The state government of Haryana enacted the Haryana State Employment of Local Candidates Act, 2020 (act) and the Haryana State Employment of Local Candidates Rules, 2021, which took effect in January 2022. The act provides that 75% of private sector jobs must be reserved for employees domiciled in Haryana. In other words, every private company, society, trust and limited liability partnership employer must now employ 75% of the workforce from within the state of Haryana, where the minimum daily wage for an unskilled agricultural worker is INR377 (USD5).
The act exempts startups and new information technology companies from its provisions for two years. Officials said that this meant that start-ups, companies, firms and establishments which come into being or are set up after the commencement date in January are exempted for two years from hiring 75% of the workforce from local candidates.
However, the act has been the subject of debate, discussion and opposition on the ground that it violates constitutional rights. The controversy surrounding the act has impelled various associations and private sector employers to file cases in the Punjab and Haryana High Court. In considering the fate of the act in a case brought by the Faridabad Industries Association, the IMT Industrial Association and the Gurgaon Industrial Association, the Punjab and Haryana High Court granted an interim stay of commencement of the act and issued a notice to the state government.
The arguments before the court against the act centred on the assertion that it was in violation of articles 14, 15 and 19 of the constitution, as it was vague and arbitrary. Article 14 grants equality before the law and article 19(1)(g) provides for the protection of the right to practise any profession, and to carry on any occupation, trade or business.
The argument further advanced by the petitioners was that the state government had no power to reserve jobs in the private sector. Job selection is supposedly based on meritocracy and skill. The contrary argument of the state was that rapid industrialisation and modernisation had led to increased land acquisition. This had reduced employment opportunities for local youth in a state that is primarily agricultural. The law would ensure the creation of more opportunities and enhance skills.
Ultimately, the issue to be decided by the court was whether a state could restrict employment on the basis of domicile. The court observed that the state had no inherent right to enforce reservations in the private sector on such grounds. The government of Haryana has appealed to the Supreme Court and has successfully applied that the stay on the commencement of the act be lifted. The state government has been ordered, however, not to enforce the act. While it is to be seen how this legal controversy plays out in the Supreme Court, legal commentators have expressed the opinion that the act does indeed contravene fundamental rights and cannot withstand judicial scrutiny.
The dispute digest is compiled by Numen Law Offices, a multidisciplinary law firm based in New Delhi & Mumbai. The authors can be contacted at email@example.com. Readers should not act on the basis of this information without seeking professional legal advice.