Moonlighting Dilemma: Can Companies Legally Act Against Employees Running Their Own Business?

A person is a permanent employee of the company, and his working hours are from 9:00 AM to 5:30 PM. What if he is running his own firm by obtaining the TIN number and SSI certification, thereby having ownership of the firm without the company's knowledge? Can the company take any legal action against him? If so, what is the process for this?

Regards,
Anil Sharma

First of all, please clarify or confirm what your HR Policy states. Is there any clause in the Appointment Letter (to this and any employee, in general) that prohibits employees from working outside the company? Please elaborate so that the members can provide more accurate and realistic suggestions.

Regards,
TS

Please refer to the company's contract with the employee to determine whether this employee can be engaged in other activities or not. If there is no such term or condition that exists, then the company cannot restrict the employee from engaging in other activities.

This is in addition to what other members have said. First and foremost, do you have sound information that he is running his own company? If yes, who is the owner? Most probably, the owner could be his spouse. In this case, how are you going to handle the situation? I do not think that he will be that foolish to start a company in his name.

The second important thing is "conflict of interest." In what way does his out-of-office work conflict with your company? You need to probe that as well.

Yes, declarations about the spouse's businesses are important. But then, to what extent do these serve a purpose remains to be seen.

Thanks,

Dinesh V Divekar

Do the skills that he has been using to manage his business run parallel to the skills required for him to deliver the job at your firm? Suppose a Manager of Operations at a factory offers tutorial classes to school students in the evening; it doesn't pose a threat to the skills required to deliver in the factory. However, if a teacher is doing so, it is definitely questionable.

Discussion on Dual Employment under the Factories Act

Here's a discussion on dual employment under the Factories Act: Dual employment.

Please go through your company policies and his appointment letter. If any clause states that he should not be engaged outside or should not have any business of his own, then you can consider this in forming your opinion. However, before making a decision, ensure that you have sound proof.

Regards,
Anil Gupta M.