The Haryana State Employment of Local Candidates Act, 2020, was introduced to boost local employment in the private sector within the state. Commencing on January 15, 2022, the legislation aimed to enforce a 75% job reservation for local candidates in private sector roles with a gross monthly salary of up to INR 30,000. Entities with a workforce of ten or more employees were obliged to register on a designated portal and disclose the details of locally employed candidates by April 15, 2022. Despite its objectives, the Act faced criticism for potential exclusionary effects and concerns about hindering the ease of conducting business.
Numerous writ petitions challenging the constitutionality of the Act were filed, leading to a temporary halt in its implementation by the Punjab & Haryana High Court on February 3, 2022. The central constitutional issues brought before the court included the maintainability of the writ petition, given that it was filed by an association of persons, and whether such an association could claim a violation of fundamental rights under Part-III of the Constitution. Additionally, the court deliberated on the State's authority to enact legislation compelling private employers to take actions seemingly at odds with constitutional provisions.
High Court's Ruling
During the evaluation of arguments from both sides, the Punjab & Haryana High Court underscored several crucial aspects that led to its declaration of the Haryana State Employment of Local Candidates Act, 2020 as unconstitutional and ineffective:
The court maintained that the state's authority (Respondents) does not extend to legislating and imposing constraints on private employers, specifically in the context of recruiting employees earning a gross monthly salary below INR 30,000 from the open market.
Emphasizing the protection provided under Article 19 of the Constitution, the court asserted that the state should not impede private employers in their recruitment processes for specific employee categories from the open market.
Referring to Supreme Court judgments, the court accused the State of Haryana of violating constitutional morality by creating a secondary status for non-state citizens, restricting their fundamental rights to earn a livelihood.
Expressing disapproval of the legislation, the court stated that prohibiting private employment through legislative command, while exempting states from similar restrictions, is unconstitutional. Private individuals, it argued, should not be subject to restrictions forbidden for the state.
The court ruled that the Local Candidates Act imposes unreasonable restrictions on individuals' rights to move freely within India's territory or to reside and settle in any part of it, violating Article 19 of the Constitution.
On the issue of the writ petition's maintainability by an association of persons, the court referred to Supreme Court judgments, concluding that the state cannot object to the association of persons claiming a violation of fundamental rights.
The legislation was rendered ineffective from its commencement on January 15, 2022. The court's decision was perceived as a victory for private sector employers in Haryana, particularly in the IT/ITES and manufacturing sectors. Recent reports suggest the Haryana state government's intent to challenge the ruling in the Supreme Court of India, akin to a similar situation in Andhra Pradesh. This has prompted expectations of comparable legal scrutiny in other states.