Moonlighting is often against company's policy because there is a legal concept which applies to all employees called the “duty of loyalty.” Because legally employees are “agents” of their employer, they are required to act in the best interests of the employer during their employment

It might be against some contract he's signed, which would make it illegal.

Aside from that I'm not sure I buy this "duty of loyalty" idea. What social purpose does it serve? Sounds like something that's common because at some point it became normal to be able to get people to agree to it. After all, most people in history could not work remotely.

There's also plenty of other professions where you can work for several people at once, for instance you can be a columnist and do prep work that's useful for more than one column.

What I don't like is this idea that he's being paid for his time, not his product. It seems pretty clear cut he's being paid to maintain this legacy system. He's doing it. If something happens, he should be available, but otherwise he should be able to do whatever he wants, including other work.

Yes I totally agree. Too many corporations view their employees as boarderline indentured servants and it's from that sense of ownership where the need to control ones time originates. Time is after all the most valuable thing we have.

It's the only thing we have.

I'm pretty sure that billing two companies for the same time is the difference between unethical and highly illegal.

And yet, doing that as a company is only good business. (Like developing really similar apps to two different clients.)

That's exactly what I would suggest.