants in Mumbai, our labour law advisory services include regulatory compliance, monthly compliances, compliance audits for principal employers and contractors, industrial relations, implementation of NAPS (National Apprenticeship Promotion Scheme) and POSH training. Similarly, our HR and recruitment services include HR outsourcing, temporary staffing, permanent staffing, talent management and many more. Offering services at the PAN India level, our legal law advisors understand your concerns and provide suitable solutions. Our team also checks regularly to ensure adherence to legal regulations and avoid any penalties.
While serving our clients with valuable services over the years, we have been recognized with different awards and certifications. Recently, in 2023, we were recognized as a future-ready organization in a large-scale category and certified as a great place to work in India.
Reach out to Prompt Personnel today to understand the legal regulations related to moonlighting in depth!