Why is it in the News?

The Punjab and Haryana High Court on Nov 17 quashed a law passed by the Haryana government in 2020 that provided 75% reservation in private jobs to residents of the state.

Context:

• The Punjab and Haryana high court on Friday struck down a Haryana law that reserved 75% private sector jobs, paying up to ?30,000 a month, for local candidates.
• The court found it unconstitutional and stated that the 2021 law violated fundamental rights as per the Constitution, emphasizing that individual rights should align with the Constitution's text and spirit, not popular or majoritarian notions.

Key Provisions of Haryana State Employment of Local Candidates Act 2020:

• The Act is applicable to all private companies, societies, partnership firms, trusts, any person employing ten or more persons in Haryana, or any other entity as may be notified by the Government.
• The Act requires private sector employers to reserve 75% of job posts that offer a salary of less than INR 30,000 for individuals who are domiciled in Haryana.
• The Government of Haryana has also made the residency (domicile) requirement to 5 years for a person to obtain a residency certificate.
• The Act enables the Haryana Government to focus on securing employment opportunities for domiciled individuals.
• However, domiciled linked reservations are not a new concept since other States have also introduced similar laws.
• For instance, the Government of Andhra Pradesh notified the Andhra Pradesh Employment of Local Candidates in the Industries / Factories Act, 2019 which provided for reservation of 75% of posts in existing and upcoming factories, industries, joint ventures, and public-private partnership projects for local candidates.
• However, central or state governments or any organisation owned by them were kept outside the ambit of this Act.
• Employers can seek an exemption if enough local candidates with required skills are unavailable; the Designated Officer decides based on an inquiry.
• The law was made applicable for 10 years but was stayed by the high court last year.

Haryana was also one of several states that have enacted laws in recent years to provide reservations for local residents in the private sector. These include Maharashtra (up to 80% quota), Karnataka (75%), Andhra Pradesh (75%) and Madhya Pradesh (70%). However the validity of most of these laws has been challenged before the Supreme Court and high courts.

Who challenged the law and on what grounds?

• The Faridabad Industries Association and other Haryana-based associations went to court, contending that Haryana wanted to create reservations in the private sector by introducing a policy of “sons of the soil”, which was an infringement of the constitutional rights of employers.
• The petitioners argued that private sector jobs are purely based on skills and an analytical bent of mind, and employees have a fundamental right to work in any part of India.
• Therefore, they argued, “The act of the respondent (government) forcing the employers to employ local candidates in the private sector vide this impugned Act is the violation of the federal structure framed by the Constitution of India, whereby the government cannot act contrary to the public interest and cannot benefit one class”.
• The Haryana government argued that it had the power to create such reservations under Article 16(4) of the Constitution, which says that the right to equality in public employment does not prevent the State from “making any provision for the reservation of appointments or posts in favour of any backward class of citizens which, in the opinion of the State, is not adequately represented in the services under the State”.

What was the ruling of the High Court?

• The High Court ruled that the law violates Part III of the Constitution (Fundamental Rights) and declared it ineffective "from the date it came into force."
• It expressed concerns that certain provisions, such as the obligation for employers to submit quarterly reports and the authorization for officers to request documents or verification, resembled an "Inspector Raj" situation.
• The court concluded that the state's actions constituted an "absolute control over a private employer," leading to violations of an individual's right to engage in occupation, trade, or business under Article 19(1)(g) of the Constitution.
• The judges held that notions about individual rights have to be in accordance with the text and spirit of the Constitution and not popular or majoritarian notions.
• The court also said that:
• “The state cannot direct the private employers to do what has been forbidden to do under the Constitution of India.
• It cannot do such discrimination against the individuals on account of the fact that they do not belong to a certain state and have a negative discrimination against other citizens of the country”.

The Structure and Development of Reservations in Public Employment in India:

• Reservation in public employment was initially limited to Scheduled Castes and Scheduled Tribes.
• Later extended to include Other Backward Classes (OBCs) based on Mandal Commission recommendations (1980).
• Mandal Commission's Recommendations:
• The Mandal Commission proposed a 27% reservation for OBCs in central services and public sector undertakings.
• This was an addition to the existing reservation for Scheduled Castes and Scheduled Tribes.
• Constitutional Perspective: Reservation is not a fundamental right.
• While the constitution emphasizes non-discrimination in public employment, the state has the authority to promote specific societal sections through reservation in education or employment.
• Basis for Reservation: Reservation can be based on factors such as domicile (residence) or backwardness.
• Parliamentary Authority: Parliament can enact laws regarding employment to a state office, specifying requirements like residence within that state (Article 16(3)).
• State's Authority: The State has the power to advance socially and educationally backward classes or Scheduled Castes and Scheduled Tribes (Article 15(4)).
• Provisions can be made to reserve posts for backward classes not adequately represented in the State services (Article 16(4)).

Some Important Judgements related to Reservation:

• Indra Sawhney v. Union of India Case (1992):
• The court affirmed the constitutionality of 27% reservation but set a 50% cap on public employment reservation.
• The court recommended excluding advanced sections within OBCs (creamy layer) from reservation benefits.
• M.Nagaraj v. Union Of India Case (2006 ):
• The Supreme Court validated the constitutional legitimacy of the 77th Amendment, allowing the state to reserve posts for underrepresented backward classes.
• It emphasized excluding the creamy layer from the reservation, extending this principle to Scheduled Castes and Tribes.
• Dr. Jaishri Laxmanrao Patil vs Chief Minister Case (2021):
• The Supreme Court reaffirmed the Indra Sawhney decision and invalidated Section 4(1)(a) and Section 4(1)(b) of the Act.
• These sections provided 12% reservation for Marathas in educational institutions and 13% reservation in public employment.
• This judicial decision sent a strong message, highlighting instances where certain state governments exceeded the prescribed limits on reservations without any justifiable exceptional circumstances.
• Janhit Abhiyan (EWS) Case (2022):
• The Supreme Court upheld the validity of the 103rd Constitutional Amendment, providing 10% reservation for Economically Weaker Sections (EWS).
• The court clarified that the EWS quota doesn't breach the 50% reservation cap, as it falls within the non-reserved category.