Moonlighting under Labor Laws of Nepal

What is moonlighting?

Moonlighting refers to the practice of working at a second job, typically in addition to one’s regular or full-time employment. In other words, it’s when an individual takes on extra work during their non-working hours to earn additional income. This can involve working during evenings, weekends, or any other time when they are not engaged in their primary job.

The term “moonlighting” has its origins in the idea of working by the light of the moon, as historically, people would work additional jobs after their primary work hours, often under the moon’s light. People may engage in moonlighting for various reasons, such as: Supplementing income, Pursuing passion projects, Paying off debts, Gaining experience etc. While moonlighting can be beneficial in many ways, there are potential considerations and challenges, such as: Time management, Fatigue, Conflict of interest, Contractual restrictions and so on. With the introduction of “Work-From-Home” policies during the pandemic, this concept appears to have gained traction recently and different companies have sought to address it – albeit in different ways, however, the concept of dual employment has been rampant in the unskilled sector in Nepal, due to a lack of job security and low levels of income. The intent behind moonlighting therefore, clearly differs across sectors in the labor market.

Nepal has a labor force of 16.8-million-workers, the 37th largest in the world as of 2017. Although agriculture makes up only about 28 percent of Nepal’s GDP, it employs more than two-thirds of the workforce. Moonlighting is a prevalent phenomenon in Nepal due to the country’s economic conditions and employment landscape. Nepal is classified as a developing nation with a largely agrarian economy, and opportunities for formal employment can be limited, especially in rural areas. As a result, many individuals turn to moonlighting to supplement their income and support their families.

Limited formal job opportunities in Nepal, low wages, seasonal employment, rapidly increasing urban population, dominance of informal economy are the major reasons that has driven the economy to resort to moonlighting to the extent possible. Despite the fact that much of the workforce in Nepal are not engaged in wage based employment and the prevalence of massive seasonal unemployment in the rural sectors of the country, the major cities of the country employ much of the wage earning population – so the culture of moonlighting has been becoming prevalent in the cities of Nepal. 

Sources: (1) Agricultural Policies and Rural Development in Nepal, (2) The World Factbook  

Is it permitted under labor laws of Nepal?

There is no clear information available or particular legal provision on whether moonlighting is permitted under the labor laws of Nepal. But considering what the law provides in context, along with the comparative study of other laws and practices prevalent in Nepal as well as around the globe, I think moonlighting is possible in the context of Nepal. This we will discuss in depth below. 

The history of labor law in Nepal can be traced back to several significant milestones and developments. In the mid 20th century, labor movements started to emerge in Nepal, primarily in response to poor working conditions, low wages, and exploitative practices by employers. In the 1950s and 1960s, Nepal underwent significant political changes, including the end of the Rana regime and the establishment of a democratic system. These changes also influenced labor policies, leading to some improvements in workers’ rights. The labor movement gained momentum, advocating for workers’ rights and improved working conditions that finally led to the enactment of the Factory and Factory Workers Act, 2016. Following that, the Labor Act, 2048 was a significant milestone in Nepal’s labor history. It replaced the outdated Labor Act of 2048 and introduced more comprehensive provisions to protect workers’ rights and regulate employment relationships. It covered issues such as working hours, wages, leaves, termination, and social security. In September 2017, Nepal enacted the Labor Act, 2074 replacing the previous labor law. The new act aimed to modernize labor laws and address emerging labor market challenges. It expanded workers’ rights, strengthened provisions related to occupational safety and health, and introduced provisions for foreign workers’ employment.

Notably, throughout history, there have been no specific provisions in the labor laws relating to regulation of dual employment in Nepal. So we have to understand the legality of moonlighting in consideration of the similar provisions scattered throughout the law. 

Types of employment as per Labor Laws

Section 10 of the Labor Act, 2074 outlines various types of employment arrangements an employer can engage in with a laborer. 

But firstly it is necessary to build a difference between employment and business/profession – as we often tend to misunderstand the work based and time based employment as a “contract for service”. Generally to build a separation between employee and contractor, it is identified whether the contract assumes the form of employment contract or a service contract. This depends on whether it is “contract of service / employment agreement” or “contract for service / contract agreement”. The distinction between “contract of service” and “contract for service” generally is based on factors like:
(i) Ability of the service provider to subcontract/delegate,
(ii) Basis of payment to the service provider,
(iii) Availability of equipment/tools at disposal to the service provider,
(iv) Assumption of the commercial risks by the service provider,
(v) Control over the work and independence in performance.

Let’s break down each type of employment from Labor Act, 2074 and Labor Rules, 2075 and their respective definitions as per the labor law, along with what is especially unique in each type of these employment contract: 



What is unique in this type of contract?

