Authors: Aditi Raj is currently a student at the National University of Study and Research in Law, Ranchi, India who intends to join her state’s judiciary, and therefore all her professional endeavours are towards understanding and bringing forth the rights of the people. Himanshu is a 4th-year student of B.A. LL.B. (Hons.) program at the National University of Study and Research in Law, Ranchi, India having research interest in the fields of public international law and constitutional law.
The recent incidents involving Infosys and Wipro have triggered a debate on the legality of employees working multiple jobs. While some IT companies like Tech Mahindra and Cred have embraced moonlighting by implementing progressive policies, others maintain a strict stance. The article explores Indian labour laws, including the Indian Constitution and various acts, while providing insights from judicial perspectives. It delves into the potential conflicts of interest, contractual obligations, and termination implications. With the evolving nature of employment in India, this article sheds light on the ongoing debate and legal considerations of moonlighting.
Introduction:
The chain of events in the last quarter of the year has spurred debate over moonlighting or dual-employment. A letter dated 16th September by the Infosys management to its employees reminding them of the company’s policy over moonlighting followed by the layoff of 300 employees by Wipro on September 21 has posed a legal query in the minds of the working class. In the meanwhile, the Minister for Electronics and Information Technology proposed his support towards the new age of employee-entrepreneurs and the structural shift in the minds of the young Indian tech force.
While we saw these IT giants facing north from the idea of moonlighting, some IT companies such as Tech Mahindra & Cred joined Swiggy which is the industry’s first in drafting a moonlighting policy. As per the policy, an employee is permissible to pursue their interest or hobby in non-working hours of the day, however the employer’s consent is required if the same is a highly sensitive project leveraging professional know-how. Tech Mahindra in its statement has revealed that the company is in consideration to frame a similar policy that allows dual employment as long as the employee is meeting the efficiency and productivity norms.
Members of the All India Services are specifically prohibited from engaging in certain activities, but are permitted to perform honorary social or charitable work, occasional literary, artistic, or scientific work, or participate in sports activities as an amateur without the permission of the government. However, the government may at any moment request that the member(s) cease such actions.
Legal Standing of Moonlighting vis-à-vis Indian Labour Laws:
In today’s fast-paced world, people are continually seeking ways to supplement their income, and moonlighting, or taking on multiple jobs, is one way to achieve this goal. However, Indian laws regarding moonlighting are ambiguous and unclear, which may leave individuals in a precarious legal position.
While it is not against the law to have multiple jobs in India, it may be considered a breach of contract if an employee’s agreement with their employer prohibits such conduct. Many companies include non-compete and exclusive employment clauses in their contracts, making it challenging for employees to moonlight. Furthermore, traditional employment contracts, which require exclusive employment, may view moonlighting as cheating.
Despite the absence of clear legislation, various statutes and acts in India govern moonlighting, including the Factories Act, 1948, the Delhi Shops and Establishments Act, 1954, the Industrial Employment (Standing Orders) Central Rules, 1946, the Industrial Relations Code, 2020, the Fundamental Right to Freedom of Profession or Trade, and the Indian Contract Act.
The Factories Act, 1948, states that an adult worker must not be forced or authorised to work in any factory on any day on which they have previously worked in any other factory. However, IT specialists, administrative personnel, and supervisors are not included in the Act’s definition of a worker.
The Delhi Shops and Establishments Act, 1954, governs employees who work in retail shops, eating establishments, theatres, and other public amusement or entertainment facilities, as well as information technology and information technology-enabled services. Each state has its own Shops and Establishments Act, and the Delhi Act, for example, prohibits individuals from holding down multiple jobs.
The Industrial Employment (Standing Orders) Central Rules, 1946, under the Industrial Employment (Standing Orders) Act, 1946, prohibits workmen from working against the interests of their employer or taking on any employment that may adversely affect the employer’s interests. However, an employee may request advance approval from their employer to take on extra work.
The Ministry of Labour and Employment’s Draft Rules for Service Sector, 2020, contains a provision on “exclusive service,” which forbids employees from taking on any additional employment that may harm their employer’s interests. However, there is an exception in cases where a worker seeks advance permission from their employer.
Under Article 19(1)(g) of the Indian Constitution, all residents have the right to practice any profession and engage in any employment, trade, or business. Moonlighting falls under the purview of this article. However, there are reasonable restrictions imposed on this article.
The Indian Contract Act does not specifically address dual employment. However, Section 27 of the Act prohibits the inclusion of non-compete clauses in employment contracts. Such clauses restrict employees from starting their own business or accepting a job offer from a competitor, thereby preventing them from competing with their employer or disclosing confidential information during or after the period of employment. Nevertheless, jurists have opposed this view, claiming that such restrictions impede people’s ability to contract freely and have an impact on commerce. The Law Commission of India also recommended reviewing Section 27 to include reasonable restrictions in its 13th report from 1958.
Employment contracts often contain non-compete provisions, making it difficult for employees to moonlight without violating their contractual obligations. However, the stance of Indian law on this issue is unclear.
In conclusion, moonlighting is permissible in India, provided it does not violate any contractual agreements or laws. Employees should review their employment contracts thoroughly to ensure that they are not in breach of their contractual obligations before taking on additional work.
