Company: NexGen Software (fictitious), a product-based SaaS company with 800 employees, building enterprise HR tech solutions.
Background
Arjun Nair is one of NexGen’s best backend engineers. Over three years, he has built core features of the company’s flagship product, mentored junior developers, and consistently delivered ahead of deadlines. He is on the fast track to a lead architect role.
The situation
During a routine LinkedIn scroll, NexGen’s CTO notices something unusual. Arjun’s profile lists him as a “Freelance Software Consultant,” with a separate website advertising services such as API development, cloud architecture, and database optimisation. The listed rates: Rs 5,000 to Rs 8,000 per hour.
A deeper look raises more concerns.
Arjun has been taking freelance projects on nights and weekends for at least a year. Some clients are in adjacent industries. One is a direct competitor building a similar HR tech product.
When confronted, Arjun is unapologetic:
“I work 9 to 6 for NexGen. After that, my time is mine. I am not using company resources. I am not sharing IP. I am simply using my skills to earn additional income. What is the problem?”
Leadership is divided.
The CTO wants him terminated:
“This is a conflict of interest. He is working for a competitor. Even if he is not sharing code, he is sharing knowledge—patterns, architecture thinking. It is a breach of trust.”
The Head of Engineering disagrees:
“Arjun is one of our best. Developers moonlight everywhere, and that is the reality today. If we fire him over this, we lose talent and look draconian. We should update the policy and move on.”
HR reviews the employment contract.
The clause on outside employment is vague: “Employees should not engage in activities that conflict with the company’s interests.” It does not explicitly prohibit freelancing.
HR now faces a difficult choice.
The dilemma
Should HR terminate Arjun for conflict of interest – sending a strong signal about loyalty and protecting the company’s competitive advantage?
Or allow the moonlighting, clarify the policy going forward, and accept that the traditional idea of exclusive employment is eroding?
What’s really at stake
This is a test of whether organisations can still expect exclusivity in an era where talent increasingly treats employment as transactional.
If NexGen terminates Arjun, it risks losing a high performer and enforcing a policy that was never clearly defined.
If it does not, others may follow, and the boundary between personal work and competitive conflict may become harder to control.
And the deeper question remains: in the gig economy, does “full-time employment” still mean what it once did?
We asked three HR leaders how they would approach this dilemma.
What HR leaders said
Pradyumna Pandey, CEO, Promediexcel Learning
“From my perspective, the first principle is respect for the employee’s primary commitment. When someone joins an organisation full-time, their first responsibility is towards that role and the value they are expected to create there.
In industries like manufacturing, this question rarely even arises. Employees are not allowed to engage in outside work because fatigue or divided attention could lead to serious accidents on the shop floor. In the IT industry, the consequences may not be physical, but the risk still exists, particularly when it comes to intellectual capital and creative energy.
Software development is a creative discipline. Ideas don’t always emerge between 9 a.m. and 6 p.m.; they come during leisure time, reflection, and even late at night. If an employee is using that creative bandwidth to build solutions for someone else – especially in adjacent industries – it inevitably dilutes the attention available for the primary employer.
That said, the key issue in NexGen’s case is policy clarity. If the employment contract explicitly prohibited outside engagements, Arjun’s actions would clearly be a breach of trust. But if the clause is vague, the organisation must also take responsibility for not communicating its expectations clearly.
In academia, for example, professors are often allowed to undertake outside assignments – consulting, research, lectures – because the policy clearly defines the conditions and requires disclosure. When organisations create that clarity, employees know the boundaries.
So, in this case, I would not support moonlighting in principle because it distracts from the primary role. However, if the company has not explicitly prohibited it, termination would send the wrong signal.
When policies are unclear, punishment is unfair. Organisations must first define clear rules on outside work before enforcing consequences.”
Anil Mohanty, Group CHRO, Falcon Marine
“For me, the situation is very straightforward. Moonlighting becomes unacceptable the moment it creates a conflict of interest – especially when the employee works for a competitor.
Whether someone is a star performer or an average contributor does not change that principle. If I am working for my organisation and at the same time helping a competing company build similar solutions, that is a direct conflict.
Many people argue that what they do after office hours is their personal matter. But employment is built on a relationship of trust and confidentiality. You may say you are not sharing code or documents, but how can anyone guarantee that knowledge, patterns, or best practices gained from your employer are not influencing your work elsewhere?
Even if it happens unintentionally, it still compromises the organisation’s intellectual advantage.
I am not against all external engagements. As subject-matter experts, professionals are sometimes invited to share insights, give advice, or participate in short consulting assignments. A one-hour discussion or a one-time advisory session is different from continuously working on projects for another company.
However, when the engagement is with a competitor, that is a clear breach. Talent is important, but no individual is indispensable. Organisations cannot compromise ethics simply because someone is a high performer.
If Arjun were working on projects unrelated to NexGen’s domain, perhaps there could be room for discussion. But building technology solutions for a competing HR tech firm crosses the line.
Moonlighting may be negotiable in some contexts, but conflict with a competitor is non-negotiable.”
Chandrasekhar Mukherjee, Senior HR leader
“The first lens I apply to this situation is legality. A full-time employee is engaged by the organisation as a full-time resource. That is what ‘FTE’ means. When someone accepts full-time employment, they cannot simultaneously work elsewhere in a similar capacity without permission.y
Even when professionals take up guest lectures, consulting assignments, or advisory roles, they usually seek prior approval from their employer. Transparency is essential.
But the bigger concern here is not just legality – it is culture and precedent. Organisations are built not only on performance metrics but also on behavioural standards.
If a high-performing employee is allowed to break those standards because he is valuable, the message to the rest of the organisation is simple: rules apply selectively. That is the fastest way to weaken organisational culture.
Working for a competitor makes the situation even more serious. Whether or not Arjun shares code is irrelevant. He carries with him knowledge about architecture, product strategy, and problem-solving approaches. Even informal conversations can transfer competitive insights.
Some may argue that losing a star performer would hurt NexGen. But organisations must think long-term. Culture is defined by the actions taken in difficult moments.
If leadership tolerates such behaviour, others will inevitably follow. Soon, employees may start prioritising their side work over the organisation’s goals.
In my view, this is not just a policy issue – it is an ethical one. Organisations must stand firm on such matters.
Allowing a top performer to break rules creates a dangerous precedent. Culture must outweigh individual brilliance.”
If you were the CHRO at NexGen
You have been asked to recommend a course of action to the leadership team.
Do you:
- Terminate Arjun for conflict of interest, even though the policy was vague, to protect the organisation’s competitive advantage?
- Allow the moonlighting this time, but clarify and tighten the policy immediately for all future cases?
- Issue a formal warning and require him to cease all work with competitors, while allowing non-competing freelance work with prior approval?
Or is the deeper question this:
In an age where talent increasingly views employment as transactional and seeks multiple income streams, can organisations still demand exclusive loyalty—or must the employment contract itself evolve?
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