Haryana’s Job Reservation Law – Rationale and Legal Questions

What is the issue?

The Haryana State Employment of Local Candidates Bill, 2020 passed earlier was notified recently.
Here is a look at the government’s rationale for this law, and the constitutional questions such laws would face if challenged in court.

What does the law say?

The law requires private companies to set aside 75% of jobs for domiciles.
This applies for jobs up to a monthly salary of Rs 50,000 or as may be notified by the government from time to time.
It is applicable to all the companies, societies, trusts, limited liability partnership firms, partnership firms and any person employing 10 or more persons.
It would also include an entity as may be notified by the government from time to time.
In July 2019, the Andhra Pradesh government had passed a similar law, which was challenged in court.
The Andhra Pradesh High Court had made a prima facie observation that the move might be unconstitutional.
- But the challenge is yet to be heard on merits.

What is Haryana government’s rationale?

Haryana’s unemployment rate has been far in excess of the national average since August 2017.
It reached a peak in April 2020 when four out of every 10 people looking for a job failed to get one.
The Covid-induced lockdowns have been removed and the economy opened up.
But Haryana’s unemployment rate has continued to be high and is still rising.
The work opportunities in the government is also shrinking.
The law thus comes at addressing these or dealing with these.

What are the legal issues in such laws?

Domicile reservation in jobs - Domicile quotas in education are fairly common.
However, courts have been reluctant in expanding this to public employment.
The Madhya Pradesh government recently decided to reserve all government jobs for “children of the state.”
This raised questions relating to the fundamental right to equality of citizens.
Private sector - Another more contentious question is the issue of forcing the private sector to comply with reservations in employment.
For mandating reservation in public employment, the state draws its power from Article 16(4) of the Constitution.
The Constitution thus places the responsibility of ensuring equality of all citizens squarely on the state.
The Constitution has no manifest provision for private employment from which the state draws the power to make laws mandating reservation.

The Courts will have to see if the state was delegating its role to the citizens, and whether that is permissible.

What are the governments’ arguments in bringing such laws?

Public sector jobs constitute only a minuscule proportion of all jobs.
Legislators have thus talked about extending the legal protections to the private sector.
The objective is to really achieve the constitutional mandate of equality for all citizens.
Another argument is that private industries use public infrastructure in many ways.
E.g. accessing land through subsidised allotment, receiving credit from public banks, tax exemptions and in many cases subsidies for fuel, etc
So, the state has a legitimate right to require them to comply with the reservation policy.
A similar argument was made in requiring private schools to comply with the Right to Education Act, which the Supreme Court also upheld.
Besides these, such laws may be seen as populist move too.

What are the likely implications of such laws?

Domicile reservations might lead to balkanisation of India’s labour market.
Free mobility of labour corrects several demographic and economic imbalances among states.
Curbing this mobility will inhibit overall economic growth and employment generation.
With Haryana too, the law is likely to hurt the low-skilled workers.
It might push the state’s industrial and services sector towards greater “informalisation”.
In other words, the same workers will be paid less and have next to nothing social security because they will not be formally on the payrolls.
According to the Periodic Labour Force Survey, nearly 97% of workers in the private sector draw a salary of less than Rs 50,000 a month.
So the Rs 50,000 monthly salary limit would cover most of the private sector employment in the state.

Do other countries take such affirmative action in employment?

Affirmative action is adopted in many countries in the context of race and gender.
E.g. in the US, there is no statutory requirement for employers to have quotas.
But courts can order monetary damages and injunctive relief, including “such affirmative action as may be appropriate”, for victims of discrimination.
This power comes from the Civil Rights Act of 1964, which prohibits employment discrimination on the basis of race, colour, national origin, religion, and sex.
Canada has the Employment Equity Act in place.
It protects minority groups, especially aboriginals from discrimination in federally regulated industries, even in the private sector.

Source: The Indian Express