The government of Haryana notified the Haryana State Employment of Local Candidates Act, 2020 (the “Act”) and the Haryana State Employment of Local Candidates Rules, 2021 (the “Rules”) with effect from 15th January 2022. The Act provides for reservation of 75% for employees domiciled in Haryana for private sector jobs. In other words, every employer of a private company, society, trust, limited liability partnership etc,. will now have to necessarily employ 75% of local candidates from only within the State of Haryana wherein the salary or wages payable to the employees is not less than INR 30,000.

The Act states that startups and new Information Technology (IT) companies will be exempted from the provisions of the Act for two years. Officials said that this primarily meant that start-ups, companies, firms and establishments which come into being or are set up after January 15 will be exempted for two years from hiring 75% local candidates by the state government.

However, the Act has been up for debates, discussions and oppositions on the ground that it is violative of the constitutional rights. The controversy surrounding the Act has enabled various associations and private sector employers to file Writ Petitions in the Punjab and Haryana High Court.

While deciding the fate of the Act in a petition filed by the Faridabad Industries Association, the IMT Industrial Association and Gurgaon Industrial Association, the Punjab and Haryana High Court has put an interim stay on the Act while issuing a notice to the state government. The plea before the court was that the Act is in violation of Article 14,15 and 19 of the Constitution of India as it is vague and arbitrary. Article 14 of the Constitution pertaining to equality before the law and Article 19 (1)(g) which provides for protection of certain rights to practice any profession, or to carry on any occupation, trade or business.

The argument put forth by the petitioner is its aggrievance with enacting reservation in jobs which are for private sectors, an arena which is removed from the preview of the government. The job is supposedly based on meritocracy and skills. Per contra, the argument of the state is that with rapid industrialisation and modernisation, the land acquisition has increased. This has decreased employment opportunities for the local youth in a state which is primarily agricultural. The law would ensure 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 state has no inherent right to enforce reservations in private sector on the ground of domicile.

Against this order, the government of Haryana has preferred an appeal to the Supreme Court and has prayed that the stay on the Act should be vacated. While it is yet to be seen how the legal controversy plays out in the Apex Court, the legal commentators have expressed their opinion that the Act is in contravention to the fundamental rights and cannot withstanding judicial scrutiny.

By - Arush Khanna & Ridhima Gupta