Article · 12 min read

Moonlighting: Legal Considerations and Contractual Regulation

Cyril Amarchand Mangaldas · India Corporate Law (Cyril Amarchand Mangaldas) Free Advanced India

Written by one of India's top corporate law firms, this is the authoritative read on what your co-founder's current employer can actually enforce while they are still on the payroll. It confirms that a non-compete or exclusivity clause operative during employment is valid in India (unlike a post-exit non-compete, which Section 27 of the Contract Act voids), which is exactly why you check their contract before they touch your codebase, not after they quit.

  • Dual employment is permissible in India only when the contract allows it or the employer consents, so a co-founder's existing employment agreement may bar the side work outright
  • Non-compete and exclusivity clauses that operate during the term of employment are enforceable, and firms draft them to cover consultancy and advisory arrangements, not just formal jobs
  • Employers can and do clarify how IP created for another entity is treated, especially where office time or resources touch the side project, making the employer's IP claim a live risk
Open on corporate.cyrilamarchandblogs.com ↗

It answers 2 questions

  1. Can I keep my day job while I incorporate and start building, without losing my startup's IP?
  2. How do I bring on a co-founder who's still at a job or in college without getting burned?

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