Explained | Haryana’s private sector reservation law and the skepticism around it

What is the controversial Haryana State law on job reservation for local residents which was first stayed and then brought back into force? Why are industrialists unhappy with its repercussions? 

The story so far: Setting aside an interim order passed by the Punjab and Haryana High Court on February 3 staying the State law that reserves 75% of private sector jobs paying up to 30,000 a month for Haryana’s local residents, the Supreme Court said on February 17 that the High Court had not provided “sufficient reasons” for putting the law on hold. 

Steering clear of getting into the merits of the case, the apex court asked the High Court to expeditiously decide on the writ petition filed before it by industry bodies, not exceeding a period of four weeks from February 17. The Bench of Justices L Nageswara Rao and Pamidighantam Sri Narasimha also directed the Haryana government to not take coercive steps against those companies who do not comply with the law till the matter is resolved. 

While hearing the petition filed by the Faridabad Industries Association and two other industry associations from Haryana, who challenged the constitutionality of the law, a Bench of the Punjab and Haryana High Court had said: “The core issue is whether any State can restrict employment (even in the private sector) on the basis of domicile”, adding that keeping this issue in mind, it was constrained to stay the law. 

While Industry bodies have contended that the law will adversely affect industrial growth, the Haryana government, a coalition of the BJP and Jannayak Janata Party meanwhile, maintains that the act will open up ample employment opportunities for the youth in the state. 

The Haryana State Employment of Local Candidates Act, 2020, which was enacted in November last year and came into force on January 15 this year, makes it mandatory for employers in the State to reserve 75% of jobs paying less than ₹30,000 a month, for local residents. The State government originally said that the reservation would apply to jobs paying up to ₹50,000, but later revised the upper limit to ₹30,000, on receiving opposition from industrialists. 

The 75% domicile quota in private sector employment was an election promse made in 2019 Assembly elections by Jannayak Janata party leader and Haryana Deputy Chief Minister Dushyant Chautala. The Bill was passed by the State Legislative Assembly in November 2020, and given the Governor’s assent in March 2021. 

All private entities considered as “employers” in the state fall under the ambit of the law, meaning it will apply to all companies, trusts, societies, partnerships and limited liability partnerships. Any individual or employer who has 10 or more persons working under them in any factory, trade, business or enterprise will also be covered under the law.