Business Development, Employee Relations,
Adv. Manoj Liyonzon
Lawyer, Chennai
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Raj Kumar Hansdah
Shrm, Od, Hrd, Pms
Consultant In Legal Matters
+3 Others

Hi, I am employed in a big organisation and also I have a partnership business. The business is registered with 4 partners and I am one of the sleeping partner. I do not have any role or responsibility in the business. Its just kind of an investment i did for some extra earning. Can my current employer take it as a dual employment and sue me for that? Is dual employment is only valid if I am hired with two different employer or business can also be considered as dual employment? And what are the consequences I may have to bear? Can my employer take any legal action against me?
8th March 2014 From India, Delhi

It is entirely on your employer as to how your engagement with another firm as a partner, though a mere sleeping one, is treated. There are certain clauses in most of the laws that direct towards avoidance of dual employment.

1. Factories Act Section 60 pronounces Restriction on dual employment

Even regard to establishments which are not coming under the definition of factories act, some the provisions mentioned here-under would help for preventing double employment:

a. The Bombay Shops & Establishments Act, 1961.

Sec 65: Restriction of double employment on a holiday or during leave

No employee shall work in any establishment, nor shall any employee knowingly permit an employee to work in any establishment, on a day on which the employee is given holiday or is on leave in accordance with provisions of this Act.

Similar provision should be there in the respective states shops and establishment act.

b. Industrial Employment (standing Orders) Act,1946

In terms of model standing orders number 8 under schedule IA of central rules “ A workman shall not at any time work against the interest of 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.

Even if everything mention above is negated, every employer draft text of employment contracts and if required bring interpretations to suit them, to deter the employee from any gainful activity and activities that shall consume his/her time attention i.e an employee not covered under the Shops & Establishment Act and the Industrial Dispute Act is governed by the Contract of Service, which, in most cases, is the Appointment Letter.

So, I would suggest not traversing that path. However, my learned friends would be able to correct me and throw more light on the very matter discussed by you.
8th March 2014 From India, Chandigarh
You have already received a clear view on how the legalities work. I echo Sajal ! Please understand your employer's definition for Dual Employment.
Holding two offices for profit accounts for dual employment, when you are using the same skills and competencies.
Let us assume a situation where you are employed as a Software Engineer and you are running your tutorials for Indian Classical music or Dance. This may not account for Dual employment as the areas of work as essentially different, even if both are 'for profit'.
Did you received an Appointment letter mentioning the Terms and Conditions for 'Employment at will' ?
You need to check the Code of Conduct within your firm and that would set your boundaries right.
9th March 2014 From India, Mumbai
According to me there is no harm in investing in business as partner and more so as "Sleeping Partner", wherein you are not involved in day to day administration of the business, which would have otherwise effected your current employment. So, relax. Yes, ofcourse, to be on safer side, its always best to disclose the same to employer if there is a slight clash of business interest besides its always better to be be more transparent with your company. Company cannot file a dual employment breach just becoz you are a Partner in "x" firm, provided they have enough evidence that "Your business interest in other firms" is/are effecting their business etc and you are a potential threat who would leak their business secrets.
9th March 2014 From Saudi Arabia, Riyadh
I agree with Ukmitra. While you may only be an ianctive partner or investor and the firm maybe doing business which is in no way related to your current job or the industry you are working in, you may want to disclose it to your employer to be on the safer side.
I know of an instance where a lady was working in a corporate and wantex to do modeling assignments. She had to disclose it to the employer and also sign a document that she would not model for a competitor or do anything that may tarnish the image of the company. Since some modeling assignments can be looked down upon.
10th March 2014 From India, New Delhi
Dear friend
I have taken up this matter on a separate thread.
Apart from commenting here, you can also give your opinion, on this thread :
Warm regards.
10th March 2014 From India, Delhi
- Dual employement is contrary to law & your organisation Code of Conduct & HR Regulation.
- A sleeping partner can be hired as an employee by an employer only upon its discretion.
- An employee if proceeds to become a sleeping partner, should get prior approval from employer. Else it
is illegal (Only if it is inheritance busines or even if new).
conteary to all these subjected to offence. COmpany can sue you
11th March 2014 From India, Chennai
In addition to Sajal's complete and comprehensive legal position, please check your appointment letter. You are most likely to find an omnibus clause that reads something like this..".... prohibited from taking any gainful activity while in our employment."
And, whether you are or are not receiving any profit from the business in which you are a sleeping partner, it will be treated as "Gainful activity" as there is always an expectation of profit from any business.
I can think of two options. First one is honest course of action: Retain only one activity; either the job or business. Second option: A legal workaround is to transfer the business interest to a family member.
12th March 2014 From India, Bangalore
I appreciate the insightful comments, without tending to cast any aspersion on the motives of a fellow-HR. It is interesting to read these comments; esp:

" whether you are or are not receiving any profit from the business in which you are a sleeping partner, it will be treated as "Gainful activity" as there is always an expectation of profit from any business."

It appears to be like the "long arms"of the Law; in this case the company's influence represented by the HR. It does not matter that one needs to PROVE the indulgence in gainful activity in terms of time or effort; or whether there is any actual gain.

