Haryana’s quota law

Earlier this week, the Haryana government notified a new law that requires 75% of private sector jobs in the state, up to a specified salary slab, reserved for local candidate. This has renewed the debate on whether the government force should private companies to adopt its reservation policy in jobs. While constitutional guarantees for reservation has been limited to public employment, attempts to extend it to private sector are not new either.

What does the Haryana quota law say?

The Haryana State Employment of Local Candidates Bill, 2020 requires private companies to set aside for domiciles 75% of jobs up to a monthly salary of Rs 50,000 or as may be notified by the government from time to time. The Bill was passed by the state Assembly in November. Now notified, the law is applicable to all the companies, societies, trusts, limited liability partnership firms, partnership firms and any person employing 10 or more persons and an entity, as may be notified by the government from time to time shall come under the ambit of this Act.

In July 2019, the Andhra Pradesh government had passed a similar law, which was challenged in court. The Andhra Pradesh High Court had made a prima facie observation that the move might be unconstitutional, but the challenge is yet to be heard on merits.

What are the legal issues in such laws?

Two big legal questions come up. First, the question of domicile reservation in jobs. While domicile quotas in education are fairly common, courts have been reluctant in expanding this to public employment. Last year, the Madhya Pradesh government decided to reserve all government jobs for “children of the state”, raising questions relating to the fundamental right to equality of citizens.

The second question, which is more contentious, is the issue of forcing the private sector to comply with reservations in employment. For mandating reservation in public employment, the state draws its power from 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”.

The Constitution has no manifest provision for private employment from which the state draws the power to make laws mandating reservation.

Would a law mandating reservation in the private sector be legally suspect?

The Constitution places the responsibility of ensuring equality of all citizens squarely on the state. Providing reservation in public employment is one of the many ways through which the state endeavours to ensure equal opportunity for all citizens. If such laws are challenged, the constitutional question that courts will consider is whether by mandating private sector to adopt the reservation policy, the state is delegating its role to the citizen, and whether that is permissible.

What is the government’s rationale in bringing such laws?

With public sector jobs constituting only a minuscule proportion of all jobs, legislators have talked about extending the legal protections to the private sector to really achieve the constitutional mandate of equality for all citizens. One argument often made in favour of reservation for private jobs is that since private industries use public infrastructure in many ways — from accessing land through subsidised allotment to receiving credit from public banks, tax exemptions and in many cases subsidies for fuel etc, the state has a legitimate right to require them to comply with the reservation policy. A similar argument was made in requiring private schools to comply with the Right to Education Act, which the Supreme Court also upheld.

In fact, in 2004, then Congress-led UPA government had taken the first step in this regard.

A Group of Ministers was constituted by then Prime Minister Manmohan Singh to examine the issue of affirmative action, including reservations, in the private sector. “The GoM will initiate a dialogue with industry to see how best the private sector can fulfil the aspirations of Scheduled Caste and Scheduled Tribe youth.” However, based on the advice of legal experts, the GoM subsequently said that since a law would be legally suspect, the government would initiate consultations with industry leaders to have them voluntarily comply with the policy.

Do other countries take such affirmative action in employment?

Affirmative action is adopted in many countries in the context of race and gender. For example, in the US, although there is no statutory requirement for employers to have quotas, courts can order monetary damages and injunctive relief, including “such affirmative action as may be appropriate”, for victims of discrimination. This power comes from the Civil Rights Act of 1964, which prohibits employment discrimination on the basis of race, colour, national origin, religion, and sex.

The Employment Equity Act in Canada also protects minority groups, especially aboriginals from discrimination in federally regulated industries, even in the private sector.