Moonlighting | IAS GYAN

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Context

Moonlighting – or employees working for remuneration with entities other than their employers – has been a hot topic in recent months.

Details

Moonlighting means taking up a second job or multiple other work assignments apart from one’s full-time job.
Moonlighting has become a topic of debate in the IT industry as working from home became the normal norm during the Covid-19 pandemic, which is believed to have led to a rise in dual employment.
Indian IT firms are divided when it comes to moonlighting. For some, it’s unethical while others call it the need of the hour.

Does Any Law Prevent Dual Employment?

There is no law that prevents dual employment. Moonlighting is not defined under any statute in Indian employment laws. Moonlighting is also not necessarily dual employment, which is a formal employer-employee relationship, complete with legal obligations like minimum wage, provident fund, gratuity etc. It could also be side hustles or freelancing which can be with or without the knowledge of the primary employer.
Moonlighting could be considered cheating if an employee’s contract calls for non-compete and single employment, which is the situation with the majority of conventional employment contracts. However, it is not cheating if the employment contracts do not have such a clause or provide relaxations.

Takes of Employees and Employers

IT employees argue that in the absence of overtime pay and regulation of employment contracts, IT employees have the right to disconnect from their primary job after the committed work hours and engage in other projects either for additional income or for developing skills, or to pursue other interests outside their job.
Many Employers have termed Moonlighting as an ethical issue. Employees working for rival firms are a "complete violation of integrity in its deepest form".

Concerns of the Companies

The primary concerns companies have against moonlighting is data and confidentiality breaches, and loss of productivity.
Moonlighting may give employees the opportunity to divulge trade secrets if they are working in a similar industry and job.
If employees are working long hours, the second job may cause the employee to become distracted, unproductive, and neglect job responsibilities because of physical fatigue.
Employees may use company resources for their second job which increases operating expenses.

Tax implications of Moonlighting

Moonlighting means taking up another job while still in employment with an organization. The second job is usually without the employer’s knowledge and hence the income earned from moonlighting can lead to tax complexities.
For instance, if the moonlighting income is received as salary, both the employers will consider standard deduction of ₹50,000 and 80C deductions to calculate the tax liability. Additionally, both the employers will take into account the basic exemption limit and consider the tax slab as per the respective salaries. This could lead to the TDS being deducted by each employer to be lower than the taxpayer’s aggregate tax liability.
Section 44ADA of the Income Tax Act allows a professional engaged in specified professions to offer only 50% of their professional fees to tax. This rule presumes that 50% of the professional fees received would be spent for business purposes and hence only the remaining 50% is treated as income from business / profession and taxed accordingly. However, the fees should not exceed ₹50 lakh to avail presumptive taxation scheme.

Reasons that lead to Moonlighting

Seeking job satisfaction

Many people work jobs they don’t like; the reasons could be plenty – the need for a stable income, family, fear to start something new in the middle of their careers and so much more. A lot of people who take up secondary jobs are only trying to satisfy their appetite for growth, learning and doing what they love.

Pandemic

The pandemic created a major economic imbalance for thousands of Indians. The brunt was borne by a lot of younger people who lost their jobs and failed to find new ones.

Post Pandemic

After the pandemic – its ripple effects of which the corporate world can still feel in movements like ‘quiet quitting’ and the Great Resignation – most countries have failed to initiate policies to help their employees recuperate.

Incapacity of Governments

India boasts of its gigantic population as ‘human resources’, but has failed to carry out policies and laws to ensure the productivity levels of this human resource. The Great Resignation in the US was an effect of this incapacity of governments.

Final Thoughts and Way Ahead

Moonlighting throws a blinding light on the gaps between what employment means in today’s world and the ground reality of how the corporate workforce is coping.
Solutions to these problems can be found in simple grassroots-level policies – better education opportunities, guidance to help students decide their professional trajectories, economic security so pupils can pick careers based on their interests and not out of need and creating policies to keep up with the moving world.
Perhaps, instead of focusing on the extensive fiasco around the employees that got fired over suspected moonlighting, one might significantly benefit from learning more about why employees choose to work two jobs to begin with and how we can shape policies to help them escape the need to have two jobs.