The state of Haryana has notified[i] the Haryana State Employment of Local Candidates Act, 2020, (“Act”). The Act is effective from January 15, 2022[ii] and is going to remain operational till expiry of 10 years from the date of commencement. The main objective of the Act is to provide 75% employment to local candidates by employer (as discussed below) in the state of Haryana. The Haryana government has also notified the Haryana State Employment of Local Candidates Rules, 2021 vide notification dated January 10, 2022. (“Rules”).[iii]
The Act is applicable on all companies, societies, trusts, limited liability partnership firms, partnership firm and any person employing 10 or more persons or any other entity, as may be notified by the government. The Act is not applicable on the central government or the state government or any organisation owned by them. The Act will have huge ramifications on the private sector in Haryana, since the Act requires the above-mentioned entities to reserve 75% of job posts having salary of less than INR 30,000 for individuals who are domiciled in Haryana. The key provisions of the Act are summarized as follows.
- Employer is defined in the Act as a company (registered under the Companies Act, 2013), or a society (registered under the Haryana Registration and Regulation of Societies Act, 2012), or a limited liability partnership firm (as defined under the Limited Liability Partnership Act, 2008), or a trust (as defined under the Indian Trust Act, 1882), or a partnership firm (as defined under Indian Partnership Act, 1932), or any person employing 10 or more persons on salary, wages or other remuneration or any other entity, as notified by the government.[iv]
- A local candidate shall mean a candidate who is domiciled in the state of Haryana.[v]
- Every employer shall recruit 75% of local candidates to the job posts where the gross monthly salary or wages is less than INR 30,000. The local candidates can be from any district in Haryana.[vi]
- Every employer is required to register its employees receiving gross monthly salary or wages of less than INR 30,000 on the designated portal i.e., the Haryana Udhyam Memorandum portal within 3 months of the commencement of the Act. Further, no new employee shall be engaged in such posts by any employer until such registration is completed.[vii]
- No local candidate can avail benefits under the Act until she/he is registered on the designated portal.
- Every employer shall furnish a quarterly report of the local candidates employed and appointed during a particular quarter on the designated portal.[viii]
- An employer’s failure to register employees on the designated portal shall be punishable with a penalty of not less than INR 25,000 but which may be extended to INR 1 lakh and a further penalty of INR 500 per day in case of a continuing offence after conviction.[ix]
- If the employer fails to recruit local candidates as per the provisions of the Act and Rules, then the employer shall be liable for a penalty of not less than INR 50,000 but which may be extended to INR 2 lakhs and a further penalty of INR 1000 per day in case of a continuing offence after conviction.[x]
Exemption under the Act
The Act provides for exemption from its provisions. The employer may claim exemption from the Act by applying to the designated officer (appointed under the Act), in case, the adequate number of local candidates of the desired skill, qualification or proficiency are not available. The designated officer after an inquiry, may, either accept or reject the employer’s application for exemption or direct the employer to train local candidates to achieve the desired skill, qualification or proficiency.[xi]
Further, as per the recent order of the Labour Department of Haryana,[xii] some categories of employers have been exempted from the provisions of this Act. They are as follows:
- Vacancies in new start-ups and new information technology (IT)/information technology enabled services (ITES) for a period of 2 years from the date of starting of the business;
- Short term employment (which is less than 45 days);
- Vacancies under any employer whose main business is agriculture activities;
- Vacancies under any employer for domestic work or services in residential homes;
- Vacancies which are being filled up through promotion or transfer or by absorption of surplus staff of any unit of the same employer in the state of Haryana; and
- Any class, post, skill and category of employment, as may be notified by the government of Haryana, where local candidates of the desired skill, qualification or proficiency required in such employment are not available.
The objective of the Act appears to help local people and provide them with employment opportunities; however, this might hamper India’s focus on ease of doing business and attracting foreign investment, especially in the city of Gurgaon, which is becoming the business hub and many offices and start-ups are operating there. There has also been severe criticism of the provisions of the Act. The Gurgaon Industrial Association has also filed a petition before the Punjab and Haryana High Court, challenging the provisions of the Act.[xiii] The private sector believes that the provisions of the Act will make it difficult for industries to remain competitive in the state, which is already facing shortage of skilled manpower.[xiv] Such strict compliance of the provisions of the Act might even compel the industries to shift to other locations like Delhi and Noida. The implementation of the Act is most likely to impose difficulties on the applicable employers, especially since the new labour codes are anticipated to be enforced in the financial year 2022-2023.[xv]
[iv] Section 2(e) of the Act.
[v] Section 2(g) of the Act.
[vi] Section 4 of the Act.
[vii] Section 3 of the Act.
[viii] Section 6 of the Act.
[ix] Section 11 of the Act.
[x] Section 12 of the Act.
[xi] Section 5 of the Act.