The options before Wipro employees fired over moonlighting: What the law says

Experts said there are no specific laws in India regarding dual jobs for IT professionals or people working in positions that are administrative or supervisory.

Wipro's recent firing of 300 employees for moonlighting, a practice of taking up a second job or projects on the sly, has created a stir in the IT industry. Some companies have adopted the practice of moonlighting that came into prominence during the pandemic, some have fired employees for practising it while some are deliberating on future courses.

But experts said there are no specific laws in India regarding dual jobs for IT professionals or people working in positions that are administrative or supervisory.

Moneycontrol interacted with a few corporate lawyers to clear the fog around the legal aspects of moonlighting – what exactly constitutes the practice, what can make organisations fire and does the law offer a silver lining for the employees?

Do Indian laws recognise moonlighting?

To put it straight, moonlighting is not completely prohibited under the law in India. Why? Because it is not explicitly mentioned anywhere in the law books. The term is adopted by a multitude of people to define the practice of having more than one job.

However, there's a catch. Section 60 of the Factories Act 1948 prohibits the double employment of adult workers in factories.

Who is a worker or a ‘workman'? As per Industrial Disputes Act 1947, or Industrial Relations Code 2020, the definition of ‘worker’ means any person employed in any industry to work for a reward, whether the terms of employment be expressed or implied.

Express terms are those that have been specifically mentioned or have been agreed upon by the parties contrary to implied terms which are unwritten and are presumed to be agreed to.

'Workman' is an exhaustive term and basically includes all workers except for those employed in mainly managerial or administrative, supervisory capacity. However, the inclusion of IT workers under ‘workman’ is not clear.

Though many employers express the contract of employment prohibiting dual employment, including debarment of joining the competitor, not to work for another employer during your allowed rest time, it is also an implied term of employment, Aditya Chopra, Managing Partner, Victoriam Legal - Advocates & Solicitors, told Moneycontrol.

He said similar rules are framed by respective states such as Section 65 of the Bombay Shops and Establishment Act, 1948 and the Delhi Shops and Establishment Act 1954, which also prohibits double employment.

“In conclusion, though moonlighting is not totally prohibited in India, it still is a practice which is punishable by way of terminating the employee for breach of contract,” Chopra said.

What about consultants, advisors etc?

When a service certificate is issued to an employee as per the Industrial Employment Standing Order Act, 1946 which also covers the IT and ITeS sectors, Chopra said, “It infers that such employee was gainfully employed with the employer from the start date of employment to the end date of employment.”

Every employee consenting to the service certificate has to follow the terms mentioned. For instance, Infosys explicitly warned employees moonlighting could lead to termination in an email. "Remember - NO TWO-TIMING - NO MOONLIGHTING (sic)," the email sent by HR reads.

The company said dual employment is not permitted by its employee handbook and code of conduct.

However, if a person is working as a consultant or advisor, or any other form of employment which does not qualify for ‘full-time’ employment, much would depend upon the terms of the contract executed between the company and the concerned person.

“If the contract is an exclusive one and the employee is working without the consent of the employer appropriate action may be taken against the employee,” Suyash Srivastava, Partner, DSK Legal, said.

Further, even if the contract is not exclusive the person is not altogether free to work for another organisation.

“There may be restrictive covenants in the employment contract pertaining to confidentiality, non-solicitation, rights over intellectual property etc. through which the interest of the company is protected,” Srivastava said. “And if there is a breach of such restrictive covenants, the same may be enforced by the employer.”

How Wipro may have found and fired employees?

Recently, Wipro Chairman Rishad Premji said the IT major had found 300 of its employees working with one of its competitors at the same time, and added that action was taken in such cases by terminating their services.

“As part of a yearly audit of employees and vendors at Wipro the Universal Account Number (UAN) was accessed through the employer's portal appearing on the website of the Employees Provident Funds Organisation (EPFO) and it came to light that some employees are working for a different company while working at Wipro,” says Srivastava.

In the circumstances that moonlighting or any practice like moonlighting is mentioned to be prohibited in the contract of the employee, then the Indian law allows companies to fire such employees/terminate their employment on the grounds of a breach of contract, says Chopra. “Wipro may have fired the employees based on the same grounds.”

What to do if laid off due to moonlighting?

Wipro’s or any other company’s laid-off employees can have recourse to their termination by claiming it to be unlawful termination if they have not conducted acts that amount to a breach of their contract with the company.

“They have to uphold that by the way of their employment contract, they were not explicitly prevented from seeking employment somewhere outside the company,” says Chopra.

One can claim to be working individually outside the means of employment and thus not amounting to dual-employment i.e., moonlighting, he said.

If all the conditions meet, Srivastava said the terminated employees may file a claim for reinstatement with back wages alleging the termination was illegal, arbitrary, an act of unfair labour practice or having been effected without following the due process of law.