Finding the middle ground

Who does not like extra pennies! At the same time, everyone wants absolute return on the money spent. Saying this, the current debate on moonlighting has given a chance to introspect and amend our contracts as well as the laws, thereby making the best utilisation of our human resources, which is absolutely imperative for a country's economic growth apart from industrial productivity and individual development.

Moonlighting refers to taking up extra jobs without employers' knowledge. Two-timing employers without their knowledge could be termed as cheating, breach of trust and violation of employment laws. Needless to say, that monetary security at the expense of the entrepreneur, and then working for other entities, is unjust. However, if a contract signed with an individual mentions him to be a freelancer, professional, retainer, stringer etc., and gives freedom to work for others, then working for multiple clients will not be illegal. Such contracts are permissible under the Indian legal system and companies often enter into such agreements, as it even saves on their social security compliances. In fact, many times, such contracts are entered into consciously to bypass and subterfuge liabilities of Provident Fund, ESI, gratuity, bonus etc. What companies do not realise is while trying to avoid labour law liabilities, they can get stuck with tax liabilities, such as TDS etc., for past years, which can prove to be colossal.

Under the current legal structure, Factories Act of 1948, Shops and Establishment Act, as well as certain Standing Orders, prohibit double employment. Employment contracts, too, restrain such working. But these codifications are now age-old. There could be specific framing of legislations regulating contracts, as per current economic needs, rather than referring to provisions from multiple Acts. The clauses may specify working for more employers to be permissible, but in cases of ingenuine contracts for avoiding social security legislations, there could be penal consequences specified for both employers and employees. Such provisions would, in fact, even create a deterrent on employees jilting employers in a disguised manner.

Apart from wanting employees to focus completely on an entity's work, one of the most crucial challenges before organisations today is joining competitors and soliciting clients, employees, vendors as well as disclosing details, trade secrets etc. There is an imperative for businesses to protect themselves from parting away with trade secrets, business relationships or data to competing firms. Under the Indian laws, a negative covenant of not joining competitors to an extent is enforceable only during the operative term of contract, thereafter, the employer can only claim damages, which is a long-drawn litigation process. Besides promulgating provisions for curbing dual employment without permission, such issues also need to be addressed specifically with speedy remedies. Civil and criminal laws provide actions, but those only result in tedious and costly litigations. Practically, restrictive covenants imposing hardship on employees are sparingly implemented.

Aside from this, as is well known, the attrition rate, especially in sectors like technology, is increasing day by day, which is one of the reasons for seeking alternatives like AI. A well-balanced legislation may provide succour to such issues also.

Furthermore, employers, while drafting contracts, should be comprehensible and clear. Employment restrictive covenants viz, non-compete, non-poaching and non-disclosure should be included expressly. According to court’s dictums, a restraint on use of trade secrets during or even after cessation of employment has been held to be enforceable under various circumstances. While framing clauses of non-solicitation, non-competing companies should ensure certain aspects, such as clauses should have limited geographic applicability, time limit for stipulation to remain operative should be reasonable etc. It is better to have the monetary damages, compensation specified. Further, conditions specified for non-solicitation and non-disclosure should be detailed, specifically indicating the prohibitions, records, confidential information, etc. Then there could be straightforward policies which may allow workers to openly pursue multiple jobs such as in part-time etc. arrangement.

Structure of global economics is changing. We need to have laws in consonance with intercontinental demands. Gig employments, multiple choices and other contemporary trends should be provided for, at the same time, it is imperative to frame pragmatic provisions preventing work loss.

The writer is a practising Advocate in Supreme Court and High Court of Delhi. Views expressed are personal