Possible Impacts of 75% Job Reservation in Haryana: Explained

Introduction

Last year, the Haryana Government passed the Haryana State Employment of Local Candidates Bill, 2020 to reserve 75% of the jobs in the private sector for the local people holding the domicile of Haryana. The provisions of this Bill are applicable to the private companies, trusts, societies, etc operating in Haryana. However, only those jobs are reserved in which the salary is less than 50,000 rupees. The quota was initially applicable for a period of 10 years. The local people will have to register themselves on a portal through which the private companies will recruit their employees. Any company violating the provision of the law can be fined up to rupees 2 lakhs.

Other State Domicile Laws

In 2017, the Karnataka Government was planning to come up with legislation to reserve 100% of blue-collar jobs (in Group C and D) for the locals. However, the plan was dropped after the law department and Advocate General warned that the legislation would not be able to survive the judicial challenges.[1]The Madhya Pradesh Government has reserved all the government jobs in the state for the local people. Maharashtra and Andhra Pradesh also have similar domicile quotas in jobs for the local people. The Andhra Pradesh Employment of Local Candidates in Industries/Factories Act, 2020, which provides reservations to the local people in private jobs, has been challenged before the Andhra Pradesh high court and the case is yet to be decided.[2]

Reasons behind the Haryana Bill

Haryana has an unemployment rate of 26.4% which is the highest in the country.[3]The main rationale behind the reservation bill is to employ the local youth of the state. The transition of Haryana from an agriculture-based economy to an industrial economy has led to a massive loss in agricultural jobs. The new bill aims at compensating for the loss of agricultural jobs by providing reservations in the industrial sector.

The local reservation is also expected to reduce the businesses’ dependence on migrant workers. Furthermore, the local reservation will help in reducing the burden of providing employment on the government as the private sector will share the burden. Since the private sector has benefitted a lot from the infrastructural development schemes initiated by the Haryana Government, the government feels that the private sector must, in return, help in reducing the unemployment rate of the state.

Arguments against the new law

• The law is against several fundamental rights enshrined in our Constitution such as the right to equality, the right to choose any profession of one’s choice, the right to be protected against discrimination, etc.
• The law goes against the principle of meritocracy as it forces the private sector to prioritize domicile over merit. The law does not take into consideration that competition based on meritocracy serves as the backbone for any successful business.
• The law will create an internal barrier within the country for migrant workers from other states to get employment in Haryana.
• Compliance with the provisions of the new law might increase red-tapism and delay the recruitment process of the employers. This will adversely affect the performance of the companies.
• Executives of some companies have also expressed their concerns regarding the possible expansion of the scope of reservation in the future.[4]They emphasize that more stress should be laid on providing adequate training and skills to the youth rather than reserving jobs.

Challenges to Private Sector

As a result of this 75% reservation, the private firms based in Haryana will find it difficult to carry out their operational as well as recruitment activities. The companies looking for employees with technical and industry-specific skills will face a shortage of prospective candidates. This will result in either the posts remaining vacant or the quality of employees going down. Even though the companies can apply for exemption, it is a very long process as a number of documents have to be submitted and some procedural delays might be involved.

Additional expenses will have to be incurred by the private sector in complying with the new regulations. The employers will have to verify the documents submitted by the candidates. Companies might also have to start specific training programs for the newly recruited employees in order to achieve the desired level of skills in the employees. The law further requires the companies to submit quarterly reports about the recruitment of 75% domicile candidates. 

Impact on Gurugram

Considering the strict provisions of the law and the hefty fines that might be imposed for non-compliance with these provisions, many firms are considering moving out of Haryana to the neighboring states. According to experts, Noida might be the most preferred choice for these relocating firms.[5]While these companies might continue to keep their headquarter in Gurugram, since the law does not apply to the existing businesses, any further expansions might be undertaken in the neighboring states. The inflow of migrants has brought immense economic progress to Gurugram and this trend might be reversed if the companies move out of Haryana.

With the companies moving to other states, the real estate sector of Gurugram will be adversely affected. While several states have adopted liberal economic policies to attract investments, Haryana’s new law might dissuade the companies from investing in the state.

