The Haryana State Employment of Local Candidates Act, 2020 (“Act”) has been brought into effect from January 15, 2022, which has wide ramifications for employers registered in the state of Haryana. The Act mandates all employers to mandatorily reserve 75% of jobs for residents of Haryana within the following parameters.  


The Act is applicable to all private companies, societies, partnership firms, trusts, any person employing ten or more persons in Haryana, or any other entity as may be notified by the Government. The Act requires private sector employers to reserve 75% of job posts that offer a salary of less than INR 30,000 for individuals who are domiciled in Haryana. The Government of Haryana has also made the residency (domicile) requirement to 5 years for a person to obtain a residency certificate.


Compulsory requirements under the Act:

1. Every employer is required to register 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 employees shall be engaged in such posts by any employer until such registration is completed.
2. Every employer is required to recruit 75% of local candidates (i.e., individuals domiciled in the State of Haryana) with respect to such posts where the gross monthly salary or wages is less than INR 30,000. The local candidates can be from any district in Haryana. However, an employer can restrict the recruitment of local candidates from a particular district to 10% of the total local candidates.
3. Every employer is required to furnish a quarterly report of the local candidates employed and appointed during that quarter on the designated portal.

Exemptions:

1. An employer may claim exemption from the Act by applying to the Designated Officer under the Act, if an adequate number of local candidates of the desired skill, qualification or proficiency are not available. The Designated Officer may, pursuant to an inquiry, 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.

Penalty:

1. Failure to register employment posts on the designated portal can attract a penalty ranging from INR 25,000 to INR 1,00,0000, and a further penalty of INR 500 per day in case of a continuing offence after conviction. Failure to recruit local candidates as per the Act can attract a penalty ranging from INR 50,000 to INR 2,00,000, and a further penalty of INR 1000 per day in case of a continuing offence after conviction. Further, the general penalty for contravention of the provisions of the Act or the rules made thereunder ranges from INR 10,000 to INR 50,000, and a further penalty of INR 100 per day in case of a continuing offence after conviction.

Views of Gns Legal:

The Act suffers from several legal infirmities and appear to be in violation of the Constitution.
Primarily, they are in violation of the principles of equality (Article 14 and 16(2)) and freedom of trade and profession (Article 19(g)) enshrined as fundamental rights in the Constitution. Separately, in the absence of rules and vague classification, they grant arbitrary discretion to the officers meant to enforce the Act.

The Act has been challenged before the High Court of Punjab and Haryana, as being ulta-vires the Constitution, and the court has issued notice to the government on the aspect of interim stay on the application of the Act until deciding the case. Until any definite stay is granted, employers would do well to begin an internal classification or calling for domicile information of their employees to be better prepared in the event the Act is not stayed or is upheld by the court.