Central Idea

In a significant verdict, the Punjab and Haryana High Court has invalidated a law passed by the Haryana government in 2020, which reserved 75% of private sector jobs for residents of the state.
The court ruled that discriminating against individuals based on their non-residency in the state is unconstitutional, as it violates fundamental rights enshrined in the Indian Constitution.

Haryana Employment of Local Candidates Act, 2020: The Controversy

Origins: Enacted by the Haryana Assembly in November 2020, the law aimed to reserve 75% of jobs in the private sector with monthly salaries under Rs 30,000 (originally Rs 50,000) for Haryana residents.
Effective Date: The law received the Governor’s approval on March 2, 2021, and came into effect on January 15, 2022.
Key Provisions: All private entities, including companies, societies, trusts, and individual employers with ten or more employees, were covered. The law mandated recruitment through a designated online portal, with provisions for employer exemptions.

Unconstitutional Restrictions: The High Court held that Sections 6 and 8 of the Act, which required employers to submit quarterly reports on local candidates employed and gave authorized officers powers to verify compliance, amounted to an “Inspector Raj.” These provisions placed undue control over private employers, which is permissible for public employment but not for the private sector.
Violation of Fundamental Rights: The court found that the law severely impaired an individual’s right to carry on an occupation, trade, or business under Article 19(1)(g) of the Constitution. It emphasized that the State cannot discriminate against individuals based on their non-residency in a particular state.
Inspector Raj and Legal Immunity: The court also criticized the Act’s provision under Section 20, which protected authorized or designated officers acting in “good faith.” This provision effectively restricted legal proceedings against such officers, further impinging on employers’ rights.

Article 19(1) (g) Violation: The Act potentially infringes upon Article 19(1)(g), which guarantees the right to carry out any occupation, trade, or business. It may impede this right by mandating job reservations in the private sector, affecting individuals’ occupational freedom.
Article 16 Boundaries: The Act’s provision of reservation based on domicile or residence may cross constitutional boundaries. Article 16 ensures equal opportunity in public employment, but the Act extends this to the private sector, a prerogative of Parliament.
50% Reservation Limit: The Act breaches the 50% reservation limit set by the Supreme Court in the Indra Sawhney case. Exceptional circumstances must be proven for such a breach, challenging the equality principle.
One Nation Concept: India’s constitutional vision as one nation with equal rights for all is challenged by these laws. Restricting out-of-state citizens’ job opportunities hinders their freedom to reside and work anywhere in India.
Economic Implications: The Act could raise operational costs for businesses and exacerbate income inequality among States.

Supreme Court’s Involvement: The Haryana government, determined to pursue the reservation policy, plans to move the Supreme Court and file a Special Leave Petition (SLP) challenging the High Court’s verdict.
Prior Legal Proceedings: The High Court had previously stayed the law on February 3, 2022, but the Supreme Court later set aside this stay, directing the High Court to decide on the law’s validity within four weeks.

The Punjab and Haryana High Court’s ruling, declaring Haryana’s 75% reservation law for private jobs unconstitutional, marks a significant development in the ongoing debate over state-based job reservations in India.
The impending Supreme Court battle will determine the fate of this contentious legislation.