Task-based Employment कार्यगत रोजगारी

Contract requires performance of specific work or service. Section 10(1)(kha)

● Contract terminates after the completion of the work specified in the employment contract. Section 140(ka)
● The basic remuneration of the employees under task based employment shall be equal to the 60% of the average of the last three months salary. Rule 77
● When determining the piece rate for a labor engaged in task based employment, it shall be determined based on the factors of: mutual agreement between employer and employee subject to increments in piece rate tagged with increment in remuneration, or in its absence – subject to per hour rate from minimum remuneration.  Section 170 read with Rule 77 and Rule 78

Time-based Employment समयगत रोजगारी

Contract requires performance of specific work or service within a specific time. Section 10(1)(ga)

● Contract terminates after the expiry of the time specified in the employment contract. Section 140(kha)
● Managerial level employees (eg. Chief Executives) can be hired under time-based employment contracts. Section 171

Casual Employment आकस्मिक रोजगारी

Contract requires performance of specific work or service within a period of seven days or less within a month. Section 10(1)(gha)

● Contract terminates at the option of employee or employer. Section 140(ga)
● Written employment contract is not required for casual employment. Section 11

Part-time Employment आंशिक रोजगारी

Contract requires performance of specific work or service within a period of thirty-five hours or less within a week. Section 10(1)(nga)

● Section 19 allows employers to employ labor on a part-time basis, and their remuneration can be based on either working hours or the employment contract. To ensure fair treatment, the remuneration should be at least equivalent to the monthly remuneration of full-time labor performing similar work. Part-time laborers are entitled to overtime remuneration at a 1.5 times the normal rate if they work beyond their regular hours. An employer cannot reduce a full time working employee to part time basis without the consent of the employee. 
● Part time employees cannot be restrained from working elsewhere. Section 20
● Section 21 of the Labor Act mandates that when a part-time laborer works for more than one employer, each employer must contribute to gratuity, provident fund, or other social security benefits based on the basic remuneration the laborer is entitled to. 

Regular Employment नियमित रोजगारी

Any other employment than above. Section 10(1)(ka)

● Rule 3 allows employers and laborers to seek from the Labor Office regarding whether an employment is Regular Employment or not. It shall be decided based on the facts of the employment rather than the terms of a contract based on factors like: (i) If the performance of work or service is continuously required after the expiry of the specific duration of the contract or if there is a need for immediate rehire, (ii) If the performance of the work requires more than a year where the duration of the contract is not specified. In cases, where the subject matter is at court, the court may decide as to whether or not the employment is regular. 
● Employees under Regular Employment shall get compulsory retirement after completing fifty-eight years of age. Where the compulsory retirement at age below fifty-eight is required, the provision that may be provided for in the company bylaw with the approval of the Central Labor Advisory Council. Section 147
● Employees under Regular Employment shall be entitled to 25% of the remuneration during the reserve period of the seasonal enterprises when they remain closed. Section 89(2)
● If the employers employ trainees contrary to the approved curriculum, such employees shall be deemed to be employees under regular employment contract. Section 16


From employee’s perspective

When viewed from employee’s perspective – 

💡Employees are legally allowed to work up to 72 hours at the place of same employer. 
Section 28 of the Labor Act, 2074 allows employers to employ their workers for up to 48 hours per week, with a daily limit of 8 hours. In addition, Section 30 allows for overtime work, but within reasonable limits – up to 24 hours per week, not exceeding 4 hours per day. While we must prioritize the well-being and work-life balance of our employees, Section 29 ensures that overtime should not be imposed on them unless it becomes necessary to protect life, safety, health, or prevent significant losses to the employer. Interestingly, the Labor Act acknowledges that, under specific circumstances, employees have the capacity to legally engage in up to 72 hours of work per week (48 hours regular work + 24 hours overtime). When the situation calls for it, employees can rise to the occasion and offer their work for up to 72 hours per week, legally, which is an acknowledgement to the fact that pursuing a part-time venture from full time employment is doable. 

💡Two legal part time roles can also add up to 70 hours per week
Section 10 of the Act defines part-time employment as a contract requiring performance of specific work or service within a period of thirty-five hours or less within a week. Section 20 the Act also ensures that the part-time employee cannot be restricted from engaging in working elsewhere. So if the employee is able to find two part-time roles each permitting 35 hours work, he can also clock up to 70 hours of work in a single week, which is not very far off from the 72 hours that we came with in the above point. This again proves that employees can legally be employed up to 70 hours a week when working in two part time roles. 

