IT firms reach out for legal help to address moonlighting

A bunch of law firms that ET spoke to, including Khaitan & Co, AZB & Partners, A&P Partners and Sarvaank Associates, said they have been seeing a sharp jump in companies reaching out to them for help in redrafting employment agreements, figuring out loopholes, making contracts more robust, enforcing restrictions, or even enabling moonlighting with necessary checks and balances.

Anshul Prakash, partner, employment labour & benefits at Khaitan & Co, said the number of companies that have reached out to them in the last two-three months runs into double digits.

“Several organisations in the IT/ITeS sector have been emphasising the requirement to have their employment contracts and policies revisited, including additional clarity on their stance against possible moonlighting,” Prakash told ET.

“The moot point is to specify that exclusivity of employment relationship and confidentiality obligations would not be limited to work hours but for the entire service tenure. Any actions that conflict with such obligations would warrant disciplinary action against that employee,” he added.

“There is a culture shift about taking up side gigs. Companies are aware that they can’t stop people beyond a point. Hence, they are trying to ringfence their businesses by putting processes in place,” said Priyanka Sinha, cofounder of law firm A&P Partners.

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She has had several multinationals reach out to know what kind of policies can be designed to ensure that employees treat their employment as the primary job, outline what amounts to conflict of interest and set out restrictive covenants from taking jobs with competitors during employment and ways to protect themselves in terms of confidentiality.

These developments come at a time when the issue of moonlighting has sparked off a heated debate in India Inc, with top honchos coming out on different sides. Wipro chairman Rishad Premji who has been a vocal critic, recently said the company had fired 300 employees who were found to have been working secretly for competitors.

A consultant, who did not wish to be named, told ET that the potential challenges around moonlighting will create the need for companies to ensure contracts are more watertight and clear boundaries laid down. “This is a classical friction as employee expectations and technology moves faster than regulation,” he said.

Some have a more relaxed stance

Some companies are asking law firms to re-examine contracts in a way that their interests are protected while giving employees some flexibility as well.

Veena Gopalakrishnan, partner, employment law, at AZB & Partners, said the term ‘moonlighting’ inherently has a connotation of clandestineness associated with it and clients are looking to address that. The focus is therefore on ensuring that the restrictions are clearly spelt out and appropriately enforced, while allowing flexibility with the necessary checks and balances.

“Some organisations are most certainly looking into their policies and contracts to ascertain if they can allow employees to work an additional job(s) without really compromising the quality of work or business interest of the organisation,” she said.

Ankita Singh, managing partner of law firm Sarvaank Associates, said some of her clients, especially startups in the IT sector, are seeking help to redraft their employment agreements that can protect companies’ proprietary information while also being inclusive for the employees.

“We have conducted sessions for some clients to explain to their employees the flipside of such moonlighting,” said Singh. “In some cases, we have seen even HR teams doing outreach activities to understand gaps between company policies and people’s aspirations so that they can create win-win solutions.