Judicial Perspective on Dual Employment:
The Indian Constitution’s Article 21 guarantees the right to life and personal liberty. The judiciary has interpreted this provision extensively, including the right to livelihood. The Court, in the case of Board of Trustees of the Port of Bombay v. Dilipkumar Raghavendranath Nandkarni, held that the “right to life” granted by Article 21 encompasses the “right to a livelihood.” However, the court’s stance on dual employment primarily favours employers, as evidenced by the following judgements.
The Supreme Court, in Niranjan Shankar Golikari v. The Century Spinning & Mfg. Co., upheld the non-compete clause of an employment contract, which prohibits an employee from working for the employer’s competitor during the duration of the employment contract. The court, however, emphasised that a negative covenant could only be enforced if it was reasonable and not excessively harsh or prejudiced.
In Wipro Limited v. Beckman Coulter International SA, the Delhi High Court found that non-solicitation agreements, which prohibit employees from disclosing or soliciting clients, are permissible. Dual employment is lawful if the employment contract contains no restrictions or if the employer consents, according to the Madras High Court in Government of Tamil Nadu vs Tamil Nadu Race Course General Employees Union. Therefore, reviewing the employment contract is essential to prevent employees from engaging in moonlighting.
The Supreme Court in Manager, Pyarchand Kesarimal Ponwal Bidi Factory v. Omkar Laxman Thange and Others, stated that the general rule in the relationship between a master and a servant is that a subsisting contract of service with one master precludes service with another, provided that the contract contains provisions or the master agrees.
When determining the eligibility of a Life Insurance Corporation (LIC) employee for membership in a local body, the Supreme Court stated that such a restriction does not affect the candidacy for election but the nature of employment itself. The court also held that if the employee participates in local administration or other elections, they may be compelled to resign from their government job or employment if holding two jobs undermines their effectiveness as an employee. They may also face disciplinary action. The Punjab and Haryana High Court upheld the dismissal of a driver who had engaged in dual employment.
As a result, under Indian law, dual employment is permitted, subject to the employment contract allowing for dual work or with the prior consent of the respective employers. This position is also reflected in the Model Standing Orders for the Service Sector, 2020 (“Draft Rules“), prescribed under the Industrial Relations Code, 2020.
In conclusion, while the right to livelihood is recognised under Article 21 of the Indian Constitution, the judiciary has predominantly favoured employers’ position on dual employment. The courts have upheld the enforceability of non-compete and non-solicitation clauses in employment contracts and have emphasised the need to review the employment contract to prevent moonlighting. Therefore, employees should be cautious and ensure that they have the employer’s prior approval or a contractual provision that permits them to engage in dual employment.
Moonlighting: Legality of Termination of Employment Contract:
Moonlighting may also be associated with a conflict of interest, a violation of confidentiality/proprietary information, competition, solicitation of co-workers or vendors, intellectual property compromise, and attrition. These concerns put organisations at greater danger, and the proper procedures should be in place to safeguard the company’s interests. Therefore, to safeguard one’s own interest, companies resort to the termination of such employees as necessary.
Separately, an employer may have practical difficulties, such as paying provident fund payments in behalf of individuals employed by more than one employer under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF Act”). Individual members of the Employees’ Provident Fund Organisation are assigned a Universal Account Number (UAN), which is linked to a code number assigned to an employer covered by the EPF Act, making it administratively difficult for more than one employer to make EPF contributions in respect of the same individual at the same time. A similar problem would arise in the case of employees’ state insurance contributions under the Employees’ State Insurance Act of 1948.
It is worthy to note here that the foregoing limits and practical challenges would only apply if an individual was hired by more than one person. As a result, these issues are irrelevant if there are two distinct connections at work: an employer-employee relationship and (ii) any other form of relationship (such as a consultancy agreement or project-based/gig-based assignment). In such cases, the permissibility of the second engagements would be fully contingent on the contractual provisions of the individual’s agreements with the engaged businesses.
Contractual conditions prohibiting dual employment and/or second engagements are enforceable under Indian law, and the Supreme Court has upheld non-compete clauses in employment agreements that are in effect during the duration of an individual’s employment agreement on several occasions. Most firms have terms in their employment contracts or policies that clearly state that the employee is hired on a full-time basis and is not permitted to work in any other organisation on a permanent, temporary, or part-time basis without the prior agreement of the employer. These agreements also include rules about conflicts of interest, secrecy, and concurrent employment with another company, particularly a rival. A firm may always lawfully enforce these clauses in court as long as they are included in the contract and the employee has consented to them.
Concerning the legitimacy of these concerns, Indian courts have recognised non-compete restrictions while on the job. In addition, Indian laws guarantee the confidentiality of an employer’s information and intellectual property. Non-solicitation agreements are enforceable if they are fair. Therefore, to safeguard one’s own interest, companies resort to the termination of such employees as necessary.
Conclusion:
In conclusion, moonlighting or dual employment is a complex legal issue in India that remains largely ambiguous and unclear. Although it is not against the law to have multiple jobs, non-compete and exclusive employment clauses in employment contracts and other statutory laws can make it difficult for employees to engage in such activities. The Indian Constitution guarantees the right to practice any profession or trade under Article 19(1)(g) but with reasonable restrictions imposed on it. However, individuals should review their employment contracts carefully before taking on additional work to avoid breaching contractual obligations. While some companies, such as Swiggy, have implemented moonlighting policies, others, such as Infosys and Wipro, have maintained their strict stance on the matter. The debate surrounding moonlighting and its legality is likely to continue as the concept of employment evolves in India.
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