Haryana’s employment reservation law

Subject: Polity

Section: Constitution

Context:

The Punjab and Haryana High Court quashed a law enacted by the Haryana government in 2021 that guaranteed 75% reservation to locals in private sector jobs in Haryana.

Historical Background of the Haryana reservation:

Origin

In November 2020, the Haryana Assembly passed the Haryana State Employment of Local Candidates Bill.

Obligation for the employers:

It made it mandatory for employers in the State to reserve 75% of jobs paying a monthly salary of less than ₹30,000 (originally ₹50,000) for local residents of the State.
The law is applicable to all private entities in the State including companies, trusts, societies, partnerships, and limited liability partnerships.
It also covers any person employing 10 or more persons for the purpose of manufacturing or providing any service.

Local candidate’s definition:

A ‘local candidate’ has been defined under the law as anyone domiciled in Haryana for the past five years.
Such candidates will have to mandatorily register themselves on a designated portal in order to avail benefits.
Employers have to make recruitments only through this portal.

Exemption:

Companies can seek an exemption if they do not find local candidates of a desired skill or qualification, but this claim can be rejected by government officials if they doubt its legitimacy.

Violations and penalty:

Employers found to be violating the Act are liable to a fine between ₹10,000 and ₹2 lakh.

Challenges to the law:

Violation of Article 19:

Several industry associations challenged the validity of the law on the ground that it violates Article 19 of the Constitution.
Article 19 guarantees the right to freedom, including to reside and settle in any part of the Indian territory and practise any profession, business or trade.

Violation of Article 14 and Article 15:

It is also contended that the law was an infringement of Article 14 (equality before the law) and Article 15, which prohibits discrimination on various grounds such as religion, race, caste, sex or place of birth.

Discrimination between residents and non residents:

The court was also apprised that the reservation creates a wedge between persons domiciled in different States and is contrary to the concept of common citizenship envisaged in the Constitution.

State Government’s View:

The State government contended that the law intends to protect the right to livelihood of people domiciled in the State, and that the enactment was rooted in the rising unemployment in Haryana.
It was also asserted that the government is empowered to create such reservations under Article 16(4) of the Constitution.
Article 16(4) stipulates that the right to equality in public employment does not prevent the State from making any provision for the reservation of appointments or posts in favour of any backward class of citizens which, in the opinion of the State, is not adequately represented in the services under the State.

Have other States enacted such laws?

States such as Maharashtra, Karnataka, Andhra Pradesh and Madhya Pradesh have enacted laws providing reservations for their local residents in the private sector.

Why did the High Court quash it?

Violation of Article 19(1)(g):

The court ruled that the law was unconstitutional to the extent that a person’s right to carry on occupation, trade, or business under Article 19(1)(g) of the Constitution was being impaired.

Discrimination:

It also highlighted that the law discriminates against individuals who do not belong to a certain State by putting up artificial walls throughout the country.

Parliament’s power is supreme:

Placing reliance on Article 35 of the Constitution, the court outlined that the provision bars the State legislature from legislating on matters that fall within the purview of Article 16(3) of the Constitution (equality of opportunity in matters of public employment) since only the Parliament can pass laws on such subjects.

Return of the Inspector Raj:

The court said that these restrictions amounted to ‘Inspector Raj’ that furthered State control over private employers.
Section 6 of the Act requires employers to submit quarterly reports with details of local candidates employed and Section 8, under which officers could call for documents to ensure the law was being implemented.