HC Quashes Haryana's 75% Local Quota in Private Sector

Relevance: GS2, Indian Polity, Law, Governance, Judicial review, Federalism, Balance of power between the state and the center, Role of the judiciary

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Why in the news?

• Punjab and Haryana High Court’s ruling struck down the Haryana government's policy mandating a 75% job reservation for local candidates in the private sector.

Contextual Background

• The Haryana State Employment of Local Candidates Act, 2020, was a legislation that mandated private sector employers to reserve a significant majority (75%) of jobs for local residents of the state, specifically for jobs with salaries less than ₹30,000 per month.
• This law was a fulfillment of an election promise by a party leader.
• The quota was introduced as a policy to address unemployment among Haryana's residents, aiming to ensure that they benefited from job opportunities in the state's private sector.
• However, the law faced criticism and opposition from various quarters, including industrialists, who argued that such a reservation could affect the quality of hiring, lead to a dearth of skilled labor, and possibly deter investment.

What was the High Court's Decision?

• The Punjab and Haryana High Court nullified the law mandating a 75% job reservation for state residents in the private sector.
• The court ruled the law unconstitutional.
• This decision overturned the Haryana State Employment of Local Candidates Act, 2020, which required employers to reserve a majority of jobs paying less than ₹30,000 a month for local residents.

What is the 75% Reservation Law?

• The 75% Reservation Law, formally known as the Haryana State Employment of Local Candidates Act, 2020, was a legislative act passed by the Haryana state government in India.
• The law mandated private sector employers in the state to reserve 75% of jobs with a gross monthly salary of less than ₹30,000 for local residents of Haryana.
• Initially, the reservation was for jobs with salaries up to ₹50,000 but was capped at ₹30,000 due to pushback from the industrial sector.
• This reservation was applicable to new employment and it aimed to prioritize local candidates in private employment within the state.
• The law came into effect on January 15, 2021.
• The law was challenged in court, leading to the decision by the Punjab and Haryana High Court to quash the law, declaring it unconstitutional.

Important Constitutional Provisions

• Article 16: Equality of opportunity in matters of public employment
  • Article 16(1) and 16(2) provide for equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State.
  • Article 16(4) allows the State to make any provision for the reservation of appointments or posts in favor of any backward class of citizens which, in the opinion of the State, is not adequately represented in the services under the State.
  • Article 16(4A) provides for reservation in promotions for Scheduled Castes and Scheduled Tribes.
• Article 15(4) and 15(5): Provisions related to the advancement of socially and educationally backward classes, Scheduled Castes, and Scheduled Tribes.
  • While Article 15 generally prohibits discrimination on various grounds, clauses (4) and (5) allow the State to make special provisions, including reservations in educational institutions and possibly in employment under the State, for these groups.
• Article 335: It states that the claims of the members of the Scheduled Castes and Scheduled Tribes shall be taken into consideration, consistently with the maintenance of efficiency of administration, in the making of appointments to services and posts in connection with the affairs of the Union or of a State.
• Article 320(4): Provides that in the case of reservations, the Union Public Service Commission (UPSC) or the State Public Service Commission need not be consulted.
• Article 243D, 243T, and 330: These articles provide for reservation of seats for Scheduled Castes (SCs) and Scheduled Tribes (STs) in Panchayats, Municipalities, and in the House of the People (Lok Sabha), respectively.
• Article 338, 338A, and 338B: Establish the National Commission for Scheduled Castes, the National Commission for Scheduled Tribes, and the National Commission for Backward Classes, respectively, with the duty to investigate and monitor all matters relating to the safeguards for SCs/STs/Backward Classes under the Constitution.

Conclusion

The High Court labeled the law as unconstitutional. The case provides an example of judicial scrutiny concerning the constitutional validity of state-enacted laws.

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FAQs

MCQs

Q.1) Consider the following statements: (UPSC 2023)

Statement-I: The Supreme Court of India has held in some judgments that the reservation policies made under Article 16(4) of the Constitution of India would be limited by Article 335 for maintenance of efficiency of administration.

Statement-II: Article 335 of the Constitution of India defines the term 'efficiency of administration'.

Which one of the following is correct in respect of the above statements?

(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I

(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I

(c) Statement-I is correct but Statement-II is incorrect

(d) Statement-1 is incorrect but Statement-II is correct