Moonlighting :Compliance Risk & Legality under Indian Labour Law

Moonlighting :Compliance Risk & Legality under Indian Labour Law

With the rise of remote work, moonlighting has become more common than ever, particularly in the IT/ITES sector. In today's dynamic economy and environment, people increasingly engage in moonlighting, which involves working multiple jobs in addition to their regular employment.


Moonlighting, the practice of working in multiple jobs outside of one's primary source of income, has become increasingly prevalent among employees in recent years. This trend is driven by various factors, including the need to generate additional income or pursue passions and hobbies. With the rise of remote work, moonlighting has become more common than ever, particularly in the IT/ITES sector.

In today's dynamic economy and environment, people increasingly engage in moonlighting, which involves working multiple jobs in addition to their regular employment. With the rise of remote work and price inflation, individuals are looking for extra opportunities to earn more income. While moonlighting can provide some advantages, there are also drawbacks to this practice. It can impact employers' compliance standards and change how employees work, affecting management efficiency.

Types of Moonlighting:

There are different types of moonlighting that employees may engage in, each with their own characteristics.

  • Freelancing is one type of moonlighting where an individual works on a temporary or part-time basis for a client or company while still holding a full-time job. This type of moonlighting can provide flexibility and additional income but may also lead to conflicts of interest and affect productivity at the primary job.
  • Part-time jobs are another type of moonlighting, where an individual takes on a secondary job with another employer in addition to their primary job. This secondary job may be in the same field or a different industry and can provide additional income and experience.
  • Gig work is a form of moonlighting where an individual takes on short-term contracts or assignments that are often project-based or task-based. Gig workers may work for multiple clients simultaneously and have more control over their work schedule but may also have less job security and benefits compared to traditional employment.
  • Self-employment is another type of moonlighting where an individual starts their own business or works as an independent contractor in addition to their primary job. This type of moonlighting can provide greater control and flexibility over one's work but also requires more responsibility and risk.

Benefits of Moonlighting in India:

  1. Extra cash: The most prevalent advantage of moonlighting is the extra cash it provides for the employee. With the increased cost of living, many people feel that their normal salary is insufficient to meet their demands. Moonlighting might help them cover their bills by providing extra
  2. Additional Experience: Employees who moonlight can gain useful experience that will help them advance in their jobs. Employees can build new skill sets and improve their resume (CV) by taking on additional jobs, which can be useful when being promoted or looking for new work prospects.
  3. Flexibility: Many moonlighting jobs provide flexible hours, which can be quite beneficial for individuals who have other commitments or duties outside of work. Moonlighting allows you to work around other commitments, such as family obligations or personal hobbies.

Hurdles of Moonlighting in India:

  1. Time Management: Moonlighting can be difficult in terms of time management. Working numerous jobs can be demanding and exhausting, resulting in "burnout" or a deterioration in performance. Employees must balance their jobs to avoid jeopardizing their main job or their health.
  2. Employer Perception: Employers may perceive moonlighting as a negative activity, perceiving it as a distraction or a lack of dedication or loyalty to the firm. Employees should know what their employer thinks about moonlighting and ensure that they are not risking their job status.

Compliance risk of Moonlighting in India:

In India, moonlighting poses a considerable risk for both employees and employers regarding compliance. Moonlighting, though technically allowed under Indian labour legislation, mandates prudent attention to legal and moral concerns.

Here are some compliance risks associated with moonlighting in India:

  • Conflict of Interest: Of major concern when moonlighting is the possibility of conflicting interests. A double-edged sword, an employee's supplementary work can either enhance or detract from their primary role. This could be seen as a breach of employer expectations, leading to disciplinary action or termination.
  • Disclosure of Proprietary Information: In some cases, moonlighting workers might inadvertently or knowingly share confidential or proprietary information from their primary job with their secondary employer or clients. Legal repercussions may ensue for the employee and the secondary employer due to this behaviour, as well as harm to the reputation of the primary
  • Productivity and Performance: Multiple jobs can impede an employee's ability to perform optimally in their primary position. Owing to moonlighting, the principal employer's operations may suffer, which could lead to breaches of contract if the agreed responsibilities are not carried out correctly.
  • Regulatory Compliance: Some industries and professions in India are subject to specific regulatory requirements and codes of conduct. Moonlighting without proper authorization or in violation of these regulations can result in regulatory penalties and disciplinary
  • Tax Compliance: Moonlighting income is taxable in India, and employees are responsible for reporting this income accurately to tax authorities. Failing to do so can lead to tax evasion charges and penalties.

