India: Developments, Notifications and Exemptions under Haryana State Employment of Local Candidates Act

Authors: Avik Biswas and Ivana Chatterjee

The Government of Haryana has notified the Haryana State Employment of Local Candidates Rules, 2021 under the Haryana State Employment of Local Candidates Act, 2020 and has also exempted certain categories of employers from complying with the Haryana State Employment of Local Candidates Act, 2020.

The Haryana State Employment of Local Candidates Act, 2020 (“HLC Act”) is applicable to all private companies, societies, partnership firms, trusts, and any person employing 10 or more persons in Haryana. The HLC Act requires such private sector employers to reserve 75% of job posts that offer a salary of not more than INR 30,000 for individuals who are domiciled in Haryana. Please find below the significant developments that have taken place under the HLC Act, recently.

I. Haryana State Employment of Local Candidates Rules, 2021

The Government of Haryana vide a notification dated 10 January 2022, has notified the Haryana State Employment of Local Candidates Rules, 2021 and it has been brought into effect from 15 January 2022.

II. Exemptions granted under the HLC Act

The Government of Haryana vide a notification dated 17 January 2022, has exempted the following categories of employers from complying with the provisions of the HLC Act: (a) vacancies in start-ups and ITeS sector that have been established or have begun operation within 2 years from the commencement of the HLC Act. The aforesaid exemption is granted for a period of 2 years from the date of commencement of work; (b) short term employment of less than 45 days; (c) vacancies under employers who primarily engage in agricultural activities; (d) vacancies under employers for domestic work or services in residential homes; (e) vacancies which are being filled through promotion, transfer or absorption of surplus staff of any unit of the same employer in Haryana; and (f) any class, post, skill and category of employment as may be notified by the Government where the local candidates of desired skill, qualification or proficiency required in such employment are not available.

III. HLC Act is currently under litigation

In the case of Faridabad Industries Association v. State of Haryana & Anr, the provisions of the HLC Act were challenged before the Punjab and Haryana High Court on grounds that the HLC Act violates the Indian Constitution. The High Court, vide an order dated 3 February 2022, has granted an interim stay on the implementation of the HLC Act and observed that it should be evaluated whether any State can restrict employment especially in private sector, on the basis of domicile. Subsequently, the Government of Haryana has approached the Supreme Court of India against the said order. The matter is currently pending before the Supreme Court.

Key Action Points for Human Resources and In-house Counsel

On implementation of the HCL Act, all eligible employers will be required to reserve 75% of all posts with salary not more than INR 30,000 for local candidates in the State of Haryana. HR Personnel and In-house Counsels should keep an eye for the recent developments that are likely to take place in lieu of the on-going matter before the Supreme Court of India.