💡Engaging in part time role while working in another full time role
Although not clearly provided for in the law, a full time role will engage an employee up to 48 hours a week (overtime is not a compulsion). This still gives an employee next 24 hours to be able to work up to the weekly 72 hours that was understood as acknowledged by the Labor Act, 2074 as well. So pursuing a part time role that doesn’t exceed 24 hours per week is definitely not an unethical practice from the employee’s perspective considering that even Labor Act, 2074 has acknowledged the working capacity of 72 hours per week under Section 28, 29 and 30. 

💡Engaging in two full time roles
Engaging in two full time roles might be considered as an unethical employment practice, although it is not specifically mentioned in the law. This is because engagement in dual full time roles more often than not leads to overworking, burnout, decreased job performance, conflict of commitments in addition to contractual or ethical issues. Though not explicitly restricted in the law, dual employment is a serious concern from the perspective of both employer and employee. 

From employer’s perspective

At the outset, there are limited provisions that actively restrict moonlighting. 

💡Explicitly restricting dual employment through entity bylaw or employment agreements
Employers would definitely not want their employees overworking and thereby suffering from burnout, lacking work life balance and reduced job performance among others. Can employers then explicitly restrict dual employment through employment agreements or entity bylaws? This is one gray area. While acknowledging that working up to 72 hours a week bears no issue with labor law (discussed above) – explicit restriction on dual employment may arguably be illegal. There may be two views here – if restrictions on dual employment through employment agreement or company bylaw are legal then, the fact that the employee cannot be involved in another employment engagement is merely a contractual restriction not a constitutional restriction. यदुवंश शाह बिरुद्ध टि.सि.एन. निर्णय नं. ७५७३ – उत्प्रेषण परमादेश. The employer shall have to resort to voluntarily terminate the employment under Section 141 at his will. But if such restriction on dual employment is viewed as illegal, then what rights do the employers have? Do they have to permit dual employment arrangements? 

💡Could this be a balanced approach?
In my personal opinion, a balanced approach could be somewhere in between the two extreme views. Employers do not want their employees to be engaged in dual employment – while employee want to be engaged in two full time employment. A balanced approach could be what we read between the lines from the provisions of the Labor Act, 2074. Labor Act, 2074 acknowledges that an employee may be engaged, if need be, for up to 72 hours per week. So while the employer doesn’t strictly prevent dual employment through employment agreement or company bylaws – the employee could declare and engage in part time work for up to 24 hours per week in addition to one full time job. 

💡Restriction for dual employment in Civil Service Act, 2049
Section 48 of the Civil Service Act, 2049 imposes restrictions on civil employees regarding their involvement in certain activities without prior approval from the Government of Nepal. The primary purpose of this provision is to prevent conflicts of interest, maintain the integrity of civil employees, and ensure that their actions do not compromise the interests of the government or create undue influence in commercial or professional domains. By seeking prior approval, the government can assess and manage potential conflicts, thus upholding transparency and accountability in civil service. The section outlines the following prohibitions:

  1. Civil employees are not allowed to participate in the establishment, registration, or operation of any bank or company without obtaining prior approval from the government.
  2. Civil employees are restricted from engaging in any trade or profession that requires registration according to the prevailing laws, unless they have obtained approval from the government beforehand.
  3. Civil employees cannot accept any form of employment elsewhere without prior approval from the government.

However, it makes an exception where civil employees are permitted to engage in literary, scientific, or artistic works as long as such activities do not contradict the policies of the Government of Nepal.

Some Leading Case Laws from India – but it should be noted that India has some strict restrictions on engaging in dual employment in its labor laws – the legal regime surrounding the employment is different from that in Nepal, so these case laws may not be so persuasive in the context of Nepal. 

  1. Section 60 of the Factories Act, 1948: It restricts employees of a factory in engaging in double employment in India, when they are already working in a factory. 
  2. Section 9 of the Delhi Shops and Establishments Act, 1954: It restricts employees from working in two or more establishments, in excess of the period during which he may be lawfully employed under the legislation. However, while this provision reads as a restriction on dual employment, it can also be interpreted to mean a restriction on overtime work, as it is tied to the period of time during which an employee may be engaged to work. 
  3. Schedule I-B of the Industrial Employment (Standing Order) Rules, 1946: It restricts workmen from taking up any employment that may prejudice the interests of the industrial establishment in which he is employed. 

