The Haryana State Assembly has finally passed the much-debated Haryana State Employment of Local Candidates Bill, 2020 (“Bill”), which seeks to mandate 75% job reservation for local candidates in the private sector. The Haryana Government believes that giving preference to local candidates in low-paid jobs is socially, economically, and environmentally desirable and benefits the public at large. If enacted, the Haryana State Employment of Local Candidates Act, 2020 (“Act”) will apply to all the businesses in Haryana irrespective of whether they are profit-oriented or not. The moot question is whether the plus for local labour will be at the expense of business standards and professional goals.
The key highlights of the Act are:
- The Act will come into effect from a date notified by the Haryana Government and will be in force for a period of 10 years from the date of its commencement, except in respect of things done or omitted to be done before such cessation.
- The Act will apply to all Companies, Societies (registered under the Haryana Registration and Regulation of Societies Act, 2012), Trusts, LLPs, Partnership Firms, any person employing 10 or more persons, and other notified entities for the purpose of manufacturing or providing any service, except organizations owned and/or controlled by the Central and State Government.
- Local candidates domiciled in Haryana and employees falling within a prescribed salary bracket will be registered on a designated portal, and no individual can be engaged by an employer until such registration is completed.
- Employers will need to register their employees who receive gross monthly salary or wages up to INR 50,000/- (or other notified amount) on the designated portal within 3 months of commencement of the Act.
- Post commencement of the Act, it will be mandatory for all employers to engage 75% local candidates for posts where the monthly salary is up to INR 50,000/- (or other notified amount).
- Employers will have flexibility in restricting the employment of local candidates from any district in Haryana to 10% of the total number of local candidates.
- To avail benefits of reservation under the Act, a local candidate will need to register himself on the designated portal.
- Employers may obtain, from the Designated Officer, an exemption from the requirement of recruiting local candidates if the adequate number of local candidates of desired skill, qualification, or proficiency is not available.
- The Designated Officer may accept or reject an employer's exemption application or direct the said employer to train local candidates to achieve the desired skill, qualification, or proficiency. All orders passed by the Designated Officer will be placed on the Haryana Government website.
- Employers will be required to submit quarterly reports on the designated portal in respect of the local candidates employed and appointed during that quarter.
- Authorized Officers have been empowered to examine quarterly reports of employers, call for any record, information, or document for verification and pass orders for compliance with objectives of the Act, which will be placed on the Haryana Government website.
- Authorized Officers will be empowered to enter the employer's premises at mutually acceptable times to conduct inspection for ascertaining compliance of the Act.
- The Act has graded monetary penalty for different offences with fines ranging from INR 10,000/- to INR 2,00,000/- for the first offence and going up to INR 5,00,000/- for the second/subsequent offences and up to INR 1000/- per day for continued contravention after conviction.
- Complaints by the Authorized or Designated Officer will have to be filed within 6 months from the date he/she learns of the alleged offence.
- The Act will have an overriding effect over anything inconsistent therewith contained in any other State law in force or any instrument having effect by virtue of such law.
Although private employers may benefit from the availability of qualified and trained local workforce in a pandemic-type situation, clearly the Act intends to create more jobs for the locals in Haryana while depriving employers the autonomy to decide on such matters. It is therefore no surprise that industry players are opposing this development. They are quite vocal that the Act will be against the interests of industry, adversely affecting competitiveness and investments in Haryana and endangering business standards which are best achieved by employing the best candidates. Further, it will act as a huge impediment towards ‘ease of doing business' in Haryana by denying employers the basic rights in matters directly affecting production goals and service standards.
That apart, the Act clearly goes against the recent changes in the Other Service Provider guidelines which enable employers to engage individuals in other States without even the need for physical infrastructure. Several other questions, including what needs to be done in respect of existing workforce falling within the prescribed salary bracket, remain unanswered and may probably be clarified in the rules to be made under the Act. The Act focuses on the domicile status of workers versus the desired skill, qualification, or proficiency needed for the jobs they seek and also burdens employers with the responsibility of training the locals to achieve the required skillsets by prescribing significant monetary penalties for non-compliances.
Given that the Act is similar to the Andhra Pradesh Employment of Local Candidates in Industries/Factories Act, 2019, which is under challenge on grounds of constitutionality before the High Court of Andhra Pradesh, it may meet the same fate. Forcing employers' hands to benefit the locals is a tricky tightrope: policy-makers would do well to ensure that the Act is not a case of cutting off the nose to spite the face!
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