Is Moonlighting Legal? Can You Work for Two Companies at the Same Time?

Introduction

The increasing adoption of Remote Working or Work From Anywhere (“WFA”) arrangements has created broader opportunities for employees to hold more than one job simultaneously, a practice commonly referred to as moonlighting or overemployment. Moonlighting refers to the practice of an individual undertaking additional work outside their primary employment, whether in the form of part-time work, freelance engagements, or other forms of employment. Generally, this practice is pursued to earn additional income, broaden professional experience, or develop competencies and skills in other fields.

On the other hand, moonlighting also gives rise to legal and employment-related implications. From an employer’s perspective, moonlighting may affect employee productivity, increase the risk of fatigue (burnout), and create conflicts of interest as well as the misuse of confidential company information. Accordingly, the question arises as to whether Indonesian law permits an employee to maintain more than one employment relationship simultaneously.

Legal Basis

Indonesian Civil Code (Kitab Undang-Undang Hukum Perdata – “Civil Code”)

Article 1338

“All agreements lawfully entered into shall bind the parties as law. Such agreements may not be revoked other than by mutual consent of the parties or on grounds prescribed by law. Agreements shall be performed in good faith.”

Indonesian laws and regulations do not expressly regulate the practice of moonlighting (multiple employment). Instead, the matter is left to the agreement of the parties as stipulated in the Employment Agreement (“EA”), Company Regulation (“CR”), or Collective Labor Agreement (“CLA”). Accordingly, these documents constitute binding legal instruments for both employees and employers in determining whether moonlighting is permissible.

Where the EA, CR, or CLA contains exclusivity clauses, prohibitions against working for another employer, or conflict of interest provisions, employees are required to comply with such provisions and are not permitted to engage in moonlighting. Conversely, where no such prohibition exists, moonlighting is generally permissible, provided that it does not interfere with the employee’s work performance, create a conflict of interest, or prevent the employee from fulfilling their obligations to the employer.

Nevertheless, moonlighting may give rise to legal consequences if it is undertaken with a competing company, involves the use of confidential company information, or creates a conflict of interest. Under such circumstances, employees may be subject to sanctions in accordance with the EA, CR, CLA, and the applicable laws and regulations.

Law Number 13 of 2003 on Manpower, as amended by Law Number 6 of 2023 on the Stipulation of Government Regulation in Lieu of Law Number 2 of 2022 on Job Creation into Law

Article 154A paragraph (1) letter k

“An Employer may terminate the employment relationship where the Employee/Worker violates provisions stipulated in the Employment Agreement, Company Regulation, or Collective Labor Agreement, provided that the employee has previously been issued first, second, and third warning letters, each valid for a maximum period of six (6) months, unless otherwise stipulated in the Employment Agreement, Company Regulation, or Collective Labor Agreement.”

Article 154A paragraph (1) sets out various grounds that may justify the termination of employment, one of which is where an employee violates the provisions contained in the EA, CR, or CLA.

Accordingly, where the EA, CR, or CLA contains clauses prohibiting employees from working for another employer, requiring employment exclusivity, or prohibiting conflicts of interest, engaging in moonlighting may constitute a breach of the employment relationship and may serve as grounds for termination of employment in accordance with the applicable laws and regulations.

In such circumstances, the employer may terminate the employment relationship, provided that it complies with the procedures prescribed under the applicable laws and regulations, including the issuance of first, second, and third warning letters consecutively, unless otherwise provided in the EA, CR, or CLA. Therefore, where a prohibition against working for more than one employer is expressly stipulated in the employment documents, a violation of such provision may result in legal consequences in the form of termination of employment.

Practical Implications

Several important considerations should be taken into account regarding the implementation of moonlighting, including the following:

• Understand the Provisions in Employment Documents: Employees should carefully review the rights, obligations, and restrictions contained in the EA, CR, and CLA. The provisions agreed upon in these employment documents are legally binding on the parties and must be observed throughout the employment relationship.
• Moonlighting Is Permissible Unless Expressly Prohibited: Where the EA, CR, or CLA does not prohibit secondary employment, employees may generally undertake freelance or part-time work, provided that such activities do not violate applicable provisions, create conflicts of interest, or interfere with the performance of their obligations to their primary employer.
• Consequences of Non-Compliance: Where a company expressly prohibits moonlighting through the EA, CR, or CLA, but an employee nevertheless engages in secondary employment, such conduct may constitute a breach of the employment relationship. Consequently, the employee may be subject to disciplinary sanctions under the applicable provisions, ranging from written warning letters to termination of employment, while observing the procedures and requirements prescribed under the applicable laws and regulations and the relevant employment documents.
• Risk of Conflict of Interest: Working for two companies operating in the same line of business, or using the employer’s resources—such as work equipment, internet network, or working hours—for the benefit of another employer, may be regarded as a breach of the employee’s obligations under the employment relationship.

Recommendations

The following recommendations may be adopted by employees and employers to properly manage moonlighting practices while mitigating potential legal risks:

For Employees

• Review Your Employment Documents: Carefully review the EA, CR, or CLA for provisions relating to “Exclusivity Clauses,” “Conflict of Interest,” or prohibitions against holding multiple positions.
• Maintain Transparency: Where secondary employment is undertaken in a different line of business, employees are advised to communicate this openly to their supervisor or the Human Resources (“HR”) department. This helps minimize potential misunderstandings and ensures that the additional work does not conflict with the terms of the employment relationship or the employer’s interests.
• Separate Work Resources: Employees should refrain from using their employer’s work equipment, software, internet network, or other facilities for secondary employment. Using company resources outside their intended purpose may violate the employment relationship, the employer’s internal policies, or the employee’s obligation to safeguard the employer’s assets and interests.

For Employers

·      Update Employment Documents: Where a company intends to restrict moonlighting, exclusivity clauses or prohibitions against working for another employer should be expressly stipulated in the EA, CR, or CLA. Clear contractual provisions provide legal certainty for both parties and minimize the potential for disputes arising during the employment relationship.

Closing

Moonlighting is not expressly prohibited under Indonesian laws and regulations. However, the legality of such practice largely depends on the provisions stipulated in the EA, CR, or CLA that bind the parties. Accordingly, the existence of exclusivity clauses, prohibitions against working for another employer, and conflict of interest provisions are key factors in determining whether secondary employment is permissible.

As flexible working arrangements continue to evolve, it is important to maintain an appropriate balance between employees’ interests in pursuing additional employment opportunities and employers’ interests in safeguarding productivity, confidential information, and employee loyalty. This balance should be achieved through clear employment arrangements and the good faith performance of contractual obligations. In this way, moonlighting may be undertaken in a proportionate manner without undermining the rights and obligations of either party or giving rise to legal risks in the future.