Local job laws that raise constitutional questions

POLITY/ GOVERNANCE

• GS-2: Issues and challenges pertaining to the federal structure 
• GS-2: Parliament and State legislatures—structure, functioning, conduct of business, powers & privileges and issues arising out of these

Local job laws that raise constitutional questions

Context: The Supreme Court of India will soon hear a petition to remove the stay (imposed by Punjab & Haryana High Court) on the implementation of Haryana State Employment of Local Candidates Act, 2021.

• The act reserves 75% of jobs in the private sector in the State for local residents. 
• The Act applies to jobs that pay up to ₹30,000 per month, and employers have to register all such employees on a designated portal. 
• The Government may also exempt certain industries by notification, and has so far exempted new start-ups and new IT companies, as well as short-term employment, farm labour, domestic work, and promotions and transfers within the State.

What are the constitutional challenges to this act?

There are at least three important constitutional questions that arise from this Act. 

1. Right to Freedom

• First, Article 19(1)(g) of the Constitution guarantees freedom to carry out any occupation, trade or business. There may be reasonable restrictions “in the interests of the general public”.
• This Act, by requiring private businesses to reserve 75% of lower end jobs for locals, encroaches upon their right to carry out any occupation.

2. Article 16

• Second, the provision of reservation by virtue of domicile or residence may be unconstitutional. Article 16 of the Constitution specifically provides for equality of opportunity for all citizens in public employment. 
• Article 16 prohibits discrimination on several grounds including place of birth and residence. However, it permits Parliament to make law that requires residence within a State for appointment to a public office. 
• This enabling provision is for public employment and not for private sector jobs. And the law needs to be made by Parliament, and not by a State legislature.

3. Quantum of Reservation

• The third question is whether 75% reservation is permitted. 
• In the Indra Sawhney case in 1992, the Supreme Court capped reservations in public services at 50%. 
• It however said that there may be extraordinary situations which may need a relaxation in this rule. It also specified that “in doing so, extreme caution is to be exercised and a special case made out”. 
• Therefore, the onus is on the State to make a special case of exceptional circumstances, for the 50% upper limit on reservations to be relaxed.
• The Maharashra Act, which provided reservations for Marathas was struck down by the Supreme Court in May 2021 on grounds of breaching the 50% limit. 
• One may contend that any reservation requirement imposed on the private sector should not be higher than the limits on the public sector.

What are the other criticisms of the Haryana Job Reservation Act?

• Affects Equality: The Haryana Act does not further “caste rule” as it is for all residents of the State irrespective of caste but it breaches the notion of equality of all citizens of India.
• Widen Inequality across States: Other than potentially increasing costs for companies, there may also be an increase in income inequality across States as citizens of poorer States with fewer job opportunities are trapped within their States.
• Idea of Nation: Over the last three years, three States have enacted laws that limit employment for citizens from outside the State. These laws raise questions on the conception of India as a nation.
  • The Constitution conceptualises India as one nation with all citizens having equal rights to live, travel and work anywhere in the country. These State laws go against this vision by restricting the right of out-of-State citizens to find employment in the State. 

Conclusion

The courts, while looking at the narrow questions of whether these laws violate fundamental rights, should also examine whether they breach the basic structure of the Constitution that views India as one nation which is a union of States, and not as a conglomeration of independent States.

Connecting the dots:

• Andhra Pradesh Locals First Policy
• Madhya Pradesh domicile based quota
• Reservation is not a fundamental right