Haryana’s private sector reservation law and doubts around it
What is the controversial Haryana state law on reservation in jobs for local residents that was first put on hold and then implemented? Why are industrialists unhappy with its ill-effects?
The story So Far: Setting aside an interim order passed by the Punjab and Haryana High Court on February 3, staying the state law that reserved 75% of private sector jobs paying Rs 30,000 per month for local residents of Haryana. The Supreme Court said on February 17 that the High Court had not provided “sufficient reasons” to put the law on hold.
Avoiding going into the merits of the matter, the top court asked the high court to expeditiously decide the writ petitions filed before it by industry bodies for a period of four weeks from February 17. A division bench of Justice L Nageswara Rao and Pamidighantam Sri Narasimha also directed the Haryana government not to take coercive steps against companies which do not comply with the law till the matter is resolved.
Hearing a petition filed by the Faridabad Industries Association and two other industry associations of Haryana, which had challenged the constitutionality of the law, a bench of the Punjab and Haryana High Court had observed: “The main issue is whether a state can can restrict (even in the private sector) on domicile grounds”, it said, adding that keeping in view the issue, the law was bound to remain.
While industry bodies have argued that the law will adversely affect industrial development, the Haryana government, a coalition of the BJP and the Jannayak Janata Party, says the act will open up ample employment opportunities for the youth in the state.
What is included in the Reservation Act?
The Haryana State Local Candidates Employment Act, 2020, which was enacted in November last year and came into force on January 15 this year, makes it mandatory for employers in the state to reserve 75% of jobs paying less than Rs 30,000 per month. Is. for local residents. The state government had originally said that the reservation would be applicable to jobs up to Rs 50,000, but later the upper limit was revised to 30,000 on protests by industrialists.
The 75% domicile quota in private sector employment was an election promise made by Jannayak Janata Party leader and Haryana Deputy Chief Minister Dushyant Chautala in the 2019 assembly elections. The bill was passed by the state legislative assembly in November 2020, and the governor’s assent was given in March 2021.
All private entities treated as “employers” in the state are covered by the law, which means it would apply to all companies, trusts, societies, partnerships and limited liability partnerships. Any person or employer under whom 10 or more persons are working in any factory, trade, business or enterprise shall also come under the purview of the law.
Under the law, a “local candidate” shall be defined as any person residing in the State of Haryana. The original draft of the bill had a stipulation that only those who have resided in the state for the last 15 years would be considered as local candidates, but this was later amended to five years.
The Act requires job seekers to register themselves on the designated online portal of the government to avail the benefits of reservation, and companies can hire newly qualified employees only through the said portal.
Meanwhile, employers will have to register employees already working with them in the ₹30,000 monthly pay bracket, and can start recruiting new employees in the category only after completing the registration process. This law will be applicable to new recruitments and will not be effective retrospectively. The Act will not be a permanent law but will remain in effect for 10 years after it is enacted.
Employers have also been directed to file quarterly reports on the digital portal, updating it with the details of local residents recruited and appointed in the pay brackets prescribed in the previous quarter. These reports will be subject to scrutiny by designated officers, who will be empowered to ask the employer to produce documents or verify them. Companies violating the Act can be fined between ₹10,000 and ₹2 lakh.
Companies can demand exemptions if they do not find a sufficient number of local candidates for a particular skill or job role, but this claim may be rejected by relevant government officials if they doubt its validity. Employers may also be directed to train local youth in the required skills in the event of insufficiently eligible candidates.
Deputy CM Mr Chautala also explained about the provision in the law under which Information Technology (IT) firms and start-ups established after January 15 this year will be exempted from the law for the next two years.
What are the legal constraints regarding this?
Job Reservation Bills or laws for domicile have also been announced in other states including Andhra Pradesh, Madhya Pradesh and Jharkhand. The Jobs Quota Bill passed in the Andhra Pradesh Assembly in 2019, reserving three-fourths of private jobs for local people, was challenged in the state’s High Court, which said “it may be unconstitutional”.
The petition, filed by the state’s industry associations in the Haryana and Punjab High Court, challenges the constitutional validity of the law, arguing that it is in violation of Article 19 of the Indian Constitution, which guarantees the right to liberty, including residence and settlement. is included. in any part of the Indian territory and practice any profession, occupation or trade. The petition also states that the Act violates Article 14 (equality before law) and Article 15, which prohibit discrimination on various grounds such as religion, race, caste, sex or place of birth.
They also argued that the reservation was being introduced through the “sons of the land” policy, which violated the constitutional rights of both employers and employees to work anywhere in the country. Further, the petitioners also pointed out that jobs in the private sector are based “purely” on the “skill and analytical inclination” of the employee.
Legal commentators such as Supreme Court lawyer Colin Gonsalves have been quoted by The Wire as describing the law as “unconstitutional”, saying that the domicile requirement was “overwhelming” by 75%.
The question of permissibility also arises if the case of Indira Sawhney v Union of India is considered, where the Supreme Court in 1992 capped the limit of reservation in public sector jobs to 50%. Legal experts have said that one can then argue that the reservation limit for employment in the private sector should not exceed the prescribed employment for public services.
Why are industrialists apprehensive?
Industrialists and industry bodies have expressed dissatisfaction with the law as they fear that it will affect the competitiveness of private businesses by artificially controlling their internal workings. Industrialists have said that apart from increasing the compliance burden on the employers, it will also affect the ease of doing business in the state.
The Federation of Indian Chambers of Commerce and Industry (FICCI) has said that the law will “cause disaster” for private investment in the state and hamper industrial growth.
Manmohan Gaind, general secretary of Manesar Industries Welfare Association, an industry body in the state, had earlier told The Hindu that the law was “too short-sighted for the political class”, adding that almost all workers in MSMEs were covered under ₹. 30,000 wage bracket and given that such industries tend to hire and let workers on demand, it will not always be possible to find local workers when the need arises.
What is the government’s reasoning?
Emphasizing that it has industry support barring a few institutions, the Haryana government has said that this law will benefit the youth of the state.
It submitted in the High Court that the law has been brought in to “protect the right to life/ livelihood of the people residing in the State”, adding that the Act was rooted in the problem of rising unemployment in Haryana.
“Industrialization and urbanization in the state has led to large-scale land acquisition, resulting in reduced growth and employment opportunities in the agriculture sector,” the government said, arguing that the law would create new jobs for local youth.
It has also said that the law will help reduce the dependence of businesses on migrant workers, pointing out that Maruti Udyog Ltd., one of the largest industries operating out of the state, “doesn’t even have 20% employees from Haryana”.