If you are an employee seeking additional income, you may be tempted to take up part-time jobs in addition to your full-time job. You may be thinking of signing up as a driver for an app-based carpooling service, or of volunteering your services as a part-time tutor.
You are not alone – as approximately 30% of Singapore workers admit to taking up part-time jobs to supplement their full-time salary. However, before taking up a part-time job, there is one crucial question you should ask: Is moonlighting legal in Singapore?
What is “Moonlighting”?
While there is no legal definition of “moonlighting”, the term is commonly understood to refer to a situation in which one, aside from having a full-time job, additionally holds either a part-time job, or is self-employed (e.g. freelancing).
Some oft-cited reasons for moonlighting include:
- To keep up with the rising cost of living;
- To accumulate savings;
- To supplement one’s family income, particularly if an unexpected event (e.g. a medical emergency, retrenchment etc.) has occurred which requires additional spending;
- To fund one’s university education; and
- To explore the possibility of a new career.
Is Moonlighting Illegal in Singapore?
The law does not prevent you from taking up a part-time job or freelancing in addition to a full-time job. In other words, it is not illegal to moonlight in Singapore. However, civil servants, and foreign employees holding a Work Permit or S Pass, should be mindful of rules that prohibit them from moonlighting:
- For civil servants, the Public Service Division has strict policies in place to prevent conflicts of interest and corruption. As a general rule, civil servants are prohibited from moonlighting. Those who wish to take up additional work are required to seek approval before doing so, with approval considered on a case-by-case basis.
- Foreign employees holding a Work Permit or S Pass are completely barred from moonlighting. The Employment of Foreign Manpower (Work Passes) Regulations 2012 prohibits holders of a Work Permit (including foreign domestic workers) or S Pass, from being employed by or contracted to any other person or business (apart from the employer stated in the Work Permit/S Pass) to do work for that person or business.
Failure to adhere to these rules could give rise to sanctions.
Last August, a staff sergeant who had failed to seek prior approval to give rides using the GrabHitch app was fined $2,000 by the Singapore Armed Forces for giving 140 rides between October 2016 and March 2017.
On the other hand, a foreign employee holding a Work Permit or S Pass who is caught moonlighting, may be punished with a fine of up to $20,000 or imprisonment of up to 2 years.
Are There any Terms in Your Full-time Employment Contract that Disallow Moonlighting?
If you are not a civil servant or a foreign employee, you should still note that employers generally disapprove of moonlighting. This is because of concerns that a second job may distract an employee, negatively affecting his/her full-time work performance.
Additionally, there is a risk of a conflict of interest arising when an employee takes up a second job.
A conflict of interest may arise where both employers of the moonlighting employee operate in the same industry and/or compete with each other, such that the full-time employer’s economic interests may potentially be undermined.
Some non-exhaustive situations in which a conflict of interest may be present include:
- Where an employee sets up his/her own business, which he/she then recommends to his full-time employment company as a potential business partner;
- Where an employee directs his/her full-time employer’s customer to a business in which he/she has a stake, whether as an owner or worker;
- Where an employee, as part of his/her full-time job, makes prejudiced business decisions to avoid implications on, and/or favour the side-business in which he/she has a stake (whether as an owner or worker);
- Where an employee provides consulting services on the side to a customer of the full-time employer; and
- Where an employee’s access to the full-time employer’s resources, such as information or technology, enables him/her, or a business in which he/she has a stake, to make a profit.
It is easy to see why employers may want to prevent their employees from moonlighting. Therefore, if you are thinking of moonlighting, it is important to consider if there are any terms in your employment contract that disallow it.
1. Express terms
Full-time employment contracts often contain non-compete clauses. Typically, such clauses bar employees from engaging in businesses in specified markets and geographies for a period of time, outside of the employee’s full-time employment.
Clauses may expressly state that the employee is not to take up directorship, employee, or agent positions in another company.
2. Implied terms
An employee who wishes to moonlight should note that as an employee, he/she owes a duty of fidelity to his/her employer, which is an implied term of the employment contract. As part of this duty, employees are expected to serve their employers diligently, honestly and loyally.
Whether moonlighting puts you in breach of your duty of fidelity depends on the circumstances and the nature of your work, in the particular case.
For example, the duty of fidelity can “hold a very different meaning” depending on your position in the company. In a 2014 Singapore High Court case, the court suggested that a director, as a fiduciary, owes a stricter duty of fidelity which requires “single-minded” loyalty.
On the other hand, an employee’s duty of fidelity requires that he “have regard to the interests of (his/her employer)”, but he need not “subjugate his interests to (that of his employer)”. The court noted that this means that the employee has to avoid actual conflicts of interest, but does not typically have to avoid potential conflicts of interest.
What this could mean for a regular employee is that he/she may not be found to be in breach of the duty of fidelity if there is merely a possibility of a conflict of interest arising from moonlighting. However, an employee should steer clear of situations where moonlighting does create an actual conflict of interest (for instance, if he/she works for a direct competitor of the full-time employer).
There is also no general rule that an employee is required to inform his/her employer if he/she is moonlighting, unless the employment contract expressly contains a duty to report or disclose involvement in activities that could threaten the employer’s interest.
However, it is important to note that the court, in assessing if there has been a breach of the duty of fidelity, will consider the particular circumstances of the case. Therefore, an employee who wishes to moonlight is advised to keep in mind his/her duty of fidelity to his/her employer, and to take the necessary steps (see below) to avoid breaching this implied duty.
What Could Happen if Your Employer Catches You Moonlighting, in Contravention of Your Employment Contract?
Non-compliance with the terms of your employment contract gives rise to your employer’s right to take disciplinary actions as specified in your contract, including termination of employment.
You may even be sued for breaching your employment contract. Therefore, before you moonlight, be sure to check that it is permitted (or at the very least, not disallowed) by your full-time employment contract.
How Can You Moonlight Safely?
As moonlighting can put you at risk of breaching the terms of your employment contract (as mentioned above), it is important that you take precautions prior to and throughout your moonlighting stint.
What to do prior to moonlighting:
Review your contract
To avoid falling foul of express or implied terms in your full-time employment contract, it is important for you to check that there are no clauses disallowing moonlighting.
Ensure that taking up the part-time job does not compromise your employer’s economic interests
To protect both your full-time employer and yourself, you should avoid taking up a part-time job or setting up your own business if that would involve similar work or operation in the same industry as, or some other form of competition with your full-time employer.
Seek your full-time employer’s informed consent
Before beginning your part-time job or signing the contract to do so, a good practice is to inform your full-time employer of your intentions to moonlight and the nature of the work you intend to undertake, and to seek his/her approval.
You will also have some continuing obligations as a moonlighter:
Tax obligations pursuant to the Income Tax Act
Income tax has to be paid on all income earned in or derived from Singapore. While the income you earn from your full-time job is considered “employment income”, the additional income you earn for your part-time job as a self-employed person is known as “trade income”.
The trade income you earn will also have to be reported to the Inland Revenue Authority of Singapore (IRAS) to be taxed accordingly.
Obligations to your employer
Even after seeking your employer’s approval to moonlight, it is advisable that you continue to keep your employer updated on any changes to the nature of your part-time work, from which a potential conflict of interest could arise.
Moonlighting is frowned upon by employers, but you may have reasons for which you are considering taking up a part-time job in addition to your full-time job.
Should you wish to do so, you can protect yourself by obtaining your full-time employer’s informed consent, and by ensuring that your full-time employment contract does not disallow moonlighting.
Thereafter, you will be required to declare your additional income to IRAS for tax purposes throughout the period of moonlighting.