Reservation in Private Sector


    In News

    • Recently, a law has come into effect in Haryana that provides 75 percent reservation in the private sector to job seekers from the state. 

    Haryana State Employment of Local Candidates Bill, 2020

    • Application:
      • It applies to “all the Companies, Societies, Trusts, Limited Liability Partnership firms, Partnership Firm and any person employing ten or more persons and an entity, as may be notified by the Government, from time to time”.
      • The act covers the whole of the State.
      • The law will be applicable for 10 years.
    • Whole Private Sector:
      • Post its implementation, priority for jobs would be given to the youth of Haryana in all private sector companies, institutions, trusts, societies and industries established in the state.
    • Certain Relaxation:
      • The state government also relaxed the residency requirement from 15 to five years for a person to get a bona fide resident certificate in the state to provide some flexibility to the private companies in hiring.
    • Dedicated Portal:
      • A dedicated portal has also been created by the Labour Department along with a helpline number. 
      • For availing benefit, the Domicile candidates need to register on a designated portal from which recruitments will be done.
      • Companies will now have to reflect their vacancy on the portal which will be continuously monitored by the government.
    • Upper Limit on Salary:
      • It envisages reservation for local youth in the private sector with an upper limit of gross monthly salary up to Rs 30,000.
    • Penalty:
      • Time period of three months is available for compliance. Non-Compliance will attract a fine of between Rs. 25,000 and Rs. 1,00,000.

    Need of Reservation

    • High Unemployment rate: 
      • The February unemployment rate in Haryana was over 26% against a national average of less than 7% according to the Centre for Monitoring India Economy.
    • Loss of Livelihood of Locals: 
      • With growth in industries, the locals suffer the most whether it is displacement due to land acquisition or loss of agricultural opportunities.
    • Prime Victims of Pollution: 
      • The locals are the first victims of pollution or industrial hazards  and hence they should have first right over jobs.
    • Reservations are granted on other Grounds like Caste, Gender: 
      • The locals who suffer from industrialisation also need to be brought into the net of positive descrimination.

    Causes for Such Laws

    • Vote Bank Politics
    • Widespread Joblessness
    • Accommodating Talent
    • Economic Recession


    • Employment: 
      • With the implementation of this system, new avenues for employment will open for lakhs of youth in the private sector
    • Ensuring Development: 
      • Such provisions would be able to get through the setbacks as that of the recent stagflation situation and it will also bring the development back to its pace and level up the infrastructure.
    • Tackles unemployment: 
      • This bill would curb the unemployment rate within the states where these policies are to be implemented by providing much of the population with jobs.
    • Raises the morale: 
      • With the presence of a higher employment level, it would also level up the morale of the citizens and especially it would boost up the youths who are left unemployed without such incentives.
    • Discourages migration: 
      • The law will discourage the influx of migrants seeking low-paid jobs, which has a “significant impact” on local infrastructure and leads to the “proliferation of slums”.
    • Reaping benefits of NMP: 
      • With increasing privatisation and the Central government pushing for National Monetisation Pipeline (NMP), such a law would prove to be a boon for the local residents of Jharkhand.
    • Eliminates Biasness: 
      • There are many instances where it was found that there were inherent biases among the corporate sector against minorities and Dalits and this will ensure that no such prejudice would be made.
    • Addresses Agrarian Crisis: 
      • Many people do want to get hold of jobs instead of practicing farming but due to the dearth of jobs in the private sector, they are not able to do so. This policy would help it out by supporting domicile reservations.
    • Undoing LPG Losses: 
      • Soon after the Liberalization, Privatization, and Globalization reforms the country faced a crisis in the job market with a plethora of jobs in the hands of foreigners. So, these reservations are somehow giving the reins to the government sector to secure  jobs for the natives.

    Way Ahead

    • The State governments can come up with certain incentives to companies which are investing a certain amount of money for training the local youths. 
    • The State governments should enable the reservation system to which serves its original purpose of making India a more just society. 



    • Loopholes in Constitution: Following arguments and loopholes are exploited by state governments to reserve jobs for locals.
      • Article 16(3):  It provides residence as criteria for Public Employment.
      • Public Employment (Requirement as to Residence) Act, 1957 was passed by Parliament to abolish Residence as criteria for job.
        • Few exceptions were made for Andhra Pradesh, Manipur, Tripura, and Himachal Pradesh.
      • Article 16(2): As the language is not mentioned as criteria of non-dicrimination, states have mandated knowledge of State Language.
      • Article 371:  Special powers have been awarded to few states. Eg.
      • Andhra Pradesh, under Section 371(d), has powers to have “direct recruitment of local cadre” in specified areas.
      • Constitution Talks about Government Jobs: As per Haryana Government the recent act is constitutional as it deals with jobs in Private Sector.
    • Judicial verdicts:
      • Dr Pradeep Jain v Union of India, 1984: Legislation for “sons of the soil” was termed unconstitutional but did not expressly rule on it as the case was on different aspects of the right to equality.
      • Sunanda Reddy v State of Andhra Pradesh, 1995: Supreme Court affirmed the observation in Pradeep Jain to strike down a state government policy that gave 5% extra weightage to candidates who had studied with Telugu as the medium of instruction.
      • The Supreme Court invalidated the appointment of government teachers in Rajasthan in 2002 in which the state selection board gave preference to “applicants belonging to the district or the rural areas of the district concerned”.
      • In 2019, the Allahabad High Court struck down a recruitment notification by the UP-Subordinate Service Selection Commission which prescribed preference for women who are “original residents” of the UP alone.

    Source: BS