Precedent

The example of Haryana is most likely to be followed by other states as well. The damage caused to the economy by the Covid-19 pandemic has led to high rates of unemployment throughout the country. In such a scenario, many other states are likely to come up with similar reservation policies. However, this will be detrimental to the nascent economy. Such provisions are likely to adversely affect the ease of doing business index and can impact the flow of Foreign Direct Investment in India.[6]

Soon after the passing of the Haryana State Employment of Local Candidates Bill, 2020, the Jharkhand Government came up with the Jharkhand State Employment of Local Candidates Bill, 2021 reserving 75% of jobs in the private sector of the state for the local people.[7]This might set in place a cycle in which every state will reserve the jobs for its local population.

Judicial Challenges

The Haryana State Employment of Local Candidates Bill, 2020 was challenged by the M/s A K Automatics Limited before the Punjab and Haryana High Court.[8]The petition claimed that the bill violated the constitutional rights of the employees by reserving jobs in the private sector. The petitioner further claimed that the citizens of India have the right to opt for any job in any part of the country and any attempt to restrict their choice will be a violation of their rights. The petition stated that the law was against the spirit of the “Ek Bharat Shrestha Bharat” policy of the Central Government which aims at creating a mobile labor force within the country.

While the petition was accepted by the High Court registry, it was withdrawn before the hearing of the case could come up. However, the new law might still have to face several judicial challenges. The law will have to stand the test of article 14, which guarantees equality before law and Article 15 (1) and (2) which prohibit the state from discriminating against people on the basis of place of birth. Similarly, Article 16 (1) provides that the state cannot discriminate against the people in matters of employment. Even though the Constitution empowers the state to come up with reservation policies in favor of the backward and marginalized communities as well as in the favor of women and children, the extent to which substantive reservation on the basis of domicile can be justified will have to be determined by the Constitutional Court/s.

The Supreme has the power to declare the reservation as void if it finds the reservation to be violative of the Constitutional provisions. In the landmark judgment of Triloki Nath Tiku and Another v. State of Jammu and Kashmir[9], the Supreme Court had held that the Court is empowered to overturn the reservation policy of the government if it finds the reservation to be based on unjustifiable grounds. The 75% reservation also exceeds the 50% limit set by the Supreme Court in the landmark case of Indra Sawhney v. Union of India.[10]Senior lawyer Ashok Arora said that the state governments can provide reservations in jobs to the local people only if they are able to prove quantifiable reasonableness for the same based on scientific study.[11]

Conclusion

While the new law is in line with Article 41 of the Constitution which stipulates that providing public assistance to secure employment for its citizens shall be a directive principle of the state, the government seems to have ignored the rights of the private employers in order to achieve this objective. India has common citizenship and hence restricting job opportunities based on geography is highly unjustified. Domicile quotas will restrict the free flow of labor within the country which will adversely affect the economic growth of the country.

• [1]https://timesofindia.indiatimes.com/city/bengaluru/karnataka-mulls-legal-cover-to-enforce-100-quota-for-kannadigas-in-private-sector/articleshow/60908719.cmd s
• [2]https://www.hindustantimes.com/india-news/hry-mp-may-face-legal-challenges-over-quota-in-jobs/story-rPpHh160qpDmPdH2iAGUDJ.html
• [3]https://timesofindia.indiatimes.com/city/gurgaon/haryanas-unemployment-rate-highest-in-india-report/articleshow/81696626.cms#:~:text=In%20fact%2C%20Haryana%20has%20recorded,the%20national%20average%20%E2%80%94%206.9%25
• [4]https://www.indiatoday.in/business/story/explained-why-firms-are-not-happy-with-haryana-s-local-job-reservation-law-1781225-2021-03-19
• [5]https://economictimes.indiatimes.com/news/company/corporate-trends/new-bill-may-see-more-firms-shifting-to-noida-from-ggram/articleshow/81381791.cms?from=mdr
• [6]https://economictimes.indiatimes.com/news/company/corporate-trends/new-bill-may-see-more-firms-shifting-to-noida-from-ggram/articleshow/81381791.cms?from=mdr
• [7]https://indianexpress.com/article/explained/explained-the-jharkhand-bill-that-reserves-75-jobs-in-private-sector-for-locals-7230819/
• [8]https://timesofindia.indiatimes.com/city/chandigarh/haryana-law-on-75-quota-in-private-sector-jobs-challenged-in-hc/articleshow/81455878.cms
• [9]https://indiankanoon.org/doc/335876/
• [10]https://indiankanoon.org/doc/1363234/
• [11]https://www.hindustantimes.com/india-news/hry-mp-may-face-legal-challenges-over-quota-in-jobs/story-rPpHh160qpDmPdH2iAGUDJ.html

This article is authored by Gautam Badlani, Student at Chanakya National Law University.