In most cases, Indian courts have upheld the termination of an employee for moonlighting or dual employment. For instance, in the case of Gulbahar vs Presiding Officer Industrial, the High Court of Punjab and Haryana upheld the termination of an employee who was engaged in double employment, as alleged by the employer and upheld the dismissal. Similarly, the Bombay High Court Manubhai Gordhandas vs Arvind Mills Company Ltd was of the opinion that the dismissal of a factory worker for double employment under Section 60 of the Factories Act, 1948 was neither excessive nor harsh but was in fact reasonable, as by engaging in dual employment, the worker was depriving his employer from the best of his services as it is humanly impossible to work at the same quality and efficiency for extended periods of time, continuously. Another scenario that was upheld by courts would be if the certified standing orders of a company clearly outline a restriction on dual employment and consider it as an act of misconduct. In such a case, courts have upheld moonlighting as an act of misconduct which would invalidate any relief, if it is established beyond reasonable doubt. M. Neelakandan vs The Presiding Officer

But how is being engaged in a profession different?

The conversations above on whether a full time job can be accompanied by other jobs is important to both employer and employee. While employees would want to maximize their time utilization and employment earnings, employers would also want to have unburnt, active and unstrained employees work for them. An employee’s dual employment is therefore a concern of both employer and employee as the employer also has interest in maintaining the healthy work-life balance of its employees as employees are one of the important (if not most) resources of the employer. 

But this definitely begs a question. How is being engaged in your profession along with full time employment different from being engaged in multiple employments? Even if it were possible for an employer to legally manage or control over the engagement of its employees in other employment, they certainly cannot do anything such to employees who practice their profession (eg. running a personal shop, professional practice, artistry etc). There are no restrictions to carry out personal business/profession in addition to carrying out full time employment, so what is the concern about employees being engaged in multiple employment?

Strangely, the law does not provide answers to these questions. Section 131 of the Labor Act, 2074 allows employer to punish some misconducts of the employer like: 

  1. Remain absent from the work without having a leave sanctioned
  2. Leave the workplace without obtaining permission of the management,
  3. Appear late in work frequently without obtaining permission
  4. Cause loss or damage to the enterprise by decreasing the production or service recklessly or negligently,
  5. Do any act of divulging secrets of any production technology related formula or confidential information of the enterprise or workplace where he or she is working with the intention of causing loss or damage to such an enterprise,
  6. Act in collaboration with a competitive employer in the similar nature of business of the enterprise or carry on any competitive business on his or her own or provide any secret information of the enterprise where he or she is employed to any competitive employer,

The employer can punish such misconduct of the employee that ranges from reprimanding, deducting remuneration, withholding promotion, withholding increments or even dismissal from service. Section 142 also allows the employer to terminate the employment based on the work performance indicated by the work evaluation under Section 112. Section 143 also allows termination of employment on the grounds of health, on recommendation of a medical doctor – where employees are not able to work as a result of physical or mental incapacitation or grievous hurt or injury or it affects the work because of a long time required for medical treatment. 

So the employer has grounds to terminate the employment engagements if the dual employment of the employee is causing them to be absent, unproductive, appearing late or engaging in competitive business. Could this be an indication that labor laws have put enough in the arsenals of the employer that enable them to treat the consequences of dual employments of their employee through the provisions mentioned in Section 131, 142 and 143 so that there is no point for the employers in fussing about what the employee do besides the eight hours they productively engage with the employer? – is the major question. 

Global Practices

Employment laws vary significantly from country to country, and regulations regarding dual employment or holding multiple jobs can differ widely. Below is a general overview of how some countries approach the issue of dual employment based on preliminary research. However, please note that it’s crucial to consult up-to-date legal sources for each specific country: 

  1. United States: In the United States, there is generally no law that explicitly prohibits dual employment. Employees are typically free to work for more than one employer simultaneously, unless their employment contract states otherwise or there is a specific legal restriction based on the nature of the job. However, some industries or professions might have regulations that limit dual employment to avoid conflicts of interest or ensure safety standards.
  2. United Kingdom: The UK does not have a general prohibition on dual employment. Employees have the right to work for multiple employers, subject to any restrictions specified in their employment contracts. There are certain industries, such as healthcare and aviation, where dual employment may be limited due to safety and security concerns.
  3. Canada: In Canada, there are no specific laws that prevent employees from holding multiple jobs. However, employment contracts or collective bargaining agreements might include clauses that restrict dual employment. Additionally, certain industries and professions may have regulations that address this issue.
  4. Australia: In Australia, employees generally have the right to work for more than one employer unless their employment contract or an award/agreement contains restrictions. However, some industries may have rules or licensing requirements that limit dual employment to ensure safety or maintain professional standards.
  5. Germany: Germany generally allows dual employment unless the employment contract expressly prohibits it. In some cases, dual employment might be subject to approval from the primary employer, and there are limitations on the maximum number of working hours allowed per week.

Do share your thoughts below in the comments !!