Writing books, which go on to become best-sellers, can also be termed a gainful activity. Yet it is astounding to find that many well-known authors are in employment and have written their books during their tenure with companies.

In any case, it seems that some companies are more bothered about any activity wherein the person can expect a gain; rather than focussing on activities which might be detrimental to the interest of the company or where there is a conflict of interest.

More power to such companies and their HRs !!

They have a whip to beat any employee with, and this gives them "power"or feeling of power.

It is no mystery now why in some organizations, HR continues to be the least liked department.

Warm regards.

12th March 2014 From India, Delhi
Four points Mr. Raj Kumar,

1. I am not from HR which you say is the "least liked' department in some companies. I am a retired general management and marketing person and presently a freelance consultant. I don't know how much these roles are "liked." Hope you will take this in a lighter vein.

2. My intention was a simple one; to protect killersaves (the member who asked the original query) from facing any difficulty from her/his employer and to help in both legal as well as safe way to deal with the situation.

3. Regarding dual employment per se, there can be lengthy debates that bat for both sides: the employers as well as the employees.

Conflict of interest is subjective, depends upon merits of each case and raises many questions like teachers giving private tuition, the now legalised private practice by government doctors, employees running chits and loan business on the shopfloor. How a freelancer like me can be effective while managing work for different principals? Are not employers themselves running many businesses? Is it safe to permit a night-shift driver to undertake some other daytime job? The questions are endless.

The fourth point is this; How many employees can manage dual employment with equal dedication? May be some of the authors who write books may have the maturity and dedication to do justification to both occupations.

Warm regards,

13th March 2014 From India, Bangalore
Hi, is there a conflict of interest between your current employer and oher employments?
13th March 2014 From India, Delhi
Dear Ganesh

I appreciate your response, (as much as I appreciated the earlier offence).

I did not mean any offence, except that certain activities, where there is no actual conflict of interest OR is not detrimental to the efficiency and health of the employee, nor does it affect the organization in any material way; should be best left ignored.

Some of these extra-curricular activities are useful to the employee and the society in general; apart from instilling an entrepreneurial or creative spirit.

What is deplorable is the attitude of some HR and the management to prosecute employees on flimsy ground, as rightly pointed out by you in your previous response. I am aware of cases where this is happened when the employee had taken-up a few training courses, participated in certain sports activity having prize money, designed or written content for websites, tried to set-up some direct selling distributionship of certain products from home along with his spouse etc etc.

Although, one can not deny that doing 2 regular jobs can not be encouraged or allowed; moreover the law rightly prohibits such employment for WORKMEN in Factories, Mines etc. the rigours of such jobs can kill an employee.

At the same time one needs to relax such considerations for certain assignments which are of purely casual nature or for creative and entrepreneurial pursuit, even if they involve little pecuniary benefits.

Warm regards.
13th March 2014 From India, Delhi
Dual employment means dually employed as an employee. Under Delhi Shops and Establishment Act, dual employment is barred in respect of employee pertaining to working hours. Under Bombay Shops establishment Act, even a member of family of an employer is not included as an employee under section 2(6) of the Act evidently because they are not employed as employees thereof. As an employee he enters into contract of service with employer and then employed with the business of establishment. Under the said Act, an employer is defined as owner of establishment but he is not an employee. Thus an owner or partner of a business will not be employed with the establishment. Thus the concept of dual employment will not be applicable in your case. However if contract is that you will not run any business simultaneously, then it is a different matter.
24th February 2015 From India, New Delhi
In continuation of above, in Kemp and co ltd v workmen commissioner decided by Madras High Court on 19.7.1955, it held that for construing the term " person employed" under section 2(12) of the State Shops and Establishment Act, the common law concept of master and servant, and employer and employee cannot be looked into. It is the statutory definition only to be seen. Thus, for answering the query also, the State Shop and Establishment need to be looked into while understanding the legal position. Say under Delhi Shops and Establishment Act, the term misconduct is used under section 30 for an employee but not for an employer. The list of misconducts under the rules relate to employee and not for employer or its shareholder. The term "employment" is similarly not to be understood in a loose sense but in accordance with statutory terminology. If that be so then "dual employment" is to be understood as dually employed as an employee.

If very wide meaning is attributed then employees of thousands of establishments who have their shares in corporates, will be treated to be running business though as sleeping shareholders and thus would be treated as dually employed. Such a construction will be detrimental to interest of society.


24th February 2015 From India, New Delhi
i have joined company A as contractor but meanwhile i got a permanent position with company B so i have decided to quit from Company A , i had worked two weeks in company A and i tell them that i am unwell and joined company B.
now company A got to know that i have joined some other company so they r threatening me to update my dual employment status and i will be blacklisted from both of the organisation .
when i come to know this i have put my resignation mail but that mail is beyond to joining date of company B.
can you please tell me what should i do . does company A claim a legal dual employment to me and how can i save my job from my current company i.e Company B.
please help me out on this.
Thanks in advance
2nd April 2018 From India, Bangalore
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