Finally, moonlighting can give various benefits to employees in India, including extra cash, job advancement, and flexibility. However, there are aspects of moonlighting and legal considerations that must be carefully examined before starting any part-time job.

Legality under Indian Labour Law:

The issue of moonlighting has divided the Indian industry, with some viewing it as unethical and in need of stern action, while others believe it is not problematic as long as it does not involve competitors, affect productivity, or involve unauthorized use of proprietary information. The debate continues, but it is important to understand the legal position in India regarding moonlighting.

Moonlighting is a prevalent practice among employees worldwide, and some countries have specific laws regulating dual employment. However, in India, the laws are silent on the issue of moonlighting. The absence of any explicit legal prohibition against holding multiple jobs has created ambiguity around the legality of this practice.

Indian labour laws do not explicitly prohibit moonlighting, but certain restrictions have been put in place to prevent the exploitation of employees. These restrictions aim to ensure that an employee's secondary employment does not interfere with their primary job duties or create a conflict of interest. Therefore, while Indian law does not explicitly permit moonlighting, it does not prohibit it either, provided that employees abide by the restrictions placed upon them by their employers.

  • Factories Act,1948: 

According to the Factories Act of 1948, which applies only to factories, an adult worker is not allowed to work in more than one factory on a single day, unless the total working hours do not exceed the prescribed limit of 9 hours. However, this restriction does not apply to workers rendering services at any establishment that is not a factory, even if they exceed the 9-hour daily limit. It is important to note that this restriction only applies to workers in factories and does not prohibit them from engaging in secondary employment outside of the factory setting, provided they comply with the prescribed daily working hour limit.

  • Occupational Safety, Health, and Working Conditions Code, 2020:

According to the draft Model Standing Orders for manufacturing and service sector establishments under the Occupational Safety, Health, and Working Conditions Code, 2020, which is expected to replace the Factories Act, employees are allowed to engage in "ethical moonlighting". This means that employees may take on additional assignments that are not detrimental to the interests of the company where they work, provided that they have obtained prior permission from their primary employer. This implies that moonlighting may be permissible, but it should not interfere with the employee's productivity or affect the interests of the primary employer. The draft model standing orders also recommend that employees should not disclose or use any confidential information acquired from their primary employment in their secondary employment.

Moonlighting clause :

The inclusion of a moonlighting clause in an employment agreement has become increasingly important for employers to safeguard their interests. This clause is typically included to ensure that employees give their full-time commitment and energy to their current job, thereby restricting them from engaging in double employment. Such a clause is commonly known as a "restrictive covenant". In India, this clause is seen as a negative covenant that prohibits employees from engaging in any activities beyond their primary employment. The inclusion of this clause is only possible with the mutual consent of both the employer and employee.


To conclude, moonlighting is the act of the employee working under more than one employer in more than one organization. The labour laws of our nations have not specifically declared this legal or illegal and the same is the case with many other nations in the world while some of the nations have explicitly declared moonlighting to be illegal. The question was also about the morality and ethics involved in the act. This was debated by many people and has been a constant discussion among industry experts, employers, etc. after the emergence of the work- from-home wave. Some companies have declared that moonlighting is legal in their policy while others have decided to include it as a clause in the contract. The ambiguity continued and the debates kept happening on the other side, some companies laid off employees in large numbers for moonlighting. The Indian costs have not been discussed very often but have been mentioned in some cases.


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