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All about Moonlighting- meaning, prevention, & policy

Fraud Detection

moonlighting meaning, policy, and prevention

What is meant by moonlighting by employees?

When you look from an HR professional’s lens, Moonlighting means the act of taking up a job in addition to one’s regular employment. An employee may work a normal 9-to-5 job as a primary source of income and take up another job at night to earn extra income.

It has created much stir in the HR industry. Businesses are now divided into two schools of thought: ones that embrace moonlighting and, others that strongly oppose it. Nevertheless, neither wants a ‘second job’ interfering with their organization’s interest. As, employers believe that it hampers the productivity of their employees, which further affects the business. 

Where is moonlighting stemming from

1. Work from home

During the lockdown, businesses saw a surge in the number of employees taking multiple jobs. A July Kotak Institutional Equities survey of 400 people across IT&ITES space, revealed that 65% knew of people pursuing part-time opportunities or moonlighting while working from home. According to the Times of India, ‘HR experts have attributed moonlighting as one of the factors that make many reluctant to come back to the office’. 

Working from home is the perfect opportunity for moonlighting jobs. Employees can do the bare minimum at their regular jobs and invest their time in multiple sources of income.

2. Lack of commitment from employers

During the pandemic, several organizations across industries largely downsized. Many laid off their employees under the name of cost-cutting. As a result, many from the workforce were left without employment for a long time. An article by Forbes India talks about how this has created distrust among the workforce, who is now scared to settle for and entirely commit to one job.

3. Lack of employee skill development

A study by PwC’s India Workforce Hopes and Fears Survey 2022 revealed that:

Around 51% of employees in India stated that their employer is not imparting relevant technical or digital skills training needed for their career as compared to 39% globally. 

As a result, employees are looking for more opportunities to upscale themselves by working on projects outside their regular employment. 

4. Demographics:

Gen Z and Gen Alpha are very gig focused, so much so that they are comfortable with the gig economy and hence moonlighting

5. Socio-economic culture influence:

Today are surrounded by so many influencers. They allow us to imagine a lifestyle that we have only dreamt about. But now, we want to experience the same lifestyle. And hence, employees intend to create multiple means of income to pay for that lifestyle 

Is moonlighting legal in India?

There aren’t overarching laws in India regarding moonlighting. But, certain moonlighting cases might question data confidentiality or bring conflict of interest. Especially when an individual chooses to moonlight with companies that are direct or indirect competitors.  

Yet, certain laws in India prohibit dual employment. 

Firstly, according to the Factories Act, during an employee’s working period at a factory, he/she cannot work at any other factory. 

Secondly, the Shops and Establishments Act talks about how an employee cannot work with other employers on holidays or leave. It further puts the onus on the employee to make sure that he/she is only working with one employer at once. Yet, it also puts the responsibility on the employers to take proper precautionary measures. 

Thirdly, Industrial employment (standing orders) Central Rules

Under section 8 in its Schedule, I B, this act issues an order for ‘exclusive service’. It says:

‘A workman shall not at any time work against the interest of the industrial establishment in which he is employed and shall not take any employment in addition to his job in the establishment, which may adversely affect the interest of his employer.’

Any breach in these acts by an employee can lead to adverse actions against him/her. Termination, a lawsuit, hefty payment to the employer, etc. are some end actions taken against the employee. 

Can employers prevent moonlighting?

Yes, there are multiple ways in which employers can prevent moonlighting. They are: 

1. Take regular feedback to understand if your employees feel underpaid or insecure about their job

Most employees indulge in moonlighting to earn extra income. If your employees are satisfied with their primary salary, the chances of them taking up a second job are reduced. 

Next, employers must sensitively deal with the distrust created in the workforce during the pandemic. Large-scale layoffs have filled the workforce with fear. Here, making your employees feel more secure about their jobs is important.

2. Ask the right questions

Do your employees feel connected to what they’re working on? Do they see the impact of what they are creating? Or, do they only see it as a bunch of tasks which they can do somewhere else for more money?

Do your employees feel like they belong to a team? Do they feel like they’re cared for? 

Research published by Kansky (1994) says that- employee behaviour is a response to what he or she experiences at the workplace. It’s reciprocity. If they experience care and belongingness, they will respond with commitment.

So, don’t close the door. Don’t say moonlighting is bad, don’t say ‘quiet quitters, I don’t want you here’, and don’t close the door. Have conversations. Find out where it’s not working and try to solve the problem

3. Conduct a recurring background check

Instant digital EPFO checks conducted in regular intervals can help you keep an eye on what your employees are up to. It uses the provident fund database to check if your employee is simultaneously employed with another company. It is one of the checks packaged with IDfy’s ‘Infinity Checks’. You may run infinity checks on your employees regularly to prevent dual employment and other employee related fraud risks. To understand more, click here.

4. Create a company policy. Here’s what a moonlighting policy means: 

A moonlighting policy conveys that the employees will treat their work at a business as their primary job and won’t allow other jobs to interfere with the same. 

The policy contains a moonlighting clause, which is a ‘Negative Covenant’. That is a clause that stops employees from performing ‘moonlighting’ or having more than one job at once. This clause is agreed upon and signed with the consent of both parties (the employee and the employer). 

An employer usually conveys the Moonlighting Clause to the employee via the offer letter, an agreement, or an employment contract. In India, this clause is enforceable wherever necessary.

Here is an in-depth blog, if you want to know more about moonlighting policy.  

Here are some samples of the moonlighting clause.

5. Invest in providing your employees with exposure and skill-development

A study by PwC’s India Workforce Hopes and Fears Survey 2022 revealed that:

Around 51% of employees in India stated that their employer is not imparting relevant technical or digital skills training needed for their career as compared to 39% globally.

As a result, employees may look for opportunities outside of their primary jobs to learn and grow. 

To avoid this, employers may invest more in their employee’s learning and development. They may also provide their employees with the freedom to work outside of their usual job role within the company. It’s like creating an internal gig economy, where your employees can devote up to 20% of their time to in-house projects. Read more about it here. 

While, Moonlighting policy is something that companies have already adopted, other prevention ways are slowing growing. 

We hope this blog helps you. If you have any other questions, do write to us at

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