Can firing block moonlighting?

Apart from stirring up many heated debates in the country, the practice of moonlighting has significantly impacted many lives in the past couple of weeks. Many tech giants like Wipro, IBM, and Infosys have fired hundreds of their employees for engaging in moonlighting.

Put simply, moonlighting is the practice of taking up a secondary job outside of working hours, without the prior consent or knowledge of the principal employer.

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The term gained relevance, especially in the IT sector, as a result of flexible working policies that employers adopted during the pandemic. Working from home allowed the employees to save time and energy spent on travel, and the reduced monitoring by employers paved the way for employees to take on additional jobs. While the contemporary debate regarding moonlighting largely centres around its legality, this article will elaborate on why Indian employees resort to moonlighting and underscore the bigger problem of the lack of collective bargaining power of the employees.

One of the major reasons for employees to resort to moonlighting is to bolster their financial security. Literature indicates that the median salary of freshers in the IT sector has increased only 45 per cent over the last decade (2012–2022), whereas inflation has recorded a 78 per cent rise during the same period. Thus, the rise in salary is significantly disproportionate as compared to the rise in living costs in these metropolitan cities. Besides, India also lacks a comprehensive social security system in place, which forces the working class to resort to moonlighting to secure themselves for exigencies. Aside from the need to sustain the exorbitant cost of living in a city, job insecurity in the private sector may be the overarching reason for moonlighting.

Organisations such as Meta, Better.com, Ford, Twitter, and Netflix resorted to firing their employees during the pandemic, thus highlighting the precarious nature of private sector employment in the country. Despite this, many employers have been critical of moonlighting, terming it unethical and/or cheating. While the employers were quick to criticise the practice, none commented on the downsizing measures.

There still exists a very strict power hierarchy between employers and employees in India. The employees often have no option but to sign restrictive employment contracts containing exclusivity and non-compete clauses. The clause of exclusivity in an employment contract binds the employee to work exclusively for the employer, barring them from taking up any other additional gigs. Contracts with such restrictive covenants deny employees the right to freely practise their profession. The employees agree to sign such restrictive employment contracts due to the little or no collective bargaining power they have.

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One of the major contributors to the weak collective bargaining power of employees is the high rate of unemployment, which makes employee replacement easy in India. Bargaining power remains severely skewed in favour of employers, who maintain a dominant position in relation to employees. The strict actions that employers have undertaken in response to moonlighting lately give a glimpse of the faint collective bargaining power that rests with employees. Because employees are easily replaceable, they have less bargaining power, which leads to increased job dissatisfaction.

Thus, to reduce instances of moonlighting, employers need to devise policies to enhance job satisfaction. This will especially stem the moonlighting that erupts due to non-financial reasons, such as toxic work culture and poor growth. Whereas, moonlighting for financial reasons can be addressed by revising sector-specific minimum rates.

While India has ratified the ILO C-144 tripartite consultation convention, there is no domestic law that addresses the dominant position of corporations. Employees are not in a position to collectively bargain on their own contracts in the private sector.

India can take inspiration from jurisdictions like the Netherlands, where the scope for sectoral collective bargaining is strong and collective agreements are entered into by the employer associations and trade unions, which outline the fundamental covenants of their employment contracts, including wages.

Apart from sectoral collective bargaining deals that can be enforced, employees in jurisdictions like Germany have strong information, consultation, and co-determination rights, which help in balancing the power hierarchy. Denmark and Finland also have employee representatives on the boards of directors of companies to guarantee rights to employees at the workplace.

To find solutions to problems such as moonlighting, job dissatisfaction, inadequate wages, restrictive contracts, and arbitrary layoffs in the country, Indian legislators must focus on the root cause of the problem, i.e., the power distance between employers and employees.

(The writer is project fellow at Vidhi Centre for Legal Policy.)