Can the Haryana government legally reserve 75% of jobs in the private sector for locals?

Recently, the government of Haryana has issued a notice to implement a new law that mandates three fourth or 75 per cent of the jobs in the private sector in the state to be reserved for local candidate. These reservations, however, are up to a specified salary slab.
And as expected, this new notification has triggered debates in Haryana as well as outside the state’s borders. The deliberation basically ponders about whether the state government could force private companies or firms to change their own hiring policies and adopt the new reservation policy in jobs by the government or not.
Until now, the constitutional guarantees for reservation have not been extended to cover the private sector employment. While the constitution has been limited to only public sector jobs this is not the first attempt in the modern history of India to extend it to private sector.
What exactly is the Haryana quota law?
The Haryana government has notified the Haryana State Employment of Local Candidates Bill, 2020, which requires private companies to reserve as many as 75 per cent of the total jobs for domiciles. The bill has although put up a cap to this reservation of monthly salary of Rs 50,000. This is prone to alterations in the future and may be notified from time to time by the government.
Passed by the state Assembly in the month of November last year, the bill is now notified and is thus, applicable to all the private sector entities such as (trusts, limited liability partnership firms, companies, societies, and partnership firms) and any individual employing 10 or more persons.
Has any other government passed a similar law in the past?
Yes, it was in July 2019 that the Andhra Pradesh government passed a similar job reservation law. The law was met with widespread criticism and was challenged in court with the High Court making a prima facie observation that the move might not be constitutional. The court is yet to hear the challenge on merits.
What are the legal challenges that such laws encounter?
Whenever any law on the similar lines is passed two big legal concerns come up. They are as follows:

  1. Domicile reservation in jobs: Although the concept of domicile reservation is not very new with domicile quotas being fairly common in some sectors like education, courts have been a little reluctant sicne times immemorial in expanding the scope of reservation to public employment. And, last year, when the the Madhya Pradesh government took a decision to set aside all the government jobs only for the “children of the state”, the court as well as the public raised questions relating to the fundamental right to equality of citizens.
  2. The issue of forcing the private sector: The second and the more contentious question is whether the government can force the private companies to comply with reservations in employment or not.
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To deal with the job reservation in public sector, the state governments basis lies in its powers from Article 16(4) of the Indian Constitution. This particular section of the constitution says that the fundamental right to equality guaranteed by the constitution does not stop the state from announcing reservations of appointments or posts in public employment provided the reservation is in favour of any backward class of citizens which the state thinks is not represented in the services under the State in adequate numbers. Thus, the Constitution provides no manifest provision to states for private employment.
Would this law dealing with reservation in the private sector be under legal scrutiny?
The reservation to promote the rights if inadequately represented or repressed people is accepted by the Indian constitution which holds the state responsible for ensuring equality of all citizens.
And the states ensure equal opportunity for all citizens by a lot of means and measures including the reservation in public employment.
With such laws being challenged in the court the prime constitutional question that will be addressed by the courts shall be whether by making it compulsory for the private sector to adhere to the reservation policy, the state is indirectly delegating its role (to provide equal opportunity) to the citizens. It will also take into account the permissibility of this delegation of responsibility.
But, if there is so much mess, why is the government bringing such laws?
If we talk about the numbers, the public sector jobs constitute only a minimal proportion of the total jobs in majority of the states. And legislators in favour of the bill claim that extending the legal reservations beyond the public sector shall help the government to really achieve equality for all citizens. Another argument in the favour of private employment reservation lies in the rationale that  private industries derive benefits from the public infrastructure in multiple ways which makes the state to hold a legitimate right to make them comply with its reservation policy.
Private firms use various services provided by the public sector like accessing land through subsidised allotment, benefitting from tax exemptions, receiving credit from public banks, and many a times receiving subsidies for materials like fuel.  This argument was also the basis for mandating the private schools to comply with the Right to Education Act upheld by the Supreme Court as well.
Is it only India or do other countries have also taken such affirmative action in private sector employment?
Well, yes. India is not the only country to adopt affirmative actions and many countries across the world have adopted the same in the context of race and gender.
If I were to quote some examples, I would take you to the United States. Interestingly, the US does not have any statutory requirement for hirers to abide by reservations. However, the courts can order injunctive relief  and monetary damages for victims of discrimination. These may also include such affirmative actions if deemed crucial by the court in accordance with the Civil Rights Act of 1964. This Act prohibits discrimination in the employment procedures on the basis of race, religion, colour, national origin, and sex.
Another example in this regard could be the Employment Equity Act in Canada which protects the rights and freedom of minority groups in both public and